Theft of Houses and Land in England. Who Should Compensate the Innocent Buyer?
The ongoing story is about to reach its next chapter.
My earlier blogs are here if you want to read them again –
but to summarise, there is a continuing problem in England with land being “stolen”.
Ok you can’t actually steal a house. But since the abolition of the requirement for land deeds in England over 15 years ago, you can much more easily steal the value of a house.
Typically, your horrible criminal – hereinafter called HC – goes looking for a nice house that looks as if it is unoccupied long term. Or, he finds out who is in hospital long term and goes looking to see if their house is empty.
Next step (I hope you are not writing this down, it’s not intended to be a manual) is to pay £3.00 to the Land Registry online and have a look at the “Title”. Find out the name of the owner. OK, that’s who you will pretend to be. Have a look to see whether there is a mortgage – you want a house with no mortgage to repay, with no Bank to be involved.
OK, you’ve found yourself a nice house, owner absent, mortgage free. At this stage you might want to tell a locksmith you’ve locked yourself out, and get the locks changed. Now find a Solicitor who is a bit busy. Perhaps an “on-line” conveyancer who will be willing to deal with you without a meeting.
Get an estate agent to sell it for you – you can say you are moving to Dubai or anywhere and in a hurry, so you don’t mind if it gets a lowish price as long as it’s soon.
The next bit is rather too technical for me – you need to have a bank account or better still a chain of accounts, somewhere that the buyers’ money can be put into. And on the day of completion, that money goes in and you very quickly whisk it out and if you know what you are doing, you launder it through twenty more accounts and in and out of Macau and Nigeria and Venezuela and bye byes.
There is a suggestion that these sorts of fraud might be being set up by sophisticated crime rings internationally who actually recruit the HC. So if true, HC gets a smaller part of the stolen money paid to him later. And if HC should be caught by the police, he is the small fry who has taken the risks and he probably doesn’t even know where the big money has gone.
So that is what is going on. The question remaining, is what to be done about it?
A million pounds (say, a nice round number) has gone missing. Everyone except HC thought it was going to pay for a house. But since the actual owner is still in hospital or on the moon or somewhere, their house is actually nothing to do with it.
[Please keep up at the back – no-one has bought or sold a house here!]
The parties to the aftermath are –
1. HC, who has gone with the money
2. The innocent conveyancers instructed by HC (ICS)
3. The innocent Buyers (IB) who have paid, maybe borrowed a million from a bank and given it to their own innocent conveyancer
4. The innocent conveyancers instructed by IB. (ICB)
Obviously if the IB had dealt with their own conveyancing, they would say it should be ICS to reimburse them. ICS would say, Why should we – You are not our client?
Since IB had lawyers ICB acting for them, they think ICB should have protected them better. They actually don’t really care, they just want their stolen money back.
And as my blogs have shown, three recent cases on just this scenario have now been decided three different ways. In the case of Purrunsing, ICS and ICB had to pay half each, on the basis that each or either could have identified the fraud with a little more carefulness. (Could they really though?)
In P&P Properties, the judge was more robust. There he said, the thief HC targeted an innocent Buyer and he has stolen the innocent buyer’s money. End of. Wipe your eyes, that’s life
But then, in the case of Dreamvar, link here, the present position which is presumably therefore the law today, a judge came up with a third cunning plan. In this case, it was decided that it should be the innocent buyer’s solicitors who should pay back to their client everything that had been stolen.
And that decision was purported to be based upon a somewhat ingenious [far-fetched? Grasping at straws?] interpretation of the law of Trusts – that the purchase money was paid to the ICB “on trust” so that if it was paid to a crook [i.e., even though it was the crook that IB had instructed it should have been paid to] then there was a breach of that trust.
The more cynical viewer wonders whether the law of trusts really decided that case, or more a feeling that the ICB in that case was the very large international solicitors Mischon de Reya and that “they can afford it”.
Indeed the Court expressly said that any and all claims of negligence against Mischon de Reya were dismissed. They were NOT negligent
In any interpretation, the situation is a shambles and it seems to me that solicitors and conveyancers are currently playing a game of Russian roulette every time that they act in a house sale/purchase.
The latest instalment is that the courts will hear an appeal by Mischon de Reya in February 2018 and I await the judgment and will probably blog again when it is given.
This is an important case and the Law Society Gazette has reported – link here – that the Law Society seeks leave to intervene into it, arguing that public policy dictates that if the P&P decision is not the correct one, then the Solicitors acting unknowing for the fraudulent imposter, not the ones acting for the innocent Buyer, should be the liable parties ordered to pay compensation.
No real legal basis for that view either, in my opinion. Just making the best of a bad job. The bad job being as I see it, entirely caused by doing away with title deeds. Not that my opinion is going be requested by anyone, obviously.
As ever – our message to you is, for documents for use around the world do contact me or Louise Morley here at AtkinsonNotary E7 Joseph’s Well Leeds LS3 1AB, phone 0113 8160116 and email email@example.com or via the website http://www.atkinsonnotary.com.