No point in conveyancers trying to “export” Dreamvar fraud risk


Conveyancing: Often better not to ask than to ask and get no good answer

Conveyancers acting for buyers should “think” rather than “automatically try to export the risk of identity fraud onto the seller’s conveyancer”, a specialist barrister has warned.

In the wake of the Court of Appeal’s ruling in Dreamvar, Nic Taggart said those acting for buyers were tending to “seek ways of cajoling conveyancers acting for sellers to give some sort of representation, warranty or undertaking” that they had carried out identity checks.

Mr Taggart, a member of the Law Society’s land law and conveyancing committee, said: “The best-practice approach is not to automatically try to export the risk of identity fraud onto the seller’s conveyancer, even though they are infinitely better placed to take steps to ‘know their client’.

“The reality is that such attempts are unlikely to be effective and may actually make the buyer’s conveyancer’s position worse when the request for a warranty or a clear representation goes unanswered.

“It will often be better not to ask than to ask and then get no good answer.”

Writing on the Landmark Chambers website, Mr Taggart said the right approach to seeking reassurance about the seller’s identity required the buyer’s conveyancer “to actually think”.

He went on: “What is the right level of caution, given all the circumstances of the particular transaction?

“What will be appropriate in relation to a sale by the owner-occupier of a modestly priced residential property that is subject to a building society charge may not be appropriate in relation to the apparent sale of a high-value unencumbered property being offered for sale by a registered proprietor whose claimed address is not that of the property being sold or any other address for service on the Register.”

The Court of Appeal ruled in the Dreamvar cases that solicitors for both buyers and sellers could be liable for the losses suffered by clients where properties were sold by impostors.

Mr Taggart said that, in the post-Dreamvar world, he had seen not only attempts by buyers’ conveyancers to cajole the sellers’ lawyers into giving some sort of representation, but “rather brutal demands” for formal warranties and even undertakings.

The barrister advised sellers’ solicitors who were asked to warrant or undertake that their client was the person they claimed to be and were entitled to sell the property should be “extremely reluctant to do so”.

Those who did this would be stepping outside the “general protection” offered by the case law. He said anecdotal evidence suggested that most sellers’ solicitors were refusing to answer or go further than ‘we know our job’.

The barrister said a “thoughtful and targeted approach” was the best way forward.

“If you are able to put to the seller’s conveyancer the specific reasons for your concerns, based on specific factors in the proposed transaction, the seller’s conveyancer may or may not be more forthcoming about their efforts to identify their seller client.

“Their response or lack thereof will probably put the buyer’s conveyancer in a better position to give their client balanced and constructive advice as to the levels of risk they are accepted if they proceed.”

He added: “There is no magic bullet. There is no guarantee that the fraudster will be stopped every time.”




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