A recent case at the High Court in Glasgow considered property fraud on an extraordinary scale. Perhaps most striking about the case was that it was the longest criminal trial in UK legal history, lasting over 320 days. 29 properties appeared on the indictment, following a police investigation involving over 100 officers.
Edward McLaren was found guilty of a £1.6 million property fraud scheme, which was funding an extravagant lifestyle. In addition, his wife Lorraine was found guilty of a fraudulent mortgage application on their own home.
McLaren, who was a financial adviser, had placed advertisements offering to help those in financial distress as a result of a bereavement, debt or illness with “property solutions”. He offered to either buy their homes or lend them money to clear any debts.
While McLaren told them he would only receive a part-ownership in their homes, he was in fact transferring all of the property into the names of his associates, meaning that the original owners no longer owned the deeds to their properties. They were then required to pay McLaren rent to live there. As a result, a couple were evicted from their home after mortgage payments on their home were not kept up.
McLaren would give his victims a part of the money they were expecting in return, but never the whole amount. He would instead use part of the proceeds of the sale to fund his next fraudulent transaction.
The fraudster was sentenced to an 11-year custodial sentence, while his wife was sentenced to two and a half years. When sentencing McLaren, Lord Stewart said: “It appears your motivation was to secure funds from mortgage lenders to fund an affluent lifestyle.”
Since September 2009, Land Registry has prevented fraud amounting to around £92 million. Following a Freedom of Information Act request in 2015, Titlesolv discovered that fraud claims to Land Registry were on the increase. Land Registry is continually monitoring and reviewing its anti-fraud practices and policies, but admits that its system is not infallible.
Land Registry encourages vigilance and recommends that owners most at risk of fraud sign up to a free property alert service. Another recommended measure is to place a restriction on a property title, preventing any registration of a sale or mortgage unless it is certified by the owner’s solicitor.
Property fraud can occur in many different and increasingly complex guises. For lenders, identification checks can provide some protection, but latent fraud in a transaction is still difficult to predict. Suitable insurance can provide protection and peace of mind to both property owners and lenders.
Titlesolv’s policies cover fraud as well as claims of duress and undue influence. Our six month ‘cure or pay’ guarantee acts as a true guarantee, rather than just an indemnity. The insured is not required to prove loss and all claims are settled within six months, providing a far swifter means of recovering losses than litigation.