Misuse of Power of Attorney for Mortgage Fraud in Jamaica: Unauthorised Property Borrowing

• A power of attorney can grant broad authority to deal with property, including borrowing against it.
• Forged or fraudulently obtained POAs have been used to mortgage property without the true owner’s consent.
• Lenders who advance money on foot of a fraudulent POA may have the mortgage set aside by the courts.
• Property owners living overseas are particularly vulnerable to POA mortgage fraud.
• Periodic title searches will reveal any mortgage or charge registered without the owner’s knowledge.

A power of attorney is a legal instrument that authorises one person — the attorney-in-fact or donee — to act on behalf of another — the donor — in relation to matters specified in the document. In Jamaica, powers of attorney are commonly granted by property owners who live overseas and need someone to manage their local property interests: to collect rent, to complete a sale or purchase, or to deal with routine maintenance and legal matters. A general power that includes authority to deal with property in all respects technically includes the authority to grant a mortgage over the property. A fraudster who obtains or forges a power of attorney granting such broad authority can approach a financial institution and use the power to charge the property as security for a loan, receiving the loan proceeds and disappearing, leaving the true owner to discover the mortgage when they attempt to sell, refinance, or simply when they receive a demand from the lender.

Lender Due Diligence and the Risk of a Void Mortgage

Financial institutions in Jamaica that advance money on the security of a property presented through a power of attorney take on a risk that is proportional to the rigour of their verification of the instrument. A lender that fails to verify that the power of attorney is genuine — for example by contacting the donor or their attorney directly — may find that a court declares the mortgage void on the grounds that it was executed without the true owner’s authority. In such cases, the lender loses its security interest and is left with an unsecured claim against the fraudster, who is typically insolvent or untraceable. Robust lender practice requires independent verification of any power of attorney used in a mortgage transaction, particularly where the donor is not present for the signing.

Protecting Against Unauthorised Mortgage Registration

Property owners who have granted powers of attorney, or who hold property that might be targeted by a fraudster claiming to act under a power, should take proactive steps to monitor their titles. An NLA title search will reveal any mortgage or charge registered since the last search. Owners who do not intend to grant borrowing powers should ensure that any power of attorney they execute contains an explicit exclusion of the authority to mortgage or otherwise encumber the property. A restriction can be noted on the title requiring the owner’s personal signature for any dealing, which adds a procedural barrier to fraudulent registration. Property owners who discover an unauthorised mortgage should seek urgent legal advice and notify the JCF’s Fraud Squad, as such transactions typically involve multiple criminal offences under the Forgery Act and the Proceeds of Crime Act.

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