How to get away with £1.3 million in cash? Start by renting a house...
December 14, 2015 7:20 AM   Subscribe

 
We dull middle-class folk go through most of our lives instinctively trusting professionals with whom we do business. It seems reasonable to expect estate agents to meet some minimal standards. And if we put transactions in the hands of established solicitors, we assume their diligence procedures protect us against scams.
You've lead a fortunate live, Max Hastings. Though I guess if you're betrayed by a business professional too severely you're often bounced from the middle-class and your life gets more "interesting", so it's rather tautologically true.
posted by benito.strauss at 7:32 AM on December 14, 2015 [11 favorites]


That's a crazy story and I do feel bad for the victims. Definitely getting the same weird vibe I get from the NYT style section though. When someone fortunate enough to own a $2 million house in West London that isn't even their primary residence can be labeled "dull middle-class folk" it makes me tilt my head and go ehhh? Doesn't mean I'm not sympathetic, but dang that is a first world problem if ever there was one.

I also feel somewhat naïve for assuming the sort of person who could just drop $2million on a house without needing a mortgage or anything doesn't have a pack of vicious predatory lawyers checking their every transaction. If I was that wealthy I feel like I wouldn't buy a used car without checking with a forensic accountant. (I know the story said she had a solicitor who just messed up, but it's still crazy to me that that much money can be lost so quickly with apparently so little due diligence being done.)
posted by Wretch729 at 7:41 AM on December 14, 2015 [26 favorites]


There's a picture of the house in the article. Apartment rental scams have been common for years, so I guess I'm not surprised by this, but £1.3 million for that house? I wonder what it rents for.
posted by Automocar at 7:41 AM on December 14, 2015


ack, dailymail link warning please. now I gotta go cleanse my browser.

* after reading link in private window *

What wretch729 said, maybe it was just a huge inheritance and the young lady doesn't really have much business sense? As far as what they call "a trend", I'd need more proof that it's that prolific, as this is maybe the 2nd or 3rd time I'd heard of such a scam, and the first where the crooks are individuals and not a bank.
posted by numaner at 7:46 AM on December 14, 2015 [5 favorites]


As if £1.3 million for a dumpy little rowhouse wasn't a crime already.
posted by octothorpe at 7:54 AM on December 14, 2015 [8 favorites]


London prices have gone nuts (again) & ordinary 3 bed terraces in average areas are now worth > £1million, so that bit isn’t too surprising.
posted by pharm at 7:54 AM on December 14, 2015 [1 favorite]


When someone fortunate enough to own a $2 million house in West London that isn't even their primary residence can be labeled "dull middle-class folk" it makes me tilt my head and go ehhh?

From the article it kind of sounds like it was his wife's family home. Maybe inherited from her parents or something. It's sounds like they owned it for a long time as well. However it happened, they've probably owned it for a long time, when it was only worth a few hundred thousand pounds.

Also, they are both relatively old. Going into retirement it's not surprising to find middle-class families with several million dollars in assets.

maybe it was just a huge inheritance and the young lady doesn't really have much business sense?

If it's anything like the US, the real loser is her solicitor, and more specifically the solicitors professional liability insurance provider. She will still probably have to fight a legal battle or two given the sum, but yeah, I doubt she'll walk away from this without her money.
posted by mayonnaises at 7:57 AM on December 14, 2015 [7 favorites]


For once, an original article on the Daily Mail! And most of the spelling is correct. Sure could have done with some fact checking and alternate perspectives though. I guess this is more of an op/ed than a news article?

In the US it's pretty much mandatory to buy title insurance as part of a house purchase. It's expensive too, like 0.4% of the purchase price. I wonder if it would pay out in this circumstance?
posted by Nelson at 7:59 AM on December 14, 2015 [3 favorites]


Max Hastings! That man can write a military history book.

Title insurance would absolutely have paid out to the buyer. Except you might not buy it for a cash transaction.

