Conveyancing News
April 2009
In an article in January’s edition of the Journal I identified a number of situations where conveyancing practitioners should be on their guard. I am now highlighting a specific fraud which is being perpetrated by highly organised criminals and has potentially serious repercussions for the Master Policy and the whole profession. Essentially it is an identity theft fraud.
The perpetrators identify properties which are not occupied by their owners and which have no securities in place. They then assume the identity of the owners, obtain substantial loans over the properties and disappear with the funds. Upon default the lenders contact the true owners, who are completely unaware of the situation.
To carry out this scam the fraudsters need the services of a solicitor, to carry out the security work and draw down the loan. If you are approached by individuals for whom you have not previously acted, who claim to be the owner of a property which is currently security-free and ask you to handle a substantial new loan over it, there is a considerable risk that they may not be genuine. To address this risk you should take the following steps:-
• Ask them to explain why they have not instructed the solicitors who acted in the original purchase (and who would already be familiar with the title).
• Check their proof of identity very carefully and ask for sight of documents relating to their purchase (e.g. copy missives).
• Enquire as to the purpose of the loan. Even where you are offered a plausible explanation (e.g. purchase of a second home or property abroad) obtain independent verification from a reliable source.
• If the property has been let out contact the letting agents and ask them when the landlords were last in touch.
• If you decide that it is safe to proceed make sure that any unusual aspects of the transaction are fully reported to the lender.
• Finally under no circumstances accept a mandate to remit any funds to a third party (e.g. a company or non-solicitor agents) but insist that they are sent direct to the clients’ own bank account.
John Scott
Solicitor
Professional Practice
Application for Registration in the Land Register
Registers of Scotland (RoS) will shortly be introducing up-front electronic scanning of all applications for registration in the Land Register. This will allow, in due course, RoS staff to carry out the legal and plans examination of applications electronically and so speed up the registration process. However the scanning process can only work efficiently if all applications are accompanied by an application form. Solicitors will be familiar with the terms of Rule 9(1) of the Land Registration (Scotland) Rules 2006 which requires that an application for registration in the Land Register be accompanied by the appropriate application form (Form 1, 2 or 3 depending on the type of application being presented). Current RoS practice is to reject an application and return the deeds and documents to the submitting solicitor if the application is accompanied by the wrong application form, or is not accompanied by any application form. In only one case will RoS give effect to a deed that is not accompanied by the appropriate application form. That is where on a sale, an existing heritable standard security is being discharged and the discharge is submitted along with the application for registration of the purchaser’s interest. In that circumstance RoS has not insisted on a Form 2 accompanying the registration of the discharge. Rather RoS will give effect to the discharge without the need for any application form.
RoS will, after 5 January 2009, no longer accept discharges that are presented for registration without an Application Form 2. In addition if an application form is not accompanied by the correct registration fee the application will also be rejected. Solicitors can expect to receive a Registers Update on these, and other changes relating to the introduction of scanning, in December.
From 1 September, 2008, the Council of Mortgage Lenders will introduce new procedures for Disclosure of Incentives in new build property cases.
Paul Carnan of the Society’s conveyancing committee has written an article which explains the background to the changes and important information including the committee’s views on best practice.
These changes will require solicitors to confirm that they have received a new Disclosure of Incentives Form from the builder/developer of any new-build, converted or renovated property, before submitting their Certificate of Title.
The Law Society of Scotland fully supports the principle of combating mortgage fraud. However, the members of the Society’s Conveyancing Committee have grave concerns about the practicalities and potential difficulties for solicitors which the new procedures will cause. In our view, the new process fails to take adequate account of the way the Scottish market operates. We have voiced our concerns to CML, and we are disappointed that our concerns have not been taken on board, including the short notice of introducing the changes. We will continue to engage with CML to seek to secure a workable solution that addresses all concerns.
To read Paul Carnan’s full article please click here.
HBOS Redemptions
HBOS has confirmed to the Society that its recent letter to the profession requiring that all mortgage redemptions be settled by electronic means, with effect from 1 August 2008, will not apply in Scotland. This new policy will be implemented from that date in England and Wales, and HBOS is to issue a follow up mailing to all solicitors. Please ignore this further letter from HBOS as you can continue to pay redemptions by cheque. We will continue to keep you updated on this.
Those who act for charities, or are involved in property transactions with charities, should take note of the Charities References in Documents (Scotland) Regulations 2007 (SSI 2007/203). The regulations came into force in April 2007 but affect all relevant documents issued or signed after 31 March 2008 on behalf of all charities entered on the Scottish Charity Register, regardless of their size. New charities require to comply within six months of being entered on the register.
Documents must contain the charity’s name as it appears in the register and any other name by which it is commonly known, its charity number and, except where its registered name includes the term “charity” or “charitable”, one of the following terms:
charity;
charitable body;
registered charity;
charity registered in Scotland;
Scottish charity; or
registered Scottish charity.
For more detail see Journal article by Janette Wilson
JA Pye (Oxford) Ltd v United Kingdom [2007] ECtHR
The Grand Chamber of the European Court of Human Rights held by majority that there had been no violation of Article 1 of Protocol No. 1 (protection of property) to the European Convention on Human Rights in the applicant's loss of ownership of 23 hectares of agricultural land through adverse possession to a neighbour who had used the land for over 12 years without permission. The decision means the 12-year limitation period (operating in England) beyond which actions cannot be brought for recovery of land in such circumstances is not in breach of Article 1 on the grounds that it pursues a legitimate aim in the general interest.
Matrimonial Homes Affidavits for Civil Partnerships
Style Affidavit taking account of the Civil Partnerships Act approved by the Conveyancing Committee.
Aberdeen College v Stewart Watt Youngson and Another
14 March 2005
ABERDEEN COLLEGE v STEWART WATT YOUNGSON and ANOTHER Disposition by A in favour of A is invalid ex facie and is not a foundation writ for the purpose of positive prescription in terms of section 1 of the Prescription and Limitation (Scotland) Act 1973. Please find herewith a link www.scotcourts.gov.uk/opinions/A305.html
Feu Duty 1
5 February 2005
Opinion of Robert Rennie
Section 9(1) of the Abolition of Feudal Tenure etc (Scotland) Act 2000 which deals with calculation of the amount of compensation a former superior can now claim for loss of feuduty following 28 November.
The subsection appears to say that the feuduty factor to be applied should be the figure "at the close of business last preceding the appointed day". The appointed day was a Sunday, so the day preceding it was a Saturday. However, as Saturday was not a business day, that means that the figure to be used is the figure published in the Scotsman on Saturday 27 November, i.e. 21. 40 as this figure published in Saturday's Scotsman reflects the figure for close of business on Friday. In the Journal of May 2000, page 6, there is a small note which states that "the figure printed [in the Scotsman] is for redemption as at that date."
My own view is that it is indeed perfectly straightforward in that the correct day of calculation is close of business on Friday which will in fact be the figure published on Saturday.
