It depends on how Title law works in the jurisdiction.
I don't know how it works in this part of the UK, but in many states in the US, the buyer would left holding the bag - the original homeowner would keep the property.
It's one reason in the US that most property sales include a purchase of title insurance.
> I don't know how it works in this part of the UK, but in many states in the US, the buyer would left holding the bag - the original homeowner would keep the property
Different ways of dealing with the problem of fraudulent transfer and property records. In the U.S., the risk is the buyer's. If the property was fraudulently transferred, the transaction is mutable. This makes the sureness of ownership, as well as the record, less reliable, while making ownership per se more.
The U.K. flips that assessment. If the Land Registry says you own the property, you can rest assured you own it. No re-litigating whether that transfer two sales back was done correctly. In exchange, this shit.
If you consider each country's history with respect to property and power, it makes sense.
If the Land Registry says you own the property, you can rest assured you own it.
Sounds to me like you can only rest assured at the moment the Land Registry tells you. After that, it’s only a matter of time before some scammer sells your house out from under you. Not a great system.
Could you use a very small mortgage as a proxy for that function? In my country a mortgage will prevent any transaction if the bank don't agree. This will add a non trivial step for the scammer.
It isn't about property and power, though. It's about knowledge and power. The buyer knows there's a transaction being contemplated. The buyer knows how to contact the seller and/or their agents. The owner does not. The predominant U.S. system requires buyers to guard against known unknowns. The U.K. system requires owners to guard against unknown unknowns. It's a least-cost-avoider problem, and it has a clear answer.
Also the buyer is either a scammer or a dupe. The owner is just a victim. Either way, the buyer should clearly be held responsible and cover all costs to resolve.
> In the U.S., the risk is the buyer's. If the property was fraudulently transferred, the transaction is mutable.
Ironically you're describing the original English legal system centered around deeds.
But a few US States, some of the UK Commonwealth, and England, as it sounds from this article, use the Torrens system[1].
The difference is whether the deeds are primary and the registry a mere copy (or even optional); or the registry primary and any papers reflecting registration a mere copy.
But generally with a Torrens system there is some statutory compensation for fraud cases.
My interpretation - the UK was about having a few gentry owning all the land and a lot of peasants that just work on the land. The US was about giving each settler a Homestead of previously unowned land (Natives not being considered capable of owning land, because racism). So, a registry would be easy to operate in the UK, but the US was too big and poorly connected and had too many land owners to make that viable.
One example is Ayn Rand who said that Natives weren't using land productively and therefore weren't really owners of it.
Torrens title was invented in South Australia in the mid 19th century. It is named for the Australian politician Sir Robert Torrens, who was briefly Premier of the Colony of South Australia around the same time. It has since spread around the world, including a few American states, but has not seen anywhere near as much adoption in the US as in many other parts of the English-speaking world.
Now, the contemporary English system isn’t strictly speaking Torrens, it actually is somewhat of a hybrid between a pure Torrens system (as used in Australia and many other places), and the original English system (which slowly evolved out of mediaeval English law) and which is still mostly retained in the US. But still, to the extent that the records of the Land Registry take priority over the actual title documents, it is closer to the Torrens system than most US systems.
I think the main reasons for the lesser adoption of Torrens in the US have little to do with the reasons you suggest. Trying to link the US non-adoption of it to the dispossession of indigenous people is dubious given that Australia, where it was invented, has a similar history. It is basically due to the greater number and greater conservatism of US state jurisdictions (here I mean “conservatism” primarily in the “slow-to-embrace-change” sense, rather than conservatism as a political ideology, this is the kind of technocratic legal issue about which neither progressives nor conservatives, in the ideological sense, care much), and also due to the lobbying power of the US title services/insurance industry, which sees the greater simplicity of the Torrens system (most of the time, ignoring occasional problems and frauds like this, which can and have happened under pre-Torrens systems too) as a threat to their established business models
Torrens essentially tries to optimise for the most common case, in which title is clear and no fraud is going on, and make that common case as simple and cheap as possible, even if by doing so the outcome in those rare cases of disputes and frauds may not always be completely optimal
I'm not a lawyer but the article implies that once the title is transferred, the new owner owns it! There might be liability with the Solicitor or the Land Registry, otherwise it would appear to be incredibly unfair!
The Land Registry is the final arbitor of who owns what in England and Wales. So yes, right now the Registry says this New Owner owns this property, there is no way to contest this in a court of law, the official Land Registry paperwork is de jure supreme, it has the same legal effect as if an Officer from the Registry was in Court to say yup, that's who owns this property says the Crown.
