Property title fraud is costing the Land Registry in England and Wales millions a year despite diligent efforts to combat fraud in real estate transactions, new research shows.
Almost £10 million worth of compensation claims, at an average value of £168,900 per claim, were received by the Land Registry last year alone because of fraud or forgery, according to new data Obtained through a series of Freedom of Information.
The data, requested on behalf of title insurance and listing risk solutions provider Titlesolv, also shows that an overall total of £23.3 million worth of claims were received in 2014 and since the start of 2012, the Land Registry Indemnity Fund has received more than £59 million in claims and paid out more than £31 million against them.
According to the data, the Land Registry has settled or paid an increasing number of the claims it receives, rising from some 78% of the claims lodged in 2012 to more than 86% in 2014. However, the actual proportion of the value of claims granted has dropped considerably over the same time period, from an average of about 80% in 2012 to just under 36% in 2014.
In England and Wales, it is the responsibility of the Land Registry to check the veracity of an owners’ claim to a listing when a title is registered, with mortgage lenders then using its records as one of the criteria for approving mortgage applications to check a criminal has not stolen an owner’s identity and is attempting to raise an unenforceable mortgage against a listing.
In recent years, the Land Registry has made progress in bolstering its governance, processes and records to defend against claims, however the number of claims remains stubbornly stagnant, the costs of which have to be shouldered by its Indemnity Fund.
‘Despite best efforts, significant amounts of money continue to be lost each and every year due to fraud and forgery of listing title deeds, with the Land Registry bearing the brunt of these costs. This is not likely to change anytime soon as many of the issues created pre-recession still lie dormant,’ said Chris Taylor, chief executive of Titlesolv.
‘If interest rates go up, and more mortgages fall into arrears, the registry is likely to face another wave of claims as defaults tend to reveal or highlight allegations of fraud. If those mortgages become unenforceable, the registry and the public purse, are vulnerable to claims of negligence,’ he explained.
He also pointed out that fraud is not something that can be easily detected, so ultimately the responsibility falls on all parties, the Land Registry, solicitors and mortgage lenders alike , to be as vigilant as possible and to collaborate even more to detect the signs earlier.
‘Ultimately, however, the principle of a State Guarantee on listing titles places liability for title fraud squarely with the Land Registry, so it is clearly in its own interest to lead the charge in the fight against fraud and forgery,’ he added.
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Source: Property News Spain