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    • mamz001
    • By mamz001 14th Jun 17, 12:28 PM
    • 16Posts
    • 1Thanks
    mamz001
    Fraud by developer against a new build
    • #1
    • 14th Jun 17, 12:28 PM
    Fraud by developer against a new build 14th Jun 17 at 12:28 PM
    Hello All,


    Hoping someone can give me some advice the context is a bit long so please bear with me.

    I put down a deposit for a new build flat near the end of last year; it was a 40% deposit upon exchange which was done Dec 2016. The works were meant to start Feb 2017 but never did due to some existing issue. However in May 2017, my solicitor told me the developer has stopped responding and no works has started the developer's solicitor told my solicitor that the developer has stopped responding to them too. My solicitor advised that I am a victim of money laundering at the beginning of June.

    I found out about all this early June, since then I have come across 10 other victims who have all paid a 60% deposit amount. All funds were transferred to the developer's solicitor by our solicitor, the developer's solicitor released all the funds to his client, my solicitor has reported the developer's solicitor to the SRA, as that is against the accounting law, they should have never released all the funds to the developer especially when no works has commenced.
    The developer is nowhere to be found and may have fled the country with the money, since I found out about this fraud, myself and the 10 other victims have appointed a litigation solicitor (Harry). Harry managed to track down that the developer's bank is with Barclays and asked Barclays for a statement for all the transaction made in that account. Barclays confirmed the account is closed but they can help answer Harry's question if he gives all our names to the bank, Harry did this yesterday.

    My question is, is there a chance Barclays can compensate us since the fraudulent money was all transferred to one of their accounts? Harry has asked them the question too if Barclays can compensate, but I thought let me try to investigate a bit myself. Any help greatly appreciated at this difficult time and happy to answer any questions.
Page 2
    • Guest101
    • By Guest101 14th Jun 17, 2:45 PM
    • 13,943 Posts
    • 13,445 Thanks
    Guest101
    Could someone clarify at what point money should be released to the vendor? My understanding was it happens at completion ... I guess I'm wrong?
    Originally posted by jbainbridge
    Not ways, but typically.


    This is slightly different as they're buying off-plan and so exchange early on - usually to secure the property at a cheaper rate.
    • saajan_12
    • By saajan_12 14th Jun 17, 2:48 PM
    • 460 Posts
    • 286 Thanks
    saajan_12
    Money laundering is essentially trying to make 'dirty' money (e.g. which originated from criminal activities) look 'clean' by funneling it through legitimate looking businesses. Here, your money (presumably) originated from legitimate work/income, so there's no issue of 'laundering' it. It sounds more like fraud.


    Then paid the remaining 30% upon exchange, again my solicitor did all the checks etc that a conveyancing solicitor would, however it has come to light that the developer never owned the building, which he was going to redevelop into new flats. Looks like my solicitor may have not done all the relevant checks.

    Initially there was a letter claiming they have assets, which was done by the developer's solicitor but it has come to light they have no assets, it was all a lie.
    Originally posted by mamz001
    What checks did the solicitor do on who owned the building - this should be a standard one. Also, can you prove your deposit was paid on the basis of them having assets? You may have a claim against the developer's solicitor directly, or against you original solicitor (who may claim against professional insurance or sue the developer's solicitor in turn).

    However I would think carefully about ploughing more money into the search, especially against the developer. You would have to prove you are owed the money, obtain a CCJ, and then get bailliffs involved to actually collect across borders. This may be more likely against either solicitors, but I don't think it's worth the risk against the developer.
    • mamz001
    • By mamz001 14th Jun 17, 2:49 PM
    • 16 Posts
    • 1 Thanks
    mamz001
    The contract that about 99.9% of home buyers in this country use says that the money is transferred to the vendor on completion.

    But a contract can anything you like... it could say the money is transferred 6 months in advance of completion or 10 years after completion. As long as both parties agree.
    Originally posted by eddddy
    That was my understanding too, that funds would be released in the end although I did not find this information on the contract, however within the contract it does say the developer would build the flats all at their own expense so none of our money is actually required by them in order to finish completion, yet the developer's solicitor released the funds. My own conveyancing solicitor told me, the funds will stay in a client account and the developer's solicitor should release it to the developer upon completion of the project. This makes me thing the developer's solicitor was part of all this.
    • mamz001
    • By mamz001 14th Jun 17, 2:54 PM
    • 16 Posts
    • 1 Thanks
    mamz001
    However I would think carefully about ploughing more money into the search, especially against the developer. You would have to prove you are owed the money, obtain a CCJ, and then get bailliffs involved to actually collect across borders. This may be more likely against either solicitors, but I don't think it's worth the risk against the developer.
    Originally posted by saajan_12
    Yes the detective works more on a no find no fee basis, I think the way forward is to claim via the solicitor's indemnity insurance. In terms of the assets the developer has, it was another solicitor who authorised this information, it was on their letter headed paper. Harry spoke to those solicitors who said apparently the developer 'stole' the letter headed paper and wrote all that up himself about him having assets worth millions. It's quite confusing.
    • teddysmum
    • By teddysmum 14th Jun 17, 3:02 PM
    • 7,750 Posts
    • 4,584 Thanks
    teddysmum
    So the OP's solicitor and the others along the way are all dodgy, so will this solicitor's indemnity insurance be valid?


