Advice needed on house sale - mortgage

zcrat41

Hi guys,

Hoping there might be some mortgage advisors/experts out there whose brains I can pick.

We're currently in the process of buying a house. It was built 5 years ago in the grounds of the next door neighbours. The neighbours still live there an all seems legit.

However, it turns out the vendors only have a possessory title deed not an absolute. We are of course investigating why that is. (It's in the grounds of an old farmhouse so I suspect non existent original title deeds rather than squatters rights). The vendor is prepared to indemnify. There's only 6 years before we could apply to have it turned into an absolute title deed.

It doesn't bother us currently (as long as we have an indemnity policy) as we're cash buyers. My question is that if we wanted to sell in 3/4 years (highly likely) our solicitor has advised us it might be difficult to sell as purchasers may struggle to get a mortgage. Is she being a bit nervy or is she right? I was hoping if we were prepared to pay for an indemnity policy it wouldn't