Property owners are usually well aware of the steps they can take to prevent their possessions from being stolen, but may not realise that their title to land that they own could also be at risk. Modern technologies, combined with easier access to information, have created new opportunities for financial crime. In the case of land, this phenomenon has become known as 'title theft'.
How does title theft work?
It used to be extremely difficult to steal land, but modern forms of property theft are hard to spot and quickly accomplished. Fraudsters assume false identities so that they can pass themselves off as landowners. This enables them to offer the land as security for a loan, or to sell it to a third party, and then pocket the cash and disappear. When the landowner discovers the crime the property is already burdened by a mortgage or has been registered in the name of someone else.
Although the number of frauds like this is still relatively low, figures published by the Land Registry – the government body responsible for publicly recording interests in registered land in England and Wales - suggest that title theft is becoming more common. In addition, identity theft is becoming more widespread as professional criminals now target land belonging to complete strangers.
Why is land at risk of title theft?
The Land Registry registers title to freehold and leasehold land in England and Wales. It has computerised all its records and its electronic registers of title have replaced old-fashioned title deeds and documents.
Historically, registers of title were confidential and no one could see them without permission from the registered owner of the land in question. However, information kept by the Land Registry became publicly available in 1990. As a result, anyone can now ask to see the registers of title to land. The Land Registry will not ask why, and it will not inform the registered owner of the land that a third party has obtained access to the register.
Land and charge certificates were abolished on 13 October 2003. Their disappearance has made it easier for impostors to impersonate registered landowners because they no longer need to produce the certificate as proof of ownership in support of a fraudulent application to change the register.
In addition, modern technologies have made it easier for criminals to obtain counterfeit documents which can be used to represent themselves as the registered owner of a piece of land.
What types of properties are most vulnerable to title theft?
Owner-occupiers are less vulnerable – although not immune – to title theft. Absentee owners, who own land outright but do not occupy it personally, are more susceptible to title theft.
Some of the frauds that have hit the headlines have been truly audacious. Examples of properties affected by title theft include:
- a 47 acre site in Sunningdale, Berkshire worth £6.5 million, owned by a Saudi sheikh;
- a Victorian semi-detached house in Harborne, Birmingham, worth about £600,000, whose owners paid off their mortgage and placed the property on the market before going abroad on an extended holiday;
- an owner-occupied detached house in Manchester, which was mortgaged to two different lenders for £111,000;
- 14 terraced houses in the same locality targeted by a criminal gang in Merseyside.
Who bears the loss caused by title theft?
The Land Registry can rectify the register to remove an impostor and restore title to the real owner of the land. However, rectification may not be available if an innocent third party has bought the property from an impostor, or lent money to that impostor with the land as security.
In a recent high-profile case, 50 acres of land were transferred to a new owner without the proprietor's knowledge or consent and then mortgaged to Barclays Bank to secure loans of £110 million. The land was restored to the true owner, but the court ruled that the bank was still entitled to exercise its power of sale over the land.
Registered landowners who suffer loss as a result of title theft may be eligible for compensation from the Land Registry. Availability of compensation will depend on the circumstances, and the amount of compensation can be reduced where the landowner has failed to take sufficient care to protect its title.
What can landowners do to protect themselves against title theft?
The Land Registry may argue that landowners who fail to take appropriate precautions have failed to take proper care of their titles, which can affect the amount of any compensation payable.
The following simple steps will help to safeguard properties against theft:
- landowners with large property portfolios should start by compiling a list of the properties in their ownership. Regular inspections of the properties in your ownership will help to reveal anything suspicious or untoward;
- you can make a quick and simple search to obtain a comprehensive list of the properties that have already been registered at the Land Registry in your name;
- check with the Land Registry to ensure that your 'address for service' - that is, the address that the Land Registry uses to send notices to and correspond with you - is up to date;
- you can also provide the Land Registry with additional addresses for service, to ensure that correspondence actually reaches you. You can register up to three different addresses for service with the Land Registry, and can choose to have notices sent to a trusted third party who will bring them to your attention;
- in some cases it may also be appropriate to place restrictions on your title. These have been specifically designed by the Land Registry as safeguards against property fraud;
- remember that title theft is not always discovered immediately. Regular audits will reveal whether there have been any unauthorised changes to the register or if any title numbers have been removed from the properties listed in your name;
- consider signing up to new services introduced by the Land Registry for customers who choose to pay for them in order to safeguard their properties against title theft.