With the increase in identity fraud some property buyers run the risk of being scammed by bogus sellers, effectively people who have “assumed” the identity of the real property owner.  In the majority of cases a diligent solicitor will prevent such fraud, but it is still wise to take precautions and to be aware of the resolutions should this happen to you.

So how does someone sell a property they do not own?

Firstly they will tempt the property buyer with an amazing offer, perhaps a discount of 10%, 20%, sometimes more, below the current property valuation.  As mortgage companies will often carry out further checks to prevent fraud the bogus vendor will probably insist on cash payment. The bogus vendor will also use a small solicitors firm that may not be highly experienced in conveyancing, in the hope that some checks may not be so thorough.

The vendor solicitor is responsible for verifying the vendor’s identity, and also verifying the vendor’s title to the property ensuring they have full rights to sell a property.  If the vendor solicitor provides this acceptance, the sale can then proceed.

On completion of the sale the vendor solicitor will transfer funds to the buyer’s solicitors, and then update land registry to change the legal title of the property to reflect the new owner.  All of this relies on the vendor solicitor checking thoroughly to establish the title of the property and the vendor’s identity.

So what happens if the property buyer has been scammed?

This is where it gets interesting.  If the vendor solicitor has not updated land registry at the time the fraud is uncovered then the true owner can normally regain their property, leaving the buyer recourse to claim costs back from the vendor solicitor (who will be insured against such errors).

But, if the land registry has been updated then it becomes much more difficult for the original owner to regain the property, thus the property buyer would normally retain their property.  The original owner then has to seek compensation for their losses; this will be either from the land registry (if they were found to have made errors), or from the solicitor acting on behalf of the bogus vendor.