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Coronavirus – We’re open as normal

Coronavirus – We’re open as normal

Foys Solicitors is open as usual.

Please note that we at Foys are mindful of the government’s guidance regarding the coronavirus outbreak, and the safety of our clients and staff is our priority. For this reason, while business is continuing as normal, we are taking steps to encourage social distancing. This includes the offering of telephone and/ or video appointments rather than face-to-face appointments where possible. Contact us on:

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Sincerely,

Foys Solicitors

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Property fraud: what you need to know

Property fraud: what you need to know

Property fraud has become a serious problem in a changing, increasingly digital world. Here’s what you need to know about property fraud.

Despite all of the increased security enhancements and rules and regulations that govern property sales, today’s world is still full of opportunities for fraudsters to trick buyers and sellers. In fact, some of those advancements have even fallen in favour of fraudsters. After all, we now live in a world where the convenience and speed of email has superseded personal interaction or even a phone call. This makes it easier for fraudsters to create facades and spin webs of lies that go undetected – even leaving some people penniless, homeless and heartbroken.

Just think: it’s possible to buy or sell a property today without having even seen the face or having heard the voice of your conveyancer, mortgage broker, estate agent, surveyor or even buyer/seller. Whether this sounds normal or unsettling to you may well depend upon your age and how comfortable you are about online interaction. Nevertheless, property fraud is something that can affect anyone. In fact, one particular scam where criminals pose as the owner of a property to sell it – known as ‘home hijacking’ – has been on the rise in recent years. The average property scam can end up costing over £100,000.

We’re going to detail what type of frauds you should look out for and detail what you can do to safeguard your property transactions from fraudsters.

Common property fraud tactics

In order to identify fraud, you need to have an idea of what it looks like. Here are some of the more common tactics utilised by fraudsters in property transactions:

Pretending to be buyers and/or sellers

The most common type of fraud is when a person pretends to be a buyer or seller. As aforementioned, while this would have been hard to pull off in the past – particularly as sellers would need access to the house – the increasing online nature of transactions makes this far more possible.

When they act as buyers, fraudsters will withdraw from a previously agreed offer before it has been legally agreed. During this process, they will often gain access to information about the property that may allow them to transfer the property to themselves by creating fraudulent documentation.

When they act as sellers, fraudsters will pretend to be the owner of the property in question. It can be rather easy to emulate a property holder, especially when they know who stays at that address. As this information is freely available on the Land Registry website and can be obtained easily through other means, this isn’t hard. They’ll try to offload the property quickly, often at a reduced rate, so that they can make some quick cash before they are discovered.

It’s important to remember that even if a person has access to a property to show you around, this doesn’t mean that they are definitely the owner as access could be gained via other means such as house sitting or by being renters (with the intent of defrauding the potential buyer and their landlord).

Pretending to be a landlord or rental agent

Many people renting in the UK have got used to doing most of the process online, with the only in-person interactions happening when they visit the property and when they come into the rental agent office to sign documentation. Fraudsters benefit from this by presenting excellent properties online, often with fake photographs, to help pressure interested parties into signing into a deposit before they seemingly drop off the face of the earth.

Again, this fraud may be more successful if a person has access to the property in question (as aforementioned), but this doesn’t mean that they have the legal right to rent the property.

Pretending to be a lender

This type of fraud can happen when a homeowner may be in a dire financial situation and forges documents to tell potential lenders that they have paid off their mortgage. However, genuine people can also fall innocent to this when they are contacted by fraudsters pretending to be lenders who claim they can renegotiate their current debt or mortgage if they are sent payments. This is almost always untrue.

Mortgage fraud

Mortgage fraud can be brought about by people who have borrowed too much money in an attempt to mislead lenders for the purpose of gaining a loan or house buyers who are looking to inflate their income to secure loans. However, it can also happen when groups of criminals – often containing corrupt solicitors, brokers and valuers – mislead lenders too.

Inflated sale price

Often an attempt to scam prospective landlords, the fraudsters will sell properties (sometimes holiday homes) with exaggerated projections of its rental potential – meaning the property’s valuation has been overpriced.

Pretending to be conveyancers

An increasingly common issue that involves fraudsters pretending to be conveyancers (either through hacking or careful manipulation of email addresses) and asking their clients to transfer money to them. This request often happens just before the weekend to pressure clients into paying without proper verification. This also gives fraudsters the opportunity to stay under the radar until the next week and get away with the money before they are discovered. It’s thought that this ‘home hijacking’ (also known as ‘Friday afternoon fraud’) is the most common legal-related cybercrime.

This can also be achieved through fraudulent mail seemingly from your conveyancer, complete with genuine-looking letterheads, asking you to pay an amount into a specified account.