Of course the US is like the only country in the world where you actually need title insurance because our land registry rules are so disparate and non-standardized. In this case the land registry did the job, the real issue is that the check was out of escrow before the land registry signed off on the transfer - something that is only possible if you don't have a mortgage.
posted by JPD at 8:06 AM on December 14, 2015 [2 favorites]


I guess this is more of an op/ed than a news article?

How do you qualify a report by the husband of the owner / almost victim written in a semi-casual style but is filed in the "News" section of the site?

I'm not being snarky here, just genuinely conflicted. The Daily Mail has its reputation, but this is kind of uncommon territory for any reporters in general.
posted by numaner at 8:11 AM on December 14, 2015 [2 favorites]


I've heard of scams like this for rental units. What I thought was fascinating about it was that they managed to get through the whole sales process without a hitch until they went to register it --- renting an apartment from a small landlord can often be a handshake and cash deal in 2015; buying means lawyers. But I guess that's what I thought was indicative, too --- the market's so crazy, and multi-million dollar cash purchases between long distance buyers so frequent, that there was no real point at which anyone involved in the transaction might come face to face with the fraudster and detect something hinky.

Re: title insurance... Title insurance as a whole is a useless extortion racket meant to pad banks' bottom lines, and I don't know that it ever paid out for anything really. But even in the US I doubt it would have been involved here --- while it is possible to buy an owner's title policy, the vast majority of title policies are sold because banks require them to issue a mortgage, and they only guarantee the bank's funds. All cash purchase=no title requirement.
posted by Diablevert at 8:11 AM on December 14, 2015 [2 favorites]


Banks don't own title insurers, and title insurance used to actually require work. These days the racket is that prices are so high when the cost of the title search has come down so much. They pay out about 5% of premiums in claims which isn't a lot. In theory the internet should make it go away, but the law gets in the way.

In other countries title search is done by the central government and is funded through fees. For example in the UK it looks like it costs about 5bps as compared to 40bps for title insurance in the US. Granted - title insurance covers other liens as well.
posted by JPD at 8:21 AM on December 14, 2015


I think Hastings is just being self-deprecating in calling himself middle-class, or possibly he is old school enough to believe that since he is not part of the aristocracy, he must be middle-class by default.
posted by crocomancer at 8:24 AM on December 14, 2015 [9 favorites]


This is the ultimate Daily Mail horror story. White Rich People Buying Houses HORROR!

A variant on this has just happened to a friend of mine. In his case the tenants moved out but copied the keys and he didn't change the locks.
He thought it had been empty (It's his old place in another town so he doesn't get time to check on it often) but the old tenant had been renting it out.
They only discovered the fraud when the new illegal tenant (we assumed all was entirely above board) registered for housing benefit.
posted by Just this guy, y'know at 8:39 AM on December 14, 2015


"I don't know that it ever paid out for anything really"

Peoria's a little unusual due to a localized war and attempted cover-up by territorial governor Ninian Edwards who, upon finding out that Congress was sorta pissed he'd slaughtered a whole city of American citizens for spite when he couldn't capture the Native war leader he was supposed to be capturing, quickly issued duplicate land titles to men willing to move there on short notice and lie about how long they'd been there. Anyway, land title disputes remain INCREDIBLY COMMON here, despite multiple acts of Congress intended to settle the disputes over the last 200 years. (Fun Hamiltrash fact: one of Alexander Hamilton's sons was the first lawyer hired by the newly-organized Peoria County, charged with getting a clear enough title to a piece of land that they could stick a county hall in it. That's right, land records here are so disputed that the county couldn't build itself. They also had to litigate land rights disputes to be able to build roads.)

Anyway, you definitely want your title searched and its not unusual to have to settle the title in older platted areas. Still. 200 years later. Developers clear titles when they build a whole subdivision, but in historic parts of the city its not unusual to try to sell a small parcel and find a disputed claim where literally everyone is dead but the property's been sold 15 times with the unclear title still hanging over it, either due to bad record keeping and title searches, or to everyone deciding they'd just risk it. It gets more unusual with time, but people were still bringing lawsuits under the original Congressional settlement order passed in about 1815 in the late 1970s and early 1980s.

