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Recognising signs of risk

Whatever the appeal outcome, the Mishcon de Reya fraud case holds valuable lessons for firm’s risk management strategies, advises Martina Hogg

14 March 2017

The High Court’s decision to order Mishcon de Reya to pay compensation to a client which suffered losses in a fraudulent property transaction has set hares running across the conveyancing industry. Not least among firm’s concerns, is the pretty extraordinary fact that the court came to its decision despite finding that Mishcon’s lawyers had not acted negligently.

The case is an example of an increasingly common form of property fraud, in which fraudsters identify properties which aren’t under mortgage (via Land Registry records), falsify documents to pose as the owner, and market the property for sale. Such was the case with a property Mishcon’s client Dreamvar set out to acquire in 2014.

The fraud was only discovered after the payment of £1.1m had already been transacted. Dreamvar subsequently sued the firm for negligence, with part of it...

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