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High Court finds conveyancers liable for £500,000 property fraud

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  • 19/04/2016
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High Court finds conveyancers liable for £500,000 property fraud
Two conveyancing firms acting for both sides of a property transaction have been held accountable for a £500,000 fraud carried out by a group of scam artists posing as the seller.

Following a three-year legal battle, law firms House Owners Conveyancers and A’Court & Co were found liable for activities carried out by a network of Dubai-based fraudsters.

The fraud saw the identity of the vendor stolen to achieve the sale of a £470,000 house in Wimbledon to the claimant, Hurry Purrunsing. The incident was only discovered after the claimant’s life savings were paid away, leaving him empty handed.

Honour Judge Pelling, who presided over the High Court case has now ordered both firms to bear an equal part of the loss.

Despite having checked with the vendor’s solicitors that the seller was the real owner of the property, House Owners Conveyancers was found liable for failing to warn its client that it had received an inadequate response from A’Court & Co and so was running a risk to its client.

During the trial, William Flenley QC, acting on behalf of A’Court & Co, argued that the firm should not be held liable to the same extent as the purchaser’s own conveyancer, stating that there is no contractual relationship between the purchaser and seller’s solicitors.

However, the argument was rejected by Judge Pelling, who pointed out that an equal standard of trustee duties applied to sellers’ and purchasers’ solicitors in cases where there has been no completion of the transaction.

Judge Pelling said A@Court & Co had made no serious attempt to comply with anti-money laundering regulations to prevent the fraud and critically, the firm had obtained no documents linking the seller to the property.

Both firms admitted liability for breach of trust over the purchase money.

Beth Holden of Anthony Gold, who acted on behalf of the claimant, said the decision would “resonate” throughout the conveyancing profession.

“More and more people have un-mortgaged properties which are highly attractive to fraudsters. The public are entitled to look to the professionals to protect against fraud, even the estate agents who market the property. In this case, we see the court saying that conveyancers on opposite sides of the transaction have joint responsibility to protect the purchaser’s money, no matter who their client is,” she said.

“Old doctrines of buyer-beware and solicitors’ warranties of identity, are not substitutes for compliance with strict requirements of anti-money laundering regulations and the duty to actively protect the transaction from fraud.”

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