Anyway, yeah, title insurance pays for that.
posted by Eyebrows McGee at 8:45 AM on December 14, 2015 [18 favorites]


it kind of sounds like it was his wife's family home. Maybe inherited from her parents or something.

Hmm. I read it as "buy-to-let investment property", from the mention of let to tenants + intended as children's inheritance + lack of any human interest lines about this being her dearly beloved aunt's old house or the house where she spent her childhood. But I could well be wrong!

(How-ever, the massive rise in buy-to-let and structural supports in place to do that - BTL mortgages, tax relief (now changing though) - is one of the reasons the UK property market is a mess in the first place - first-time buyers priced out of homes, amateur landlords not understanding or learning about their legal responsibilities, and a shitty market of insecure expensive tenancies. Which, you know, is not as bad as someone taking your money for a house they don't own to sell you in the first place, but I would humbly argue is a much more widespread and generally concerning problem.)
posted by Catseye at 8:48 AM on December 14, 2015 [6 favorites]


I think Hastings is just being self-deprecating in calling himself middle-class, or possibly he is old school enough to believe that since he is not part of the aristocracy, he must be middle-class by default.

I would guess this is it. He's a former Editor-in-Chief at the Daily Telegraph so was operational at a high level of the wider British political system.
posted by biffa at 8:49 AM on December 14, 2015 [3 favorites]


It seems odd to hand over the entire payment without getting a title in return.

I can understand losing a deposit or other percentage, but if I'm handing over a million pounds, I'd want an officially stamped, notarized, whatever-else-you-need-in-the-UK piece of paper in my hand.

Though, I'm not sure how out of town sales work in the U.S., come to think of it.
When we bought our house, there were a million pieces of paper to sign.
I imagine if the seller was "in Chicago", we'd just have been faxing them back and forth, which honestly, you'd have no idea who is on the other end.
posted by madajb at 8:54 AM on December 14, 2015 [1 favorite]


We bought our house from a family who'd owned it since 1905 so we wanted a really thorough title search since no one had looked at any of the legal documents in over a century at that point who know how many leans could have accumulated in that span of time.
posted by octothorpe at 8:56 AM on December 14, 2015 [1 favorite]


I'm guessing that whoever it was that could drop a couple of million in cash for a house wasn't exactly impoverished by the scam, so I'm not too worked up over it compared to some property scams. Still, you'd think at least minimal research would have turned up the bills pointing at a different address, and at least minimal due diligence would have sent mail that way. I'd think someone is going to owe a lot of money to the woman in question, though maybe British law works differently.
posted by tavella at 9:13 AM on December 14, 2015


That's a crazy story and I do feel bad for the victims. Definitely getting the same weird vibe I get from the NYT style section though. When someone fortunate enough to own a $2 million house in West London that isn't even their primary residence can be labeled "dull middle-class folk" it makes me tilt my head and go ehhh? Doesn't mean I'm not sympathetic, but dang that is a first world problem if ever there was one.

Not at all. The vast majority of people living in first-world nations do not have second homes, and the wealthier people living in developing nations may have them. It's not a first-world problem, it's a rich person problem. We misunderstand the world badly when we fail to consider that economic class creates immense social distinctions within every society, even those that are poorer and less materially developed overall in relative terms.
posted by clockzero at 9:31 AM on December 14, 2015 [4 favorites]


In Texas the title insurance premiums are set by the state, freeing their customers from the indignity of rate-shopping. When we bought our house the fee was 0.6%. Baked into that 0.6% was a referral fee to the realtor who told us which title insurance company to use.

Then when we refinanced two years later and used the same title company, they had the grace to offer us a 30% discount.

The top 4 companies control 2/3 of the market, and they like the Texas title insurance market just fine the way it is, thank you very much.
posted by etherist at 9:35 AM on December 14, 2015 [1 favorite]


One of the many surprising things about this is that there is apparently an even worse letting agency out there than Foxton's.
posted by Sonny Jim at 9:48 AM on December 14, 2015 [5 favorites]


"Middle class" in Britain doesn't mean what it does in America. Regular folks in America, even if they're basically living paycheck to paycheck, will describe themselves as middle class; that level of Brit (of which I am one) might be aspirational enough to claim middle-class status, but being working class is not something to be disdained the way it is in the U.S.

