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Identity fraud reaches new levels of audacity in fraudulent property transfer

In one of the most audacious cases of identity fraud committed in South Africa to date, fraudsters with an intricate knowledge of the property system have stolen millions from a bank and sold an upmarket home without the knowledge of the owners.
 
“This case should set alarm bells ringing for anyone who owns a residential property of high value that has been on the market for a while,” says Penny Chenery, a director at Hogan Lovells formerly known Routledge Modise who is acting for the couple who had their Sandhurst property "stolen" by the fraudsters.
 
She says a “terrifying” aspect of the case is that the transaction seems legitimate in every respect. “All the paperwork was handled correctly and passed through every check, including those at the bank’s loan department and the Deeds Office.”
 
In fact, a valuation was conducted and submitted to the bank and this, together with faked loan application documentation, was convincing enough for the bank’s attorneys to pay R11.8 million loan into a trust account provided by the supposed conveyancing attorney .
 
“The documentation was so well forged that it appeared in order to  the Deeds Office resulting in the property being transferred out of the owners’ name. As a result, the owners have approached  the High Court for the return of their property.”
 
The fraud, completed in March 2013 when the transfer went through, only came to light recently when the owners  received an offer of purchase for  the house, which had been on the market for about a year and stood vacant for that period of time under control of a guard. They then discovered that their house had been sold and transferred out of their name.
 
Through Chenery, the couple successfully launched an urgent High Court application to have an interdict placed over the property. Next, they will seek a court order to transfer the property   back into their name, free of the R11.8 million bond now attached to it, which hearing is scheduled for early December 2013.

“Reversing the damage has been extremely expensive for the owners – and bear in mind that none of this was of their own doing,” she says. “As a conveyancer, it is fascinating to me that this could be done at all. It seems to be that only a person with conveyancing knowledge or someone with a very good knowledge of the property registration system could have pulled this off.”
 
As this case, which is subject to a full forensic investigation, could be salutary for other owners of high-value real estate, Chenery notes the following points about the transaction:

 - After being renovated, the Sandhurst house was placed on the market for a purchase price of R26 million. It had been on the market for about a year when the fraudulent transfer was concluded in March 2013.

- Both the sellers and the person whose signature was on the purchase agreement were the victims of identity theft. Their signatures on the documentation were expertly forged. Copies of the purchaser's  identity documents, with falsified photographs replacing theirs, were presented when the R11.8 million loan agreement was signed with the conveyancing attorneys appointed by the bank.

- The fraudsters were represented by a non-existent firm of attorneys operating from rented premises with a real telephone number. However, they impersonated a bona fide conveyancing attorney from another province whose name was forged on the relevant documentation.

- The R11.8 million loan granted by the bank was withdrawn piecemeal in cash from the bank account until nothing was left.

- Every step of the transaction was fraudulent, including the purchase offer, loan application, rates certificate, transfer duty receipt and transfer documentation.

Chenery says it is critical for high-value property owners who put their property on the market to protect themselves against fraudsters.
 
They can do this by being vigilant with regards to instructing reputable estate agent who allow restricted access to the property and keep details of all persons allowed to view the property and by asking their attorneys to conduct a Deeds Office record search (known as “Winsearch”) to ensure their property is still registered in their name on a regular basis.
 
“If you find that your property has been transferred out of your name, contact us immediately,” she says. “It is vital to act quickly because the new ‘owner’ could sell the property again or draw in other innocent parties and register further bonds over the property. Time is of the essence.”



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