In a challenging economic climate, where liquidity pressures and opportunistic investment strategies are shaping the property market, many conveyancing solicitors are seeing an increase in requests for back-to-back or same-day property transactions. These involve a property being bought and immediately resold, often on the same day, at a higher price.
While lawful, back-to-back conveyancing transactions are considered high-risk for solicitors and conveyancers, both from a professional indemnity and regulatory perspective, due to their potential for money laundering, mortgage fraud, and the possibility of the transaction collapsing. Conveyancers must be highly vigilant for red flags and perform stringent due diligence.
Understanding how to manage these exposures is essential to protecting your firm, your client, and your professional standing.
Why are back-to-back transactions on the rise?
Economic uncertainty, limited housing stock, and tighter lending conditions have contributed to a rise in opportunistic trading, particularly where investors seek to “flip” properties for quick profit.
In some cases, back-to-back sales arise from legitimate development or investment strategies. However, they can also be linked to mortgage fraud, overvaluation schemes, or misrepresentation of the true transaction chain.
Example Transaction Client A is the original owner of the property. Client B agrees to purchase the property from Client A for £500,000. Client B does not intend to occupy or hold the property long-term; their goal is to resell it immediately at a higher price. Client B may have little or no independent funding. Before completing the purchase from Client A, Client B has already found a new buyer Client C who agrees to buy the same property for £625,000. Both transactions (A→B and B→C) complete on the same day, often using the proceeds from the second sale (B→C) to fund the first purchase (A→B). Client A sells the property, Client C acquires it, and Client B profits from the £125,000 uplift all within a single day. Implications: The conveyancer handling the matter must manage funds from Client C’s lender or Client C directly to ensure the timing aligns correctly so that Client B can complete their purchase before reselling. |
Red flags of a fraudulent transaction include:
The property being purchased below market value, or significant differences in valuations
Parties to the transaction have a track record of unsuccessful transactions
There is a quick turnaround between purchase and resale, often for no apparent reason
A reluctance from clients to meet in person or provide adequate ID
Third-party payments or unusual payment structures
For conveyancers, the challenge lies in distinguishing between a legitimate transaction and one that may later give rise to allegations of negligence or complicity in fraud.
Key risks for conveyancers
Back-to-back transactions compress timeframes, heighten uncertainty, and expose conveyancers to a cluster of legal, regulatory, and professional risks. The following risks illustrate where these transactions most often unravel, and where vigilance matters most.
Mortgage fraud exposure – Back-to-back transactions are often flagged by lenders as higher risk. Even an inadvertent failure to disclose a sub-sale arrangement or an inflated price to the lender may constitute a breach of duty.
Conflict of interest – Acting for multiple parties in a development or complex chain creates a risk of an unmanaged conflict of interest, where the firm cannot provide full, independent advice to one client without potentially disadvantaging another. The SRA (opens a new window), CLC (opens a new window) and CiLex have clear guidance on conflicts of interests.
Source of funds and AML concerns – The property sector is a recognised high-risk area for money laundering, and back-to-back transactions are a red flag for the potential involvement of illicit funds. The pressure to complete quickly can lead to shortcuts in essential checks, such as source of funds verification, client identification, and property searches. This exposes the conveyancer and their insurers to significant risk, and potential professional negligence claims.
Misrepresentation and negligence allegations – Where the onward buyer or lender later claims that the transaction was misrepresented, the solicitor may be drawn into disputes alleging a failure to warn against, or to identify, red flags.
Transaction collapse or delays – If one part of the chain fails (e.g. the first buyer pulls out, or a lender refuses finance due to the short ownership period), the entire sequence can collapse. This can leave parties facing potential financial losses or legal claims if contractual obligations are not met.
PII implications – Professional indemnity insurers are increasingly scrutinising firms’ conveyancing practices, particularly around sub-sales. A pattern of such transactions without clear risk management controls may affect a firm’s risk profile or renewal terms.
How conveyancers can mitigate risk
To mitigate these risks, firms should first assess whether back-to-back transactions fit within their risk appetite. If so, they must then ensure the robust systems, controls, and documentation are in place to identify and prevent fraudulent transactions before they complete.
Key steps include:
Conduct Enhanced Due Diligence
Obtain and retain a clear audit trail of all communications and client instructions.
Verify the source and legitimacy of funds, particularly where profits appear disproportionate.
Query and document the commercial rationale for the transaction.
Check the reputation of the party instructing your firm, and whether it has a track record of similar transactions.
Full disclosure to all relevant parties
Always disclose the full transaction chain to the lender and ensure the lender’s solicitor is aware of any sub-sale.
Confirm in writing that your client understands the structure and implications of the transaction.
Conflict checks and independent representation
Avoid acting for both the seller and buyer in the chain, even where instructed by related entities.
Where separate representation is unavoidable, obtain explicit consent and document your rationale.
Adopt and follow regulator guidance
The Law Society has published guidance (opens a new window) on managing risks in property transactions and avoiding mortgage fraud.
Regularly review and update internal procedures and training in line with that guidance.
Report any knowledge or suspicion of money laundering to the National Crime Agency (NCA) through a Suspicious Activity Report (SAR) (opens a new window).
Engage with your broker early
If your firm is seeing more back-to-back transactions, speak with your insurance broker. A proactive conversation allows your broker to help you demonstrate strong risk management practices to insurers, ensuring your coverage remains robust and competitively priced.
Law firms should also consider having a plan for aborting the work, should you not be satisfied during the transaction. Conditions for aborting the work should be included within your retainer.
Final thoughts
Conveyancing remains one of the most scrutinised areas of legal practice, and in times of economic pressure, the risks multiply. The key is vigilance. Not every same-day transaction is a red flag, but each one demands careful thought, thorough documentation, and transparent communication with all parties involved.
By taking a proactive, risk-aware approach, solicitors can continue to support clients effectively while safeguarding their firm’s reputation and professional indemnity standing.
For more information, reach out to a member of our team.
