As Property Fraud Lingers, Insurance Companies Design Policies To Protect Victims
The U.K. Court of Appeals has issued a judgment in the case of Dreamvar (U.K.) Ltd. v Mishcon de Reya and Mary Monson Solicitors Ltd., clarifying the liability of solicitors in conveyancing transactions.
This appeal comes after the initial High Court decision in 2017, which gave buyers, who had lost money in a sale of a property by a fraudulent seller, a right to recover the lost money from their lawyer. The Court of Appeal has now taken this judgement a step further, holding the seller’s lawyer equally liable for any monetary losses.
For defrauded buyers, the appeal sets a precedent for future instances of property fraud. But several lawyers involved in property transactions are now worried that they can be made accountable for losses suffered in instances of fraudulent transactions. Under this judgement, a buyer may not be reimbursed immediately. To help navigate this process, insurance companies are implementing solutions that aim to protect buyers who are victim to fraudulent transactions.
Mischon de Reya acted as the solicitor for Dreamvar, a small property company, in the purchase of a property from an imposter who claimed to be the registered owner of a property. The imposter supplied false identification materials to his lawyer, Mary Monson Solicitors, and the sale proceeded. Mischon transferred the purchase money to Mary Monson Solicitors who passed it on to the fraudulent client before the fraud was discovered.
“The Dreamvar case deals mainly with the liability of lawyers but nowhere does it deal with how these potentially devastating losses affect the actual individual buyers concerned,” Stewart Title Limited Director of U.K. Underwriting Mark Davies said. “At the end of the day, buyers are consumers of legal services and instruct lawyers to protect their interests. In this case, however, the Court is in effect making a buyer's lawyer responsible for actions it has little or no control over.”
Solutions To Preventing Fraud
Stewart Title Limited devised a solution that can help to protect an individual from the losses arising from this type of fraud. Working closely with conveyancing practitioners, the insurance company has created a policy that can offer protection where losses are suffered as a result of forgery, fraud, duress, incapacity or impersonation of lawful owners of a residential property by a third party. It also deals with historic fraud and can provide cover of up to £1M.
“We hope that our policy will actually take worries away from the consumer," Davies said.
These cases continue to cause problems for property buyers, and lawmakers are beginning to take action. Lawyers have begun working alongside authorities like the Land Registry to take steps to reduce risks of fraud. Until then, property buyers are relying on solutions that prevent fraudulent transactions from happening.
This feature was produced in collaboration between Bisnow Branded Content and Stewart Title Insurance. Bisnow news staff was not involved in the production of this content.