    Poor OP could end up even worse off with no pay out and Harry's probably expensive bill to cover (shared by the other 'vendors'?).
    • mamz001
    • By mamz001 14th Jun 17, 3:08 PM
    • 16 Posts
    • 1 Thanks
    mamz001
    So the OP's solicitor and the others along the way are all dodgy, so will this solicitor's indemnity insurance be valid?


    Poor OP could end up even worse off with no pay out and Harry's probably expensive bill to cover (shared by the other 'vendors'?).
    Originally posted by teddysmum
    My hunch says my conveyancing solicitors were negligent as in they just took the word from the managing agent (who may also be involved) and went with it. They didn't even perform land registry checks. Harry's bills are expensive especially getting a court order to freeze the developer's bank account and to go through the statements, but at least the costs are split into 10 of us. I spoke to a few solicitors and so did some of the other vendors and so far they all said there's a good chance we will win the case but most likely through claiming against the solicitor's indemnity insurance. Let's see, I am not going down without a fight!
    • ciderboy2009
    • By ciderboy2009 14th Jun 17, 4:43 PM
    • 250 Posts
    • 212 Thanks
    ciderboy2009
    I would say forget about finding the developer & freezing bank accounts.

    If the developer's solicitor should have retained the funds in a client account then they are at fault and a claim should be made against them.

    It sounds to me that 'Harry' is just out to make himself as much work as possible which isn't actually required.
    • mamz001
    • By mamz001 14th Jun 17, 4:54 PM
    • 16 Posts
    • 1 Thanks
    mamz001
    I would say forget about finding the developer & freezing bank accounts.

    If the developer's solicitor should have retained the funds in a client account then they are at fault and a claim should be made against them.

    It sounds to me that 'Harry' is just out to make himself as much work as possible which isn't actually required.
    Originally posted by ciderboy2009
    That's what us victims thought too, but then after speaking to a few solicitors some say, in order to claim the insurance you have to mitigate your losses and check that all other routes to claim your money back have been exhausted first, otherwise the insurance company may refuse to pay out since you did not try to locate the funds first?

    Although there has been a solicitor or two who said to take the route of directly claiming against the solicitor's indemnity insurance.

    Do you know if we have to mitigate our losses before claiming through insurance?
    • silvercar
    • By silvercar 14th Jun 17, 4:57 PM
    • 35,260 Posts
    • 148,788 Thanks
    silvercar
    That's what us victims thought too, but then after speaking to a few solicitors some say, in order to claim the insurance you have to mitigate your losses and check that all other routes to claim your money back have been exhausted first, otherwise the insurance company may refuse to pay out since you did not try to locate the funds first?

    Although there has been a solicitor or two who said to take the route of directly claiming against the solicitor's indemnity insurance.

    Do you know if we have to mitigate our losses before claiming through insurance?
    Originally posted by mamz001
    I would say that you claim from the developer's solicitor. Let them mitigate their losses not you.

    I would also check that your solicitor gave instruction that your money should be held by the developer's solicitor and not passed on.
    • ThePants999
    • By ThePants999 14th Jun 17, 5:07 PM
    • 656 Posts
    • 737 Thanks
    ThePants999
    I would say that you claim from the developer's solicitor. Let them mitigate their losses not you.
    Originally posted by silvercar
    This is surely key - it's the solicitor who's insured, not you. My understanding was that you don't claim on their insurance, you sue them, and they claim on their insurance. Meeting the requirements of their insurance (such as mitigating losses) is surely their problem.
    • mortgageFTB
    • By mortgageFTB 14th Jun 17, 6:57 PM
    • 93 Posts
    • 85 Thanks
    mortgageFTB
    People, Chill, this is so obviously a windup thread.

    Nobody would be thick enough to pay 60% of a house, potentially hundreds of thousands of £ for something that doesn't yet exist.
    • mamz001
    • By mamz001 15th Jun 17, 10:34 AM
    • 16 Posts
    • 1 Thanks
    mamz001
    People, Chill, this is so obviously a windup thread.
    Originally posted by mortgageFTB
    Absolute Genius!
    • DumbMuscle
    • By DumbMuscle 15th Jun 17, 10:45 AM
    • 134 Posts
    • 139 Thanks
    DumbMuscle
    People, Chill, this is so obviously a windup thread.

    Nobody would be thick enough to pay 60% of a house, potentially hundreds of thousands of £ for something that doesn't yet exist.
    Originally posted by mortgageFTB
    Even if this is a windup thread (and I think you underestimate the limits of human stupidity), it's bringing out some useful information about indemnity insurance, new builds, and the proper ways to do things.
    • silvercar
    • By silvercar 15th Jun 17, 11:51 AM
    • 35,260 Posts
    • 148,788 Thanks
    silvercar
    People, Chill, this is so obviously a windup thread.

    Nobody would be thick enough to pay 60% of a house, potentially hundreds of thousands of £ for something that doesn't yet exist.
    Originally posted by mortgageFTB
    Not always the way. Quite common to buy off plan.
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