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New laws to prevent property fraud!
Richard Carter, a Partner specialising in Property matters at the Firm, has reacted to the news of proposed new laws designed to prevent property fraud.
“Two years of consultation the Law Commission has proposed some new legislation to modernise the land registry to prevent property fraud. Property fraud has cost the Land Registry itself over £60 million in the last 5 years and the cost to sellers and buyers on fraudulent transactions has also run into the millions. The Law Commission is seeking to update the Land Registration Act 2002 to modernise it to fight fraud. The existing law was formulated 15 years ago and the rapid pace of change in technology and fraud has meant a new approach is needed."
The main proposals from the Law Commission on fraud measures include:
- Enabling HM Land Registry to set the reasonable steps that conveyancers must undertake to verify the identity of their clients, to help route out fraudsters.
- Imposing a duty of care on conveyancers with respect to identity checks, based on the directions issued by HM Land Registry.
- If a conveyancer fails to meet his or her duty with respect to identity checks, ensuring that HM Land Registry has a right of recourse against the conveyancer to recover the amount HM Land Registry paid for the loss caused by the fraud. Conveyancers who follow the required steps won’t be responsible if fraud still happens.
Richard Carter welcomed these proposals as a step in the right direction, “We need to update Land Registration to seek to prevent fraud and these measures seem sensible if somewhat limited. Fraud on property matters has increased since the Land Registration Act 2002. However the Law Commission has not gone as far as recommending the Land Registry go back to being a closed register only open to law firms and property owners. It will be interesting to see the debate on these proposals and proposed Bill over the coming weeks.”
The Law Commission has also proposed some other changes to Land Registration to resolve some specific conveyancing issues that involve the Land Registry – these include:
Other recommendations include:
- Preventing the register from being changed once a mistake has been on the register for 10 years, to make the register more accurate and final.
- Requiring evidence of interests that people want to protect with a unilateral notice at an earlier stage, preventing disputes at the Tribunal.
- Bringing mines and minerals onto the register.
- Creating a new power to introduce electronic conveyancing that does not require completion and registration to happen simultaneously, to facilitate electronic conveyancing.
- Beefing up the powers of Land Registration Division of the First-tier Tribunal (Property Chamber) – including an express statutory power to determine where a boundary lies, so that parties do not have to re-litigate the same issue.
Richard Carter commented – “These will be useful in modernizing the rules in certain specific issues that arise. Progress towards electronic conveyancing is overdue and this will help. However it feels like an opportunity missed to help other situations including dealing with restrictions in favour of management companies – these are the biggest frustration and are the biggest cause of cost and delay from a registration perspective.”