What you should know about ‘home hijacking’

With ‘home hijacking’ frauds having netted fraudsters almost £25m in 2017, and both homebuyers and landlords falling victim, it’s incredibly important to be aware of these scams if you own or are buying property – especially if you are a first-time buyer. This scam often happens during the conveyancing process where conveyancers work to transfer the legal ownership of a property to another party (seller to the buyer).

This conveyancing process involves a number of different steps, such as:

  • Examining and crafting legal documents
  • Conversing with the buyer or seller’s solicitor
  • Investigating the property and its ownership for any other information that could affect the purchase (e.g. if the property is at risk of flooding)
  • Examining mortgages to ensure finance is in place for the property
  • Securing the deposit
  • Signing and exchanging contracts
  • Lodging an interest in the property
  • Applying to the Land Registry to change the deeds
  • Securing/paying the outstanding amount

The ‘home hijacking’ scam involves diverting property fees that the buyer was going to give to the conveyancer through multiple, overseas accounts that are difficult, if not impossible, to track. To do this, criminals will either hack into the conveyancing solicitors’ email address system, carefully manipulate a fraudulent email address to make it look legitimate or through email spoofing. The first method is often achieved by the hacker remaining undetected, reading through the conveyancing firms emails and identifying a target.

When the property deal is close to being finalised, they’ll strike with a fake email (or letter) that they say contains the solicitor’s bank account details. As these details are often known to the buyer at this point, the email or letter will explain how those details had changed and that the amount must be paid immediately. As most buyers at this stage are eager to seal the deal, after an often protracted property search and conveyancing process, they can feel compelled to pay for fear of missing out on their property. When the money has been transferred, the fraudster shuts down the account and moves the money across various accounts to hide their tracks.

First-time buyers must be cognisant of the conveyancing process as these scams often rely on the inexperience of buyers; however, due to the aforementioned nature of most property transactions happening from afar, this is something that can afflict buyers of all experience levels.

What you can do to avoid being a fraud victim

There are a number of things that buyers, sellers and tenants can do to safeguard their property assets and money meant for property purchase or deposit, from fraud.

Buyers

  • Avoid properties that you see online where you are either not allowed to see the property in-person or any appointment is constantly being changed or delayed.
  • Don’t give in to any demanding phone calls, emails or letters that pressure you into quick decisions – especially when they are related to paying money – or ask you for personal details.
  • Don’t transfer any money without calling and verifying any bank details with your conveyancer – and be especially suspicious of such requests on a Friday afternoon.
  • Be wary of property investment seminars and training programmes that are ‘invite only’ and make hefty promises.
  • Familiarise yourself with the property’s tenure via the Land Registry.
  • Don’t be afraid to ask plenty of questions of your seller – they will have no problem in answering.
  • If you have concerns, make sure to confirm what checks your conveyancer or property solicitor has made on the property and the seller.
  • Don’t engage with any lenders or mortgage brokers that haven’t been approved by the Financial Conduct Authority (FCA).

Sellers

  • Be wary of buyers who come in with excellent offers (especially if you have been struggling to sell) as they may be scamming you to get personal and property details.
  • If you are a landlord looking to rent and want to avoid any property scam, make sure to only use a trusted letting agent.
  • You can sign up to receive a ‘Property Alert’ from the Land Registry’s website that will notify you of any applications or searches they have received regarding your property (or one of your properties). If you don’t know the source of these searches, or why they have been made, it can help you stay alert to any possible fraud.

Tenants

  • Only pay a deposit into a government-sanctioned deposit scheme (which, in England and Wales, is currently the Tenancy Deposit Scheme, Deposit Protection Service and MyDeposits).
  • Don’t offer valuable items to a landlord as a deposit as they will not be protected. Landlords should not accept this, but a fraudulent landlord will likely have no problem in accepting the item before vanishing with it.
  • As a tenant’s holding deposit is not protected until they become a tenant, you shouldn’t pay a holding deposit to anyone other than a trusted letting agent or landlord.

Foys can help you buy and sell without worry

Whether you are buying a property to own as your home, or you’re a landlord looking to buy a property before renting it out, it’s important to have a team of property solicitors behind you. At Foys, our excellent, fully-qualified and licensed conveyancing solicitors have many decades of experience. Since 1972, our team has been behind thousands of safe and successful property transactions.

We are diligent in our efforts to ensure that buyers and sellers can be trusted, and we also take measures to protect our business from cybercrime. We engage with our clients so that they are always kept in the loop regarding the status of their property transaction, and we will also help them to recognise potential fraud. You can trust Foys Solicitors to handle property measures with care, safety and security.

To get in touch with our experienced property solicitors and receive your FREE initial consultation, get in touch with your nearest Foys office today.

Alternatively, you can complete our contact form here.

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This post is not legal advice and should not replace professional advice tailored to your specific circumstances. It is intended to provide information of general interest about current legal issues.

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Call the office nearest to you and speak to one of our professional specialists or fill out the form below