Identity theft is becoming increasingly common in property transactions. Fraudsters are assuming the identity of registered owners so that they can sell or mortgage land, pocket the proceeds and disappear.
Victims of title theft may try to unravel the transaction or seek an indemnity from the Land Registry. However, the extent of the court’s jurisdiction to alter registers of title to correct a mistake and to require the registry to compensate victims is far from clear. Another alternative may be to try to recoup their losses from the professionals involved in the transaction.
What is the position if a conveyancer fails to realise that the person instructing him is an imposter? Penn v
Do landowners who have been defrauded of property have a similar right to bring claims against conveyancers who have drawn up transfers for imposters? The decisions in Nouri v Marvi [2010] EWCA Civ 1107; [2010] 50 EG 64 and, most recently, in Bowling & Co Solicitors v Edehomo [2011] EWHC 393 (Ch); [2011] PLSCS 66 make it difficult to dismiss the suggestion out of hand.
Bowling & Co concerned a sale on behalf of a husband and wife. The husband had forged his wife’s signature on the transfer and may even have arranged for someone to impersonate her. The wife issued proceedings in tort against the solicitor that had drawn up the transfer. She claimed that it had been negligent because it had failed to take reasonable steps to identify the transferors and to protect her interests as the proprietor of the land.
The solicitor relied on the Limitation Act 1980, which requires actions in tort to be brought within six years of the date on which the damage accrued. It argued that the limitation period began to run on exchange of contracts for the sale of the property. Mrs Edehomo’s previous legal advisers, whose firm was subsequently dissolved, had delayed and the claim had become statute-barred. Mrs Edehomo relied on Nouri, where the court decided that the limitation period that begun to run on completion of the transfer (as opposed to the date on which it was registered), but the High Court agreed that the limitation period had expired.
The judge reminded the parties that exchange and completion had occurred simultaneously in Nouri, which made it unnecessary for the Court of Appeal to distinguish between the different events. He held that the damage had accrued when Mr Edehomo contracted to sell the property to a third party because it would have been difficult for his wife to sell her interest until the legal position was resolved.
It seems likely that a claim will eventually emerge in which limitation is not an issue; at that point we will obtain a ruling on the substantive law. In the meantime, conveyancers should check their clients’ identity carefully to minimise the risk of a claim.
Allyson Colby is a property law consultant
