The Land Registry reports that an increasing number of fraudsters are assuming the identity of proprietors in order to sell or mortgage land. Where the fraud goes undetected, proprietors who have lost out usually look to the professionals involved in the transaction to account for their loss. Nouri v Marvi [2010] EWCA Civ 1107; [2010] 42 EG 105 (CS) highlights the importance of acting quickly to preserve rights at the Land Registry, as well as against conveyancers who have been negligent.
The solicitor acting for the transferor of land failed to realise that the person instructing him was an imposter and that the land was eventually registered in the name of an innocent third party. When the court refused to undo the registration – because the landowner had not acted with sufficient urgency when he realised that he had been defrauded – the landowner issued proceedings against the solicitor who had drafted the transfer for the imposter.
The landowner’s claim was founded in tort, not contract, because he did not have any contractual relationship with the solicitor who acted for the imposter. None the less, he alleged that the solicitor had been negligent because he had failed to confirm the imposter’s identity and to take instructions from the true proprietor of the land.
The Court of Appeal ruled that the limitation period began running from the date on which the forged transfer was completed (and not from the date on which it was registered) and that the landowner’s claim failed because it was statute-barred. The outcome might have been different had the landowner begun proceedings within six years of the completion of the transfer.
The landowner claimed that the conveyancer had failed to hold a face-to-face meeting with the imposter and had not obtained a copy of his passport before the transfer was completed. He also claimed that the solicitor had failed to heed warning signs that should have raised suspicions concerning the legitimacy of the sale (such as the absence of a forwarding address for the imposter and the lack of instructions about the apportionment of a service charge and absence of any response to requests as to what he should do with the money that he held).
The court took the view that the solicitor had negligently placed a document that could be used to defeat the landowner’s title in the hands of a third party. That constituted an immediate blot on his title and it was not the position in which he would have found himself had the solicitor acting for the imposter properly performed his duties. The landowner’s title became less valuable as soon as the forged transfer was in circulation. Consequently, the damage was sustained then, and not when the title was registered in the name of the new owner.
The Land Registry and the Law Society have, for the first time, produced a joint practice note on registration fraud. It highlights the types of property owners that are particularly susceptible to fraud and explains the precautions that lawyers can take to make it more difficult for fraudsters to succeed. It is essential reading for practitioners and can be found here:
Allyson Colby is a property law consultant
