Solicitors advising clients who are selling their homes through ‘house competitions’ must act with caution to avoid falling foul of the gambling laws or complicity in fraud or money laundering, the Law Society has warned.

The collapse of the housing market has prompted a growing number of home owners to look at prize competitions as a way of realising the value of their properties. However, such schemes must include an element of skill, judgement or knowledge on the part of those taking part to avoid being classed as illegal lotteries.

The Gambling Commission said it is aware of 20 or so competitions being held and had questions over the legality of ‘a small number’.

A Law Society practice note advises practitioners to take on such cases only with the approval of senior managers, and if they are not experts in gambling law to seek advice in that field. It warns that even where a scheme complies with lottery law it could be a vehicle for fraud or money laundering.

Richard Barnett, chairman of the Law Society’s conveyancing and land law committee, warned practitioners to be alert to potential problems.

‘It’s easy in these troubled times to get sucked into an area of law that’s fraught with danger,’ he said. ‘You need to be more aware of risks and problems than you would be in a normal climate.’

Steve Kuncewicz, solicitor at Manchester firm Ralli who is advising a couple attempting to sell their home through a competition, called for clearer guidance on what is needed to pass the ‘skill, judgement or knowledge’ test. ‘At the minute there is a huge amount of uncertainty,’ he said.