If you own a property that is registered and do not live in it yourself, you could be an easy target for fraudsters.
One type of fraud that is not new but seems to be becoming more common involves fraudsters transferring a property into their own name with HM Land Registry and then securing a mortgage against it. Having converted the equity in the owner’s property into cash, the fraudster disappears, defaults on the mortgage and leaves the true owner to deal with the consequences.
This is what happened in the case of Barclays Bank plc v Guy 2008. When Mr Guy found out about the fraud on his property, he applied to the Court to rectify the register to show that he was the owner and not the fraudster. The Court found that Mr Guy was entitled to this but he was not entitled to have the mortgage charge removed. The Court found that the mortgage remained valid and so the mortgage company was entitled to seek an order for sale to recover the sum it had lent to the fraudster if they were not paid.
How can this be right? The Court referred to Section 58 of the Land Registration Act 2002 which provides that, if a person is listed as the proprietor of a legal estate with HM Land Registry, that is conclusive evidence of ownership. The Court accordingly found that, the transfer into the fraudster’s name was a mistake and so rectifiable but the mortgage charge was not a mistake as the mortgage company was entitled to rely on the information on the Land Register as conclusive evidence of ownership. The Charge was therefore not rectifiable. This means too that if the fraudster sells the property to an innocent third party, that transaction would be binding.
So, how do you minimise the risk of this happening to you? If you do not live at your property personally you must make sure that you amend the Register to show that (by using a Unilateral Notice) and provide your current address for correspondence. Updating your address with HM Land Registry is free – all you need to do is complete a form and send it to a freepost address with evidence of your identity.