Ways to Avoid Property Frauds

There were media reports that an owner was suspected of concealing debts when selling a property, which made the purchaser suspect that she had fallen prey to a property fraud. In the end, the transaction fell through and the purchaser suffered losses. This begs the question of whether there is any way to minimise the risks involved.

In fact, the purchaser should conduct a land search before entering into a provisional or formal agreement for sale and purchase, or before paying an initial or further deposit. In addition to the owner's particulars, the purchaser should check for any incumbrances such as any mortgages or other liabilities against the property. The purchaser should also seek professional legal advice and assess the risks involved before making decision.

As a reference, there are suggestions from the industry that before entering into a provisional agreement for sale and purchase, the purchaser may seek professional legal advice as to whether or not clauses to better protect the purchaser could be incorporated into the agreement. For example, if the vendor is subject to an undischarged mortgage with an “all-monies” clause, the vendor's solicitor shall stakehold the deposit paid by the purchaser until the transaction is completed.