Daylight robbery

Property title theft is on the rise. Land Registry’s mantra that: “there is no better way to safeguard ownership of land and property than by registering your title with us” has been uncovered by the recent BBC One Show. The number of property title theft victims has tripled since 2005.

Despite continued increases in the instances of fraud and indemnity pay-outs suggesting otherwise, Land Registry told the BBC One Show that they: “do not accept that there is a direct relationship between us putting that information online and fraud.” It was also revealed that the motive to publish information online was a combination of governmental drives, the “increased provision of electronic services” and making conveyancing “simpler, quicker and cheaper”. Is the risk of having your property stolen worth slightly cheaper conveyancing?

The BBC One Show investigation follows a front-page report in the Sunday Express which revealed the worrying truths and impact of property title theft. The situation is finally being given the attention that it deserves and property professionals and property owners are becoming alert to the dangers and consequences. Unfortunately, once a property is on the Land Register there is no way to remove the details from public view. Nonetheless, there are practical and legal steps that can be taken to minimise risk and protect yourself against this lucrative crime.

For over a year, a team of four lawyers, all members of The Law Society and much-experienced in property law, have been researching property title theft. Motivated by ‘near-miss’ instances of clients, they discussed their plans extensively with the Land Registry throughout their development stages and have created a system of protection for owners using practical and legal procedures.

While the Land Registration Act 2008 ‘guarantees’ compensation for loss, some victims have never seen a penny. Furthermore, property owners are not told about the raft of legal loopholes and avoidance techniques which limit the receipt of a state backed indemnity. In any event, a cheque doesn’t compensate for the heartache involved in losing your property.
In the case of the Rowntrees, a couple who discovered that their home had been stolen when they placed it on the market, the fraudster simple changed their name by Deed Poll to match that of the registered owners and subsequently used the ‘forged’ documents to impersonate the identity of the true homeowner and register a mortgage against their title. In this instance, the fraudster had genuine identity documents which easily deceived Land Registry, the mortgage lender and indeed their solicitor. Unfortunately, identity theft is continuing to rise dramatically.

The Land Registry has attempted to belittle the problem and have stated that their largest indemnity pay out of £8m was not as a result of the register being online as the fraud was conducted with a forged Land Certificate. However, if the property had been registered in Gatekeeper Protection, this type of fraud could not have occurred.

Gatekeeper protection
Gatekeeper Protection combines not only the suggested protection methods recommended jointly by The Law Society and Land Registry such as the placing of Restriction LL and the updating of the proprietors service address, but also a series of additional protective measures which combine to lock fraudsters out, even if they steal and adopt the client’s identity.

On verification of identity, Gatekeeper Protection collates a series of ‘shared secrets’, issues a property Passport printed on secure paper, and separately issues a secure code known only to the client and Gatekeeper Protection’s encrypted server. Gatekeeper then places a series of restrictions against the property title which ensure that no transactions can take place without the consent of Gatekeeper Protection directors and that Gatekeeper Protection is alerted to title activity. Should an application to alter the title be raised, for example by a solicitor changing the owner’s details due to what they believe is a legitimate sake, Gatekeeper Protection, by procedure, will object to the alterations within one working day thus preventing the transaction taking place; a service believed to be unrivalled by the raft of traditional legal practices.

While notices are sent by Land Registry to the property dweller, in instances of fraud there are a variety of circumstances in which the dweller does not respond with an objection within the statutory 14 day period. It may be the case the mail is lost, remains unopened or is intercepted by the fraudster. Gatekeeper Protection supports the Land Registry campaign for service address to be updated to reduce the possibilities above, however, that in itself is not a protection mechanism like Gatekeeper Protection.

The Law Society has recently suggested, despite suggesting otherwise in its guidance note to practitioners (Property and Registration Fraud; 2010), that as an alternative to title theft prevention policies, property owners should speak with their solicitors who will offer their office address as a Land Registry Service Address for notices. However, as acknowledged by legal practitioners, on receipt, a notice issued by the Land Registry relating to a property may have to pass between secretaries and fee-earners, files obtained from storage and clients contacted for instructions. All too often, if the client hasn’t instructed the firm for some time, contact details can be out of date, or the solicitor’s letter is simply sent to the property’s registered address which may be monitored by the fraudster. Indeed, a verbal acknowledgement from a fraudster impersonating the client could be sufficient for the notice to be un-acted upon by the solicitor in which case the property title theft will not be prevented.

Safety in mind
Gatekeeper Protection objects to all activity unless specifically given instructions to allow in advance. Instructions must be verified by receipt of the property Passport, which is uniquely stamped and embossed and compared to an identical copy held on file, the confirmation of the Secure Code and the confirmation of the clients ‘shared secrets’. Even if a fraudster steals an identity, property title theft cannot take place.

As a result of the recent press attention and comments from victims that ‘more needs to be done’, Land Registry is using its dominant position as keeper of the Land Register to further its commercial services. This ‘remedial’ service seems all too similar to the Land Registry’s previous ‘Property Watch’, in which data obtained under Freedom of Information in 2009 revealed that after two years of service only four customers were on the books! This monitoring service does not offer the level of protection available from a service such as Gatekeeper Protection, a company designed with title theft protection from its inception.

While conveyancers should follow practice note guidance and may feel as though they can offer some form of protection in the form of Restriction LL and encouraging their clients to update their service address, for reasons mentioned, this will not always be a reasonable preventative measure for vulnerable properties.