Ashrafi v Belmont Green Finance: Why “mortgage in someone else’s name” can go badly wrong

Ashrafi v Belmont Green Finance: Why “mortgage in someone else’s name” can go badly wrong

The High Court decision in Ashrafi v Belmont Green Finance Limited [2025] EWHC 3247 (Ch) is an important reminder that informal family arrangements can create serious legal and practical consequences in property transactions. The case is particularly relevant where the person living in the property, or paying for it, is not the person named on the mortgage. For conveyancers, it also highlights how quickly these scenarios can overlap with mortgage fraud and money laundering risk indicators.

The background: real-life arrangements versus what the lender is told

In Ashrafi, the occupiers said they were the “real owners” because they held the beneficial interest in the property. However, they had arranged for a family member to obtain the mortgage in his own name, presenting himself to the lender as the owner and borrower. When the mortgage fell into arrears, the lender pursued possession. The occupiers challenged that, relying on their beneficial ownership and occupation, but the court ultimately upheld the possession order.

Enabling a proxy borrower can limit your ability to object later

A key point from the judgment is that the law may prevent beneficial owners from relying on their interest against a lender where they knowingly put another person in a position to appear authorised to mortgage the property, and the lender is not told about any limitations. Put simply, if you allow someone else to “front” the mortgage and the lender advances funds in good faith, the court may treat it as unfair for you later to claim that your behind-the-scenes ownership should take priority over the lender’s security.

Why this matters in residential conveyancing

Although the mortgage product in this case was buy-to-let, the themes are familiar in residential practice. Transactions where the borrower, owner, occupier, and funder are not the same person often start as “family solutions,” but they can become highly contentious if there is default, relationship breakdown, or a change in circumstances. The case underscores that living at the property is not, by itself, a reliable defence against a lender if the occupier has helped set up the arrangement that enabled the mortgage to be granted in the first place.

Mortgage fraud risk: when the story does not match the application

Proxy borrowing and nominee arrangements can also create fraud exposure because they often involve a lender being given an inaccurate or incomplete picture. The risk is not limited to deliberate dishonesty, it can arise from “casual” statements that nevertheless conflict with what the lender is relying on. Common pressure points include who will actually live in the property, whether the mortgage product matches the true use, who is providing the deposit, and whether there are undisclosed agreements about ownership or control that sit outside the lender’s knowledge.

From a conveyancing perspective, these are not peripheral issues. They are often material to the lender’s decision to lend, the pricing of the risk, and the validity of the transaction. Where the file shows a mismatch between documents and reality, the conveyancer must treat it as a heightened risk matter requiring careful scrutiny and, where relevant, escalation in line with retainer and lender requirements.

Money laundering risk: property is a common route to disguise funds

Residential property transactions remain attractive for money laundering because they can absorb large sums and produce assets that appear legitimate. The risk increases where funds come from third parties, where money moves through multiple accounts without a clear explanation, or where there are last-minute changes to funding arrangements. “Family arrangement” explanations can be genuine, but they can also be used to mask the true source of funds or the true controller behind the transaction.

For conveyancers, the practical challenge is that the same fact pattern that creates legal risk under the case, someone else on the mortgage, someone else paying, someone else living there, can also create the conditions for layered funding and opaque ownership structures. That combination should drive a more cautious, risk-based approach to client due diligence and source-of-funds analysis.

Managing duties and avoiding regulatory exposure

Where a conveyancer knows, or suspects, that a transaction involves the proceeds of crime, there are legal and regulatory obligations that cannot be treated as optional. In practice this means firms need a clear internal escalation route, consistent decision-making, and careful handling of communications to avoid inappropriate disclosures. The goal is not to treat every complex family transaction as wrongdoing, but to ensure that concerns are identified early, assessed properly, and handled in accordance with professional and statutory duties.

Practical conveyancing approach: what to tighten on high-risk files

The simplest way to reduce both legal and compliance risk is to identify mismatches early and document the advice clearly. A file should be treated as higher risk if the intended occupier is not the borrower, if the deposit is coming from a third party, if the title does not reflect the client’s explanation of ownership, or if the mortgage product does not match the real intended use of the property. In these situations, conveyancers should ensure that onboarding questions, source-of-funds checks, and occupancy discussions are not treated as “tick-box” items but as core evidence that the transaction is coherent and properly disclosed.

It is also important to be realistic with clients about outcomes. If a transaction is structured so that one person borrows and another person effectively owns or occupies, the non-borrower may find it difficult to force the lender to deal with them later, even if they offer to pay. Ashrafi illustrates why the safest solution is usually to align the mortgage, the title, and the intended occupation with the true arrangement from the outset.

Ashrafi is a useful case to cite when explaining to clients why “we’ll put it in my brother’s name” is not a harmless workaround. It shows how quickly these arrangements can undermine consumer expectations, increase enforcement risk, and raise fraud and money laundering concerns. For conveyancers, the professional response is consistent, treat proxy borrowing as a high-risk scenario, test the transaction narrative for consistency, strengthen verification and funding analysis, and escalate where the facts do not add up.

This blog is for general information only and is not legal advice. Outcomes depend on specific facts, the mortgage terms, and the duties that apply to the firm’s role in the transaction.