Property Hijack

Property fraud is on the rise. To carry out the fraud, a fraudster pretends to own a property and sells that property to a prospective purchaser. This is also known as a ‘property hijack’. Normally, the fraudster will convince their solicitor that they are the true owner of the property.

How does it work?

The purchaser pays the purchase price to the fraudster but the purchaser will not obtain the property as legal ownership remains with the true owner. The true owner can take legal action to recover the property. Often there will be a lender who has granted the purchaser a mortgage and is left without its security, with the purchaser remaining liable for payment of the debt.

What property is at risk?

Some properties are more vulnerable to this fraud, including:

• properties with absent owners;
• properties where the owner is elderly and in nursing care;
• high value properties and
• mortgage-free properties.

What happens when the property hijack is discovered?

The fraud might be discovered during the sale process. The Titles Office might realise the fraud and will not register legal title to the property in the purchaser’s name and the lender’s mortgage will not be registered. In many cases, however, the transaction will be registered at the Titles Office, with the owner only discovering what has happened afterwards. The fraudster has disappeared with their ill-gotten gains after instructing their solicitor to transfer the funds into a bank account created as part of the fraud.

Preventing property fraud

As with most fraud, the best cure is prevention. Tightening procedures by everyone involved in the sale process, including solicitors, real estate agents, property owners and lenders, is vital. Steps now being introduced include comprehensive identity checks carried out by authorised agents to verify the parties’ identities.

Acting fast is key when property hijack is discovered

Hijack fraud will continue to happen in the future and, when it does, prompt action is necessary. With quick action, it may be possible to recover the purchase price from the fraudster and to avoid legal action to have the property transferred back to the true owner.

 

 

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Please note that this article has been prepared by Margaret Miller, partner of Bell Legal Group, for information purposes only. It is not legal advice nor should it be relied upon as such.