But, of course what we've got here is apparently Fraud. Presumably the likely legal outcome is that the actual sale price or, if higher, fair market value, must go to the previous legitimate owner. Unless the new owner is shown to have committed fraud.
The Solicitors are required to be insured. And of course the Government owns the Land Registry and so is quite capable of standing any of its potential liabilities, though it seems most likely the Solicitors screwed up here in accepting bogus "proof" of identity.
3.2 Suspected fraud or forgery
If someone suspects that a fraud has taken place or is
about to take place in relation to their property, they
should contact us immediately. In many cases, we will
be able, on application, to enter a standard form
restriction LL in the register, that requires a
certificate to be given by a conveyancer that they are
satisfied that the person who executed a document
lodged for registration as disponor is the same person
as the proprietor.
It will also be advisable to take legal or other
professional advice to try to minimise any loss.
> The Land Registry is the final arbitor of who owns what in England and Wales.
I don't think that's true because for instance there are still properties unregistered (as mandatory registration was phased in until 1990). Certainly it seems possible to rectify the Register, not least in case of fraud [1]
Also, in English law, a valid sale of land must meet strict criteria, including being made by Deed. I am not a lawyer but I don't see how the Deed can valid in this case since it did not involve the legal owner at all!
Since solicitors must check identities (how could they have failed that?) and executing a Deed includes signing it in the presence of a witness I suspect a number of people have at the minimum massively screwed up, and the witness is likely an accomplice.
But, if the Registry says your property is registered, and that Jim owns it, the fact you say it isn't registered doesn't trump that. You would need to persuade a Court that the Registry is wrong, and then they'd need to tell the Registry to fix that. Until both those things happen, Jim owns it.
> I am not a lawyer but I don't see how the Deed can valid in this case since it did not involve the legal owner at all!
Prima Facie there's a Deed which says the legal owner sold it. Now we've got this chap, says he's the legal owner, says he never signed that paperwork. That's a contradiction, which is true? So that's the sort of problem we have Courts for.
My guess is, this chap is exactly who he says he is, there's a fraudster somewhere with £131000 of somebody else's money who won't show up to court.
But of course it's also possible this is a different fraud in progress. The chap who claims it was "stolen" has £131000 in an account in his friend's name, and now wants both the house and the money.
A judge gets to decide the truth of the matter. Often things are clear cut (e.g. the "driving license" proves to be a badly photocopied Photoshop image, a solicitor's clerk admits a "face to face" transaction actually took place on Zoom, the bank account is traced to a known crook who fled the country last week) but sometimes it's just very hard to decide, which is why we need smart, honest people to do that job and decide what's a fair outcome when it's unclear.
Seems like the ID was pretty convincing, and the real owner (assuming the paper did their due diligence!) wasn’t there at the property - so everyone involved may have done a decent amount of checking, but it wasn’t enough because the fraudster knew how to play the system to get through the normal hurdles. It does happen.
Sounds like a court needs to dig in and figure out what is going on for sure.
It sounds like a sophisticated fraud. They probably target clergy or others who have well known public schedules. I assume there is an equivalent of title insurance in the UK that will pay out though.
The original owner is not going to be the one with title insurance though, that's usually bought by the buyer, not the seller, especially not a seller who isn't even aware that there is a transaction.
"Title insurance" isn't much of a thing in the UK. I think this is because the Land Registry gives you something similar as part of the service. Random quote from the web, from the Law Society Gazette, no less: "We already have a land registry which provides a comprehensive guarantee of title backed by the state."
As for whether fraudulent sales should be reverted or not, I've been pondering the question since I read the story yesterday and come to the conclusion that it would be good to apply some common sense:
* Someone buys a house without looking at it, before or after the sale, as an investment because the price seems really attractive. It is then discovered that the owner, who is living in the house, was not involved in the "sale". Obviously they should revert the transfer of ownership and compensate the purchaser.
* Someone buys a field, gets planning permission, builds a house on it, and moves in. Ten years later it is discovered that the real owner of the field, a company in Dubai, was not involved in the "sale". Obviously the transfer should not be reverted and the involuntary seller should be compensated.
Yes I expect that, if pressed, the courts would void the entire transaction and restore the property. The land registry may be the arbiter of who currently owns what, but the courts are the arbiter of what "happened" according to the law.
Otherwise it sets an absurd precedent. If it was not some man's house but a critical piece of infrastructure, the courts are not going to stand idly by and let some random person take possession of Sellafield, or for that matter, Harrods.
But the existing owner will probably settle for compensation instead of fight a lengthy court battle.
