How to lose your property: a note on the case of Rashid -v- Nasrullah
If a third party occupies a property you own, without your consent, for long enough, it is possible they can claim ownership to it. This is known as “adverse possession” (or squatters’ rights) and the rules vary depending on whether the land is registered or unregistered (the rules are stricter for registered land). This is, however, a lawful means of acquiring someone else’s property without their consent.
There are, of course, unlawful ways of acquiring someone else’s property without their consent, and the carrying out of fraud in property related transactions is a very hot topic. There have been a number of widely reported cases in recent years. Solicitors have to be very careful to ensure they properly identify their clients when acting in transactions and (for example) be alert to the possibility of email traffic without clients being intercepted and fraudulently replicated.
The recent case of Rashid -v- Nasrullah gives an interesting example of how the two principles mentioned above interact.
In this case, Mr Mohammed Rashid owned a property in Birmingham. In 1989 his father carried out a fraud and managed to have the property transferred to him, without Mohammed’s knowledge. The father then transferred the property to another of his sons, Farakh, in 1990.
It was not until some 20 years later that Mohammed applied to have the registered title rectified, so as to put the title back into his name, due to his father’s fraudulent actions.
His brother, Farakh, objected to this and argued that as he had been in occupation of the property for so long, without the consent of his brother Mohammed, then he was entitled, on face value, to be registered as the owner of the property by way of adverse possession (i.e. squatters’ rights). The property was unregistered and so he only needed to show occupation of the property for a period of 12 years, without anyone’s consent.
The matter went to tribunal and it rejected Farakh’s argument: it would be manifestly unjust for Mohammed to be deprived of his property as a result of forgery. However, the matter was appealed to the Court of Appeal which decided that, notwithstanding the forgery, Farakh was able to claim the property by way of adverse possession. The judge noted “it is impossible not to feel sympathy for the victim of a brazen fraud of this kind and to wish to deprive a scoundrel such as this appellant of the benefit. However, correctly analysed, the outcome in this case is not the result of fraud but of the true owner’s subsequent failure to take effective action to challenge it.”
Therefore, although Farakh’s claim based on forgery could be defeated, his claim based on squatters’ rights could not, because that claim was not reliant on the forgery that had taken place. Farakh therefore kept the property, to Mohammed’s cost.
Where a fraudster is able to successfully carry out a fraudulent property transaction and then disappears with the purchase monies paid by an innocent buyer, it can lead to entirely unsatisfactory and expensive court proceedings over who should bear the loss; the innocent true owner of the property, an innocent buyer, either (or both) of their innocent solicitors or the Land Registry.
In reality, there is no satisfactory outcome and there is no substitute for being proactive in monitoring properties you own, particularly where they are rented or occupied. The Land Registry offers further advice (and, with registered land, can provide property alerts). For further information visit their website: www.gov.uk/protect-land-property-from-fraud.
Luke Cain is a solicitor in the Property department at Barker Gotelee Solicitors in Suffolk.
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