64.1 Introduction

This section of the Manual contains a summarised version of the salient points in Module 15 (Identity Fraud) of the Registration Officer Development Programme.

Except in a very few cases, the parties to the deed (the granter(s) and grantee(s) in a transfer of title transaction and the granters and lenders in a standard security transaction) will have been represented by solicitors. The system of land registration in Scotland operates on the basis of trusted professionals, solicitors, representing their clients’ interests in conveyancing transactions. Solicitors are under a professional duty to satisfy themselves as to the identity of their clients. The Law Society of Scotland recommends that a solicitor should verify a client's identity by means of documentary evidence, and the Keeper relies on solicitors having carried out these checks.

It is important to set the context in which a fraudulent conveyancing transaction may occur prior to registration in either the Land Register or the General Register of Sasines (the Sasine Register). Identity fraud occurs when someone pretends to be the owner of property, or in a situation where the person pretends to be authorised to sign deeds on behalf of the owner (e.g. where the owner is a corporate body). The impersonator would typically sign the deed pretending to be the true owner. Fraud can also occur where a person tampers with a deed already signed by the true owner. In such situations the fraudulent deed would then be submitted to the Keeper as part of an application for registration in the Land Register or on its own in the Sasine Register.

Table of Contents

64.2 Indicators of identity fraud

Where a fraud has been committed affecting property it will seldom be apparent to the Keeper from an examination of the deed(s) that accompany the application for registration in either the Sasine Register or the Land Register. However, there are a number of factors that might indicate that fraud has occurred in a conveyancing transaction.

Indicators of fraud would commonly arise where the nature of an application for registration in the Land Register or a deed in the Sasine Register stands out and arouses suspicion because something in the deeds is obviously wrong, or false, or misleading, or strikes the registration officer as being unusual. The following examples might give rise to a suspicion that a transaction could be fraudulent, but these do not necessarily mean that a fraud has been committed. Remember that suspicion is only suspicion; it does not automatically follow that a fraud has been committed.

64.2.1. Factors relating to the transaction

A significant disparity between the price paid in the current transaction when compared with the price paid in the previous transaction (shown in the Proprietorship Section of the title sheet), particularly where there are two or more sales of the property in quick succession.
A series of standard securities is registered over a residential property in a short space of time. This is an unusual situation and may point to a mortgage fraud in which a fraudster applies for mortgage loans over a property to several lenders at the same time, using a different solicitor for each loan.

64.2.2. Factors relating to the parties

A discrepancy between the name or designation of the party granting the deed and the party which holds the registered interest – e.g. a company with a registered title in the Land Register purports to convey it or grant a security over it, but the company’s name or designation are different from those in the title sheet. (Note; A company's designation in a deed usually includes the company number, and may also state the country in which the company is registered, and/or the address of its registered office or place of business. It is not the Keeper's practice to specify that particular details must be included, provided that the deed adequately identifies the company. However, all details of the designation which are included in the deed must of course be reflected in the title sheet)
A discrepancy may point to an instance of identity fraud where a genuine company is impersonated by fraudsters, but it is also possible that the company has merely changed its registered office. If the company number is given, this should always be checked as a company’s number will always remain the same even if other details change.
A close relationship between the parties – e.g.

a) transfers between a company and a private individual whose name is similar to that of the company or of one of its directors

b) transactions involving different parties with the same address, which might indicate that one party is impersonating another member of their family

64.2.3. Factors relating to the deed

Altered documents – e.g. deeds where the pages appear to have been printed or folded at different times, or where the type face differs from one page to another, or the text has been 'squashed' to fit a page.
Signatures – e.g. where signatures on a deed are in similar handwriting (pressure or shape of characters), or where a person's signature differs from the version of their signature which appears in a previous deed.
Typed copies of pro forma styles of deed.
Poorly typed deeds, deeds containing numerous spelling errors, or deeds that appear to be ‘home-made’ rather than professionally drafted by a solicitor.
Variations from the known standard version of the name and/or designation of a lending institution (e.g. where there is a discrepancy between what is in the deed and what appears on the LRS pick list). An example would be a deed in favour of 'XY Building Society' if that organisation became 'XY plc' a number of years ago. This might indicate that a pro forma deed has been hoarded by a fraudster for use at some time in the future.

64.3 Implications

In the situation where a fraudulent property transaction has been registered in the Land Register or recorded in the Sasine Register, in order to restore the register to the true position the victim, upon discovering the fraud, will require to have the fraudulent deed reduced by the Court of Session by means of a Decree of Reduction. Where the title to the property is recorded in the Sasine Register, the Decree of Reduction can be recorded in the Sasine Register and that deed will show in any subsequent search in connection with the ownership position of the property.

Where the property is registered in the Land Register, the existence of the Decree of Reduction will create an inaccuracy in the register as regards the registered title. This would lead to a consideration as to whether rectification of the register is permitted under section 9 of the Land Registration (Scotland) Act 1979. Essentially, under this provision in the Act, rectification of the register by the Keeper or the courts is not permissible unless the proprietor in possession of the property has been fraudulent or careless or consents to the rectification. If rectification of the register is not possible, then the person who has suffered loss as a consequence of the fraudulent transaction may be entitled to claim indemnity under section 12 of the Act.

64.4 Action to be taken where identity fraud is suspected

Registration officers should process an application on the basis of the deeds and documents in that application. Unless suspicions are aroused either because of the occurrence of one or more of the above potential indicators or because of the nature or content of an application, registration officers are not expected to check for 'hidden' factors which might indicate an identity fraud (e.g. by looking at archived deeds for previous versions of a granter's signature, or by searching in all cases of sales for prices in previous transactions or the values of neighbouring properties).

In any case where the registration officer considers that there is a suspicion of fraud, they should refer the case to their team leader who should liaise with the Legal Services Fraud Officer. The team leader should check for relevant archived information and then refer the application, with any supporting archived material, to Legal Services. It is important to keep the potential incident confidential. The registration officer and team leader must refrain from discussing the case with colleagues, as this may lead to the circulation of unsubstantiated allegations. Registration staff and team leaders must not contact the parties to a transaction or their solicitors with regard to an allegation or suspicion of fraud, unless contact is authorised by Legal Services.

Similarly, in any case where a member of Agency staff receives an allegation that a fraud has been or is about to be committed (whether in relation to a pending application or to an existing registered title), the details of the allegation should be noted down and referred immediately to Legal Services. The allegation may, for instance, be made in a post-registration enquiry to Customer Services or in a letter or phone call to the registration officer handling an application.

The member of staff receiving the allegation should not make any comment about the allegation nor correspond with the person making the allegation and nor should they contact other parties who may be affected by it, unless authorised to do so by Legal Services. The registration officer and team leader must ensure that the documentation pertaining to the deed or application for registration which is under suspicion is kept under lock and key whilst it is within their area.

1979 Act Registration Manuals

L64 Identity Fraud