No, the courts wouldn't. A genuine innocent purchaser, properly registered at the Land Registry, has good title. (Note: not the fraudster - their downstream victim). The original victim's options for recompense are the scammer, the solicitors who did the conveyance for the fraudster (if negligent), or the Land Registry itself.
Nobody is going to end up as the accidental innocent purchaser of a stolen Sellafield, so that's not a concern. If the government really needs to reverse a transaction under these circumstances it could use a compulsory purchase order or a private act of Parliament.
That’s a bad rule. The purchaser had the ability to thwart the fraud and the true owner did not. The better rule is that an individual cannot pass a better title than he has.
Yeah, maybe. There's a reason different jurisdictions go different ways on this. You could also argue that the true owner could have thwarted the fraud by more careful identity management, and the purchaser (in hiring a solicitor to ensure the bona fides of the seller) has done nothing wrong. And if the true owner was absentee, the fraud might not be uncovered for years, long after the purchaser has moved in and made reliance on ownership.
The bottom line is that there are two innocent victims and one or both are getting screwed. I prefer your rule too, overall, but there are circumstances where one or the other is going to be more unjust in a particular case.
Well, if they made the bank take the hit (until they can get money back from the fraudster, and since most residential purchases are financed with a mortgage) I'd wager that suddenly ID/ownership checks would become bulletproof...
I suspect they'd rather you claimed against the fraudster or a solicitor, with the compensation fund as a backstop. If that is the case, it could be neither: just that most people get recompensed elsewhere.
That's right, I think. The property can be recovered from the fraudster, but not from an innocent subsequent purchaser. There is at least some form of compensation scheme by the Land Registry. And 'selling on behalf of someone who isn't the actual owner' certainly can found a liability claim on the solicitor.
That's wild. Is there any other case where someone gets to keep stolen property as long as they didn't know it was stolen? I have to say if I was in the victim's position, my reaction would probably land me in prison for longer than the fraudster.
I think it’s more ‘if someone goes through an expensive and extensive legal process to purchase at great expense, some real property, starts taking it as their own in good faith, then later what may be the prior legal owner, but who was not who did all the legal paperwork comes back to me and claims fraud - do I have to move?’
The issue is there are scenarios where the person writing the article may not actually be the legit owner - maybe they are delusional, or were squatting, or whatever. Maybe they are in league with the person who took off with the money, etc.
And the person who bought it is out real money on the meantime and is trying to make a home in good faith - it’s a pretty bad situation all around.
I think it's simpler than that, if the claims from the article are true (you still need courts to decide that, and I don't know of a court system where this is suitably fast).
Original proprietor had a furnished house, and the end result should be that they still have the house at no expense and at least trouble: they did not partake in the "sale", so they shouldn't suffer consequences from someone's incompetence or negligence. House is not just a "financial" instrument: it might have large emotional value too (memories, tradition & history, community and neighbourhood...).
Unfortunately, the honest buyer hired a solicitor to act as their agent, and while the solicitor might lose their professional license, buyer should get their damages back from the said solicitor or licensing body, because buyer is a victim of their incompetence/negligence, yet competence and care were guaranteed with the professional license.
Solicitor relies on the Land Registry to be the ultimate arbiter, so they should expect their damages to come from them for the duties they failed to perform.
Regardless of what the law is anywhere, that's how it should work IMHO. Unfortunately, the practicalities of how long it takes courts to (dis)prove a fraud make some of these hard to effectively achieve in a timely manner.
Theoretically, courts could make the process more expedient in cases of inhabiting-properties by "pausing" the transfer and putting the property into government custody, giving temporary use rights to the more likely resulting owner from the preliminary hearing (hey, fake document was involved, sorry, original owner gets to live there for the time being: everyone, please keep all receipts for any work done on the property and about your legal representation so you can be fairly compensated).
There are many European countries where this is the case for movable property. For instance, there was the case of the Fiat factory worker who bought a painting in a railway lost property auction, which turned out to be a stolen Gauguin.
Losing the singular most expensive item you own, that typically contains the rest of your property, with no warning… that tends to end with you on the street which some may feel worse than prison.
I’m not condoning that choice but recognize the consequences are particularly low when you’re already at the bottom.
mate.. it's a matter of perspective. for people that have nothing left... prison doesn't sound that bad.
If I have to choose between ending up on the streets again or prison... I'm pretty sure I'd chose prison this time around. I was young and lucky the first time. Now...
I don't know how it works in this part of the UK, but in many states in the US, the buyer would left holding the bag - the original homeowner would keep the property.
It's one reason in the US that most property sales include a purchase of title insurance.