A forged mortgage discharge form could land the representatives of a closed property conveyancer in court. A court has ruled that the Land Registry can sue conveyancing firm, Caffrey & Co, after a mortgage was fraudulently discharged. The ruling means that conveyancers must be able to prove that they have taken sufficient steps to satisfy themselves that documents are valid when submitting applications to the Land Registry.
Mr and Mrs Turner instructed Caffrey & Co to discharge a mortgage on their farm in favour of DB Bank. The couple provided Caffrey & Co with a discharge form they said was signed by the bank. When the Land Registry asked for proof, the Turners provided a power of attorney they claimed was from the bank authorising the signatory to complete the form. It later transpired that both forms were forgeries.
Mr Turner then bought Mrs Turner’s share of the farm with a new mortgage from Santander Bank. When DB Bank discovered that its charge over the property had been removed, it applied for it to be reinstated. The charge was restored, but ranked in priority after the loan to Santander. DB Bank then obtained an indemnity from the Land Registry against its losses.
The Land Registry in turn applied to the court for permission to sue Caffrey & Co to recover the money it paid out on the indemnity. The court decided that Caffrey & Co had “expressly or impliedly represented” that the discharge form and power of attorney were genuine and gave permission for the Land Registry to bring a case for negligent misrepresentation.
“Caffrey & Co was shut down by the SRA in 2012 but its insurers will still be on the hook if is found to have acted negligently,” said James Burgoyne, Director – Claims & Technical, Brunel Professional Risks. “The case shows the importance of taking reasonable steps to ensure that documents provided by clients are genuine.”