A relatively new type of property fraud is the ‘split property fraud’. It usually requires a fraudulent property owner, plus a fraudulent valuer and solicitor. In essence, the property owner goes to a lender for a remortgage. He has the property valued for its true value (eg £100,000), and so gets an advance of £80,000. But, the solicitor does not secure the loan against the entire property, but instead against a small part of the garden that has been hived off into a separate title (with the lender not noticing that its charge is now over ‘land at the rear of 23 Acacia Road’, rather than against the whole property). In practice, it seems that the scam can be repeated many times against a single property.

Whilst lenders may be fearful of such frauds, they pose little risk for honest solicitors (as it is difficult to see how an innocent solicitor could be involved in such a transaction). But, there are other frauds that can well lead to an innocent solicitor being liable. For instance, Barlow Lyde & Gilbert report an instance of an innocent solicitor being involved in the well-known scam of a seller who fraudulently sells someone else’s property (having obtained copy mortgage deeds and leases from the LR). In that situation, the innocent solicitor acting for the buyer could well be held responsible for some of the losses, if he makes a minor mistake in the conveyancing that could subsequently be argued to have allowed the fraud to progress. So, do be on your guard.

A variant on this is when one of two joint owners decides to sell without the other’s consent; typically, this will involve forging the other owner’s signature on a document authorising the solicitor to act on the sale. Such frauds are a perfect example of why conveyancers need to follow identity checks and verify signatures. Source: Zurich@risk. © Practical Lawyer