Property Fraud – avoid the scammers!

Challenging economic conditions always provide greater opportunities for scammers and fraudsters to try and deceive their way to quick profits. Property fraud comes in many shapes and sizes – misrepresentation, concealment, forgery but by far the most common is identity fraud – where fraudsters invent or steal identities for their own financial gain.

A recent example came in the First Tier Tribunal case of Tali Shani v Chief Mike Agbedor Abu Ozekhome [2025] UKFTT 1090 (PC)] which makes for a compelling and, at times, bleakly comic read. Judge Ewan Paton adeptly differentiates the evidence from the “evidence” (a nod to some expert use of quotation marks in the judgment) unpicking it piece by piece to reveal multiple attempts to commit property fraud.

The property in question (a terraced house in Neasden) lacks the necessary glamour but when reading the judgment, one must imagine David Suchet’s Hercule Poirot or Daniel Craig’s modern homage, Benoit Blanc, delivering their verdicts to a room of suspects, shifting the focus from one to the next only to reveal at the end the ultimate plot twist. I won’t spoil it for anyone with a spare half hour but watch out for the appearance of a superimposed red hat and dress and a former Nigerian General and Government minster.

Putting to one side the comical element of this case, it highlights that property has always been a target of fraudsters. The Land Registry recently published data that in the past year 4,429,092 applications were received and just 86 were identified as fraudulent – this sounds like a very low percentage (just 0.0019%) but the combined value of those transactions was still over £59 million and overlooks the devastation to the individuals affected.

How do the courts deal with property fraud

The leading case on identify fraud in property was the landmark Court of Appeal decision in Dreamvar (UK) Ltd v Mishcon de Reya. This case sent ripples through the property law landscape, reshaping the way liability is allocated in cases of identity fraud during conveyancing. Alongside P&P Property Ltd v Owen White Catlin, the judgment has become a pivotal reference point for solicitors, insurers, and property professionals navigating the risks of fraudulent imposter transactions.

A brief reminder of the facts

Both Dreamvar and P&P involved fraudsters posing as legitimate property owners and selling properties to unsuspecting buyers. In each case, the buyer paid the purchase price, transactions were completed in accordance with the Law Society Code for Completion by Post (2011) and before registration the frauds were discovered but not in sufficient time to prevent the fraudsters from disappearing with the proceeds of sale.  

In P&P, the solicitor accepted the fraudulent vendor as her client despite failed anti-money laundering (AML) checks. The fraudster had instructed the solicitor to sign the contract on behalf of the seller.

The claims

The central legal question was: who should bear the loss—the buyer, the buyer’s solicitor, or the seller’s solicitor?

Despite the similarities between the two cases, the claims brought by the defrauded buyers in each case were slightly different:

• In P&P Property, the defrauded buyer claimed against the seller’s solicitors on the basis that they had:
  • held themselves out as having the authority of a true owner to conclude the sale;
  • negligently failed to carry out checks to establish their client's identity; and
  • in breach of trust, paid the purchase monies to its client without proper authority.

P&P also brought the first two of these claims against the estate agents appointed by the fraudsters. P&P did not bring a claim against its own solicitors.

• In Dreamvar, the defrauded buyer brought claims:
  • in negligence and for breach of trust against its own solicitors; and
  • for breach of warranty of authority, breach of an undertaking and breach of trust against the fraudulent seller's solicitors.

Key Findings

In P&P, the Court of Appeal held that:

• the claim for breach of warranty of authority against the seller’s solicitors failed because the buyer did not explicitly rely on the representation.
• The buyer’s claims for breach of trust and breach of undertaking succeeded. The undertaking was given as part of the Law Society’s Code for Completion by Post where the seller’s solicitors gave an undertaking to release the sale proceeds to the seller on completion. The Court emphasised that solicitors must not release purchase funds unless the transaction is genuine. This was central to this analysis, particularly the definition of “completion” and the authority to release funds.

In Dreamvar, the Court of Appeal held that:

• The solicitors acting for the fraudulent seller were liable for breach of trust and breach of undertaking.
• Solicitors acting for the seller were also found liable for breach of trust. The court said they had acted honestly but failed to act reasonably, having failed to carry out relatively basic identity checks.
• The court denied the buyer’s solicitors relief under section 61 of the Trustee Act 1925, emphasising that insurance coverage should not influence the fairness of liability allocation. This sparked dissent from Gloster LJ, who argued that insurance status should not influence judicial sympathy.

Implications for property transactions

This decision marked a significant shift in judicial thinking, placing greater responsibility on solicitors to protect clients from fraud—even when the fraud is perpetrated by a third party.

Dreamvar has effectively shifted the risk of identity fraud from buyers to their legal representatives and their professional indemnity insurers. While this may offer greater protection to consumers, it places solicitors under increased pressure to safeguard transactions. The decision also raises questions about the role of professional indemnity insurers and the potential for increased premiums.

Clients, agents and other stakeholders should expect to have to deal with increased regulation in future as advisers and insurers place greater emphasis on fraud avoidance.

There are some simple steps that all parties involved in property transactions ought to consider, such as:

• Carrying out identity checks. Dreamvar was a salutary reminder of the importance of carrying out proper due diligence on every client.
• Being alert to the warning signs of fraud. Dreamvar also highlighted the importance of conveyancers being alert to the warning signs of fraud.
• Putting in place fraud prevention measures. Educating clients on steps they can take to protect against fraud, particularly where properties are unmortgaged, vacant or let.
• Raising pre-contract enquiries. Once a transaction has started, buyers' conveyancers may seek an assurance that the seller's conveyancer's client is the actual owner of the property. They may also choose to raise specific pre-contract enquiries of the seller's conveyancer.
• Requesting an undertaking from the seller's conveyancer. Buyers' conveyancers will want the protection of an undertaking from the seller's conveyancer, either under the 2019 Code or otherwise.
• Monitoring PI insurance terms. Conveyancing firms should monitor the terms (and limitations) of their PI insurance.
• Taking out indemnity insurance. Indemnity insurance may be available in certain circumstances.
• Amending standard terms of business. Conveyancing firms may also consider amending their terms of business when acting for buyers to specify the circumstances in which they will be permitted to release completion monies.

Conclusion

The opportunities for fraudsters are proliferating and the sophisticated AI platforms now present a real and present danger to all. As fraud becomes more sophisticated, legal professionals must adapt to ensure that trust in the conveyancing process is maintained. The use of AI to create convincing chat bots is causing huge difficulties in the financial sector and this is leaking into the property market.

Clients will find themselves having to provide additional information to meet some of the additional compliance burdens put in place to protect conveyancers, agents and lenders. This may well add to the costs of providing such services. While in the short term this may feel frustrating for clients, the reputation and institutional security of the UK property market is at stake.