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Risk Alert Feb 2013

31 January 2013

First a conveyancing scam alert

Bad news! After going quiet for a short time, the scamsters are now back and operating in various jurisdictions.

Please warn your conveyancing staff not to allow the seller to change the details of the bank into which the proceeds of the sale must be paid. If the seller insists for a valid reason, then s/he must provide you with written instructions AND proof that the new bank account is hers/his.

Where the property sold belongs to a married couple or more than one owner, then instructions MUST be obtained from both the joint owners. Too often we have the situation where the conveyancer assumes that the husband/wife will agree with his/ her spouse’s instructions. This is very often NOT the case!

 

The  R10.8 million total-incurred value of all claims notified in the first quarter of the 2012 year compares favourably with the R30.2 million incurred value of claims seen in the first quarter of 2011.

 

 
Total number of claims notified as at three months, in the past six years
Year 2012 2011 2010 2009 2008 2007
Total no of claims 94 123 127 106 87 68

Table 1 (above) shows a reduction in the number of claims notified in this period, when compared with the past three years.  

 

Comparative Analysis: Claims notified 2011 and 2012 as at 30 September 2012
Year 2012 % of total 2011 % of total
Conveyancing 24 25% 42 34%
RAF Prescription 28 29% 26 21%
RAF U/S 6 6% 7 6%
Litigation 12 13% 15 12%
General Prescription 7 7% 12 10%
Commercial 11 11% 11 9%
Other 6 7% 10 8%
Total 94 100% 123 100%

Table 2 (above) compares the numbers of claims per claim type registered in the first quarter of the 2012 and 2011 years.

 

CONVEYANCING
This quarter, there has been a pleasing turnaround in the number of claims notifications arising out of conveyancing transactions. As will be seen from Table 2 conveyancing notifications have halved year on year. Their value is R2.7 million. This is approximately 25% of the value of all claims this quarter.

 

In Q1, 10 (42%) of the 24 conveyancing claims arose out of unauthorized payment of trust funds.

The total – incurred value of these claims is R1 979 705. This is approximately 67% of the value of all conveyancing matters for the period.

 

  • Once again we urge conveyancers to impress upon their staff the importance of ensuring that payments out of trust are only made with the depositor’s WRITTEN instructions. (Please refer to my article in the May Bulletin 2/2012 and on the website (under Red Flag Areas in Conveyancing).
  • Please emphasize the need to FICA clients and to ensure that banking details are correct and belong to the correct recipient. Proof of bank details should be obtained wherever appropriate.
  • Also, please ensure that documents are signed in your presence and that identity documents are only certified when you are satisfied as to the identity of the party. We have again had the situation where a conveyancer certified the identity document of the wife without her being present. The wife knew nothing about the second bond that the husband took out on their property. Beware of imposters being brought into the office posing as one of the parties!  

Risk Alert Bulletin Feb 2013

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