For more context, Max Hastings is a military journalist and reporter. He went to public school and Oxford, but he's still regarded as solidly middle class.

I find it amazing that the letting agency didn't even do the most basic paperwork. I had to jump through thousands of hoops when I bought and sold my flat.
posted by vickyverky at 10:11 AM on December 14, 2015 [8 favorites]


He went to public school and Oxford,

And for you folks playing at home, public school = private school in America.
posted by Melismata at 10:14 AM on December 14, 2015 [3 favorites]


Love this British-ism:

I am unable to name the firm which handled the letting of Penny’s house, because her lawyer is roasting them over a slow fire and they are not quite cooked.
posted by theorique at 10:37 AM on December 14, 2015 [4 favorites]


We learned that a woman from Catford, South-East London, had changed her name to ‘Penelope Hastings’ by deed poll. Having done this, she secured a passport declaring her to be ‘Penelope Hastings’.

...

A spokesman said [the estate agency] had done nothing wrong and it was not a case of false identity because the woman ‘vendor’ was in possession of a genuine document (the passport).


That's fascinating.
posted by Nonsteroidal Anti-Inflammatory Drug at 10:49 AM on December 14, 2015


I do find the assertion that they aren't responsible for any verification as long as someone shows up with the same name startling. People with the name James Smith better watch out, I guess.
posted by tavella at 10:59 AM on December 14, 2015 [1 favorite]


Previously, on MetaFilter, and on this side of the Atlantic. I read the linked article with mixed horror and fascination.
posted by Shepherd at 12:22 PM on December 14, 2015


My understanding is that the UK does not have title insurance -- instead the official register of deeds is maintained by the government, and they are financially responsible if they screw up or are duped. Of course in this case the buyer doesn't seem to have bothered to consult them, so she may be on the hook. But it's a very different system with different failure modes.
posted by miyabo at 12:40 PM on December 14, 2015 [1 favorite]


I'm guessing that whoever it was that could drop a couple of million in cash for a house wasn't exactly impoverished by the scam, so I'm not too worked up over it compared to some property scams.

It's interesting to me the assumptions people make to avoid admitting that someone with a million pounds in cash to buy a house in London can't actually be a victim. My partner once bought a house for cash with inherited money; the cost of the house represented more than half of the inheritance. We know literally nothing about this young woman except that she bought a house for cash. Sure, she could be rolling in dough to the extent that this is the equivalent to you or me of splurging on an unusually expensive pair of boots at the mall on a Saturday. She could also be someone who, for the first and only time in her life, had that much money because she'd just inherited from her own middle-class parents. I'm a middle-class middle-aged person in the US, and my dad is middle-class, too, but from things I know about the value of property and a couple of things my mother said to me in years past about their savings, I'll be surprised if my father's estate is worth less than a million dollars. (Not that I expect any of it; I've been disowned.)

So, it's really easy for me to imagine a young person, inheritance in hand, buying a house with it because it seems like a solid and safe place to put that kind of money, and then, you have a house! This scam could have wiped her out.

I'm not saying it did. I'm saying: there's definitely more than one possibility in terms of how much damage this scam has done to the buyer. It's not necessary to make up a story that frees you from the burden of feeling compassion; you're not obligated to in any case.

I do find the assertion that they aren't responsible for any verification as long as someone shows up with the same name startling.

I was once the victim of identity theft. A woman used my social security number to get two auto loans, which she then defaulted on. The police detective who looked into the situation suspected the SS number was provided by a sketchy car salesman at one of those "Big Dave's Used Car" type of lots.

