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Tribunal Corrects Mistake on the Land Register Arising From Fraud

It would be very convenient if the Land Registry always held a completely accurate record of exactly who owns which property, but that is sadly not the case. The First-tier Tribunal (FTT) made that point when stepping in to correct a mistake on the register arising from fraud.

houseThe case concerned a bankrupt man who had paid £75,000 for a suburban house and was for 17 years its registered owner. On the face of it, he then sold the property to a Belize-registered company for £36,000, a sum just sufficient to pay off the mortgage and the costs of the transaction. After a property transfer was filed with the Land Registry, the company was registered as the house’s new proprietor.

When the man’s trustees in bankruptcy launched proceedings, the FTT found on the basis of expert handwriting evidence that his signatures on the transfer and other documents were forgeries. As a result, he had no idea that his property had been transferred to the company at a very significant undervalue – it had later been put on the market for £280,000 – until after the event.

Whilst stopping short of finding that the company was party to the fraud, the FTT ruled that justice demanded that the mistake on the register be rectified. On the basis that the transfer was void, it directed the Chief Land Registrar to substitute the trustees in bankruptcy as the property’s registered owners.

The FTT found that the company was aware that it was purchasing the property for less than its true value. If it wished to claim back the money it had paid for the house from the trustees, it would have to establish that it was not guilty of fraud and that there had been no lack of care on its part. It would in any event have to stand in line with the man’s other creditors.