Surge in Property Hijackings and Title Deed Fraud in South Africa

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JEREMY MAGGS: Real estate is often viewed as a secure long-term investment in South Africa, yet reports suggest it’s increasingly attracting the attention of organized crime syndicates.

What do I mean? From fraudulent title deeds to outright property hijacking, homeowners are sometimes discovering too late that they no longer have legal ownership of their properties.

Listen: Property insights: Understanding property fraud and preventive measures.

Joining us now is Grant Smee, a regular guest on our show and the CEO of Only Realty Property Group. We’re here to explore the fundamental issues within the system and assess whether the risks are becoming systemic rather than incidental.

Welcome, Grant. Let’s get straight to the point: can South Africans really rely on the existing property system to protect their ownership?

GRANT SMEE: At this moment, trust in the system is questionable, which is why the government is considering digital title deeds and re-evaluating the title deed process.

There is a movement towards safeguarding individuals involved in property transactions, but the landscape is riddled with fraud due to the significant sums of money involved and a widespread misunderstanding of property transfers.

JEREMY MAGGS: Can you clarify how a title deed could be transferred without the owner being aware? Where in the system do you see it breaking down?

GRANT SMEE: While it’s less common in more formal sectors, title deed fraud is rampant in informal and poorer areas. Here, people may collaborate to have a deed transferred illegally at the deeds office using forged documents and misleading information, often with the help of unscrupulous conveyancers. This issue is growing increasingly prevalent.

JEREMY MAGGS: I’m concerned about the implications for banks. Are they unknowingly financing fraudulent transactions?

GRANT SMEE: Absolutely. Banks serve as the first line of defense against fraud. If they have a bond registered against a property, there’s a level of protection, but they are certainly vulnerable.

Read: Unseen R3trn property wealth could boost SA growth and inclusion.

There’s significant movement from both the formal financial sector and the government to protect individuals and their properties.

JEREMY MAGGS: Do you attribute this issue to criminal cleverness, or is it more about institutional weaknesses and inadequate verification?

GRANT SMEE: I think it’s a combination of both—criminals exploiting weaknesses in the system, as well as gaps in education and understanding surrounding property transfers, which leave institutions vulnerable, especially given the volume of transactions.

Read: Empower the disadvantaged with title deeds, says former banker Jordaan.

Title deed fraud often occurs in low-value transactions, which may not receive the thorough investigations they warrant.

JEREMY MAGGS: What about estate agents and conveyancers? Are they part of the problem, even if inadvertently?

GRANT SMEE: Indeed, there has been significant progress, especially following our inclusion on the grey list. Estate agents have had to improve their verification processes significantly.

However, there are still fraudulent estate agents who exploit their knowledge of the system and process to take advantage of consumers.

There is a valid concern regarding both estate agents and conveyancers. The key issue is a lack of education and information regarding legitimate agents and conveyancers, as well as how to verify their credibility.

JEREMY MAGGS: Why do you think it’s so challenging to reverse these crimes once they occur?

GRANT SMEE: Fraudsters ensure all paperwork, especially for title deed transfers, is in order, making it costly and complicated to reverse these transactions. Legal action is often required through the High Court, and reversing a transaction isn’t as simple as raising a red flag—it’s far more intricate, especially when banks are involved.

Prevention is far more cost-effective than attempting to remedy the situation post-fraud.

JEREMY MAGGS: Moving on to property hijacking, which has gained significant media attention in Johannesburg. It sounds extreme, but how does someone lose physical control of their home?

GRANT SMEE: Instances of property hijacking are notable, particularly in areas like Windsor East and West, as well as central Johannesburg, where large buildings have been overtaken. We’re also seeing individual homes being hijacked.

Properties that are vacant for extended periods may be unlawfully occupied by individuals claiming ownership, leading to a legal battle for their removal.

Read:

We’ve also seen recent cases where individuals exploit access to homes listed as Airbnb properties, creating potential complications if not addressed promptly.

JEREMY MAGGS: Do you think we might be underestimating the scale of the problem? Is it possibly larger than the available data indicates?

GRANT SMEE: I believe it is much larger. Many situations are resolved quickly—either financially or otherwise—which contributes to underreporting. People are often taking advantage of the protracted legal processes involved in repossession.

JEREMY MAGGS: Earlier, you mentioned the digitalization of property transactions. Do you think this will improve the situation, considering the inherent vulnerabilities in such systems, like cyberattacks?

GRANT SMEE: Common cyber threats include phishing attacks rather than hackers infiltrating systems.

Listen: Phishing emerges as South Africa’s primary cyber threat.

If the government introduces a digital transfer process, it’s crucial to implement robust security measures. The digitalization of the title deed process should be accompanied by digitizing the verification procedures as well.

Just digitizing one segment won’t address the entire issue or provide a comprehensive solution.

JEREMY MAGGS: Thank you very much, Grant Smee, CEO of Only Realty Property Group, for your insights. I appreciate your time.