When I was on the phone with the bank—Bank of America—and asked them why they had issued loans in my name to a woman with a different last name (but the same very common first name) she said, "We would have just assumed you'd married and changed your name." I was astonished that they hadn't asked for a copy of a marriage license or name change certificate, especially given that my first name was the most popular name for girls my age in the US.
posted by not that girl at 12:41 PM on December 14, 2015 [7 favorites]


It's a good thing Land Registry did its job; if it hadn't smelled a rat and had gone ahead and registered the purchaser as the new owner, the house really would have gone to her and there would be a huge hassle in trying to undo it and get the house back. This area of English law is currently very messy.
posted by Aravis76 at 12:41 PM on December 14, 2015 [2 favorites]


> I was once the victim of identity theft ... they had issued loans in my name to a woman with a different last name (but the same very common first name)
posted by not that girl

Epony-depressing.
posted by RedOrGreen at 1:11 PM on December 14, 2015 [1 favorite]


Are you required to buy title insurance for a cash sale? How is that enforced?
Also, the title would have cleared fine, here - the scammers had a person change her name and get a passport to match the registered owner.
posted by gingerest at 1:18 PM on December 14, 2015


It's interesting to me the assumptions people make to avoid admitting that someone with a million pounds in cash to buy a house in London can't actually be a victim.

Did I say she wasn't a victim? No. I just said that I wasn't as worked up about someone who has $2 million cash to blow (and more to schedule renovations and redecorations) getting conned as I am over HOAs stealing houses or poor and elderly people being rooked out of their homes by sleazy 'remortgage' companies.

As I said, I hope she gets her money back from the companies that didn't do due diligence. And of course, that the people involved in the fraud go to jail. I'm just not as distressed for her as I am for people who lost their home of decades and had their retirement destroyed.
posted by tavella at 1:33 PM on December 14, 2015


The factor I find interesting is that the sale could be considered 'concluded' before the deed was registered. Here in MA, at least, which has not a small amount in 'common' (pun intended) with British common law, keys aren't transferred and escrow is not released until the update to the registry/deed has hit the books. At least in MA, this causes quite a few sales to finalize in the registry office for that very purpose.

Is it still the case in the UK that squatters can take possession of a house?
posted by scolbath at 1:35 PM on December 14, 2015


Squatting in residential property had been a criminal offence since 2012. You can still squat in non-residential property.
posted by biffa at 2:06 PM on December 14, 2015


We don't have deeds registration in England and Wales, we have title registration. Land Registry doesn't record the transaction as such, it just changes the state register to reflect the new ownership. The sale is completed when the deed is executed, but legal title only passes when the purchaser is registered as owner. That usually happens a month or so after completion, by which time possession will have changed hands.

Squatters taking possession of a home is now a criminal offence in the UK, as of a few years ago. That said, they can still become the owners of the home via long possession, either automatically when the land is unregistered or by application to the Land Registry when the land is registered.
posted by Aravis76 at 2:07 PM on December 14, 2015 [1 favorite]


Are you required to buy title insurance for a cash sale? How is that enforced?

The one all-cash transaction I was involved with, in California, we never even discussed whether title insurance was optional. In retrospect perhaps the deal could have closed without, no mortgage issuer was insisting on it. But it wasn't even considered.

Worth noting that in California the title insurer is often also the escrow agent, the one who holds all the paperwork and money and then records the final sale document once the deal is complete. They bear the burden of making sure the transaction is handled legitimately. I still think 0.4% is an awfully steep fee to charge for that service but it does seem to insulate both sides of a transaction from something as insane as this story.

BTW all-cash transactions are not nearly as uncommon as you'd think. Some 30–40% of US home sales are all cash.
posted by Nelson at 4:14 PM on December 14, 2015 [1 favorite]


Well I'm confident that privatization of the land registry, as the Tories plan to do, will not in any way lead to an increase in this sort of thing. Not at all.
posted by fearfulsymmetry at 6:06 AM on December 18, 2015


Privatising Land Registry is a very poor dea, given the essentially adjudicative function of parts of their routine work. (They already commercially sell some of their data, which is as far as I think it should do.) But I think this type of fraud would carry on at about the same rate whether or not privatisation happens. This wasn't a Registry fuck-up, it was probably the solicitors who should have caught it before releasing the purchaser's money - if Registry had failed to catch it, the difference would have been that she could have asked the state to indemnify her for her loss when the register was changed to put the original owner back on.
posted by Aravis76 at 7:34 AM on December 18, 2015


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