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Claire, surely not: the seller's solicitors would have (presumably) given an undertaking to redeem the mortgage, and kept the funds required to do that. The fraudster's gain would have been that much less.

Also, involving a third party such as the mortgagees might queer the fraud: the mortgagees may contact the true owner (presumably living elsewhere) about the sale and redemption requirements.

I haven't seen the case (not on Bailli yet) but from the LS article the fraud was that the fraudster wasn't the seller, but someone purporting to be the seller, and he made off with the purchase money following 'completion.' The buyer's solicitors (Mishcons) have been found liable to their client for the loss, although the rationale for this isn't wholly clear from the article: Mishcons were not negligent, but it appears that the judge found a trust, and that payment to the wrong person was a breach of trust (supposedly for not checking the seller's solicitors had taken reasonable steps to check the seller's identity). It may be that the trust argument is a vehicle to allow the buyer to be compensated by Mishcon's insurers. Even if Mishcons had sought confirmation, isn't it likely it would have been given (short of an undertaking)? The seller's solicitors should have undertaken the usual money laundering identity checks, and presumably the fraudster had forged/illicit documents to satisfy these requirements? The article says that all claims against the purported seller's lawyers failed, so it appears that they had done everything required to satisfy themselves as to identity.

Perhaps a partial answer to this type of fraud is for house owners not to formally redeem their mortgages when the mortgage is paid off (also saving - for the time being - the redemption fee) until they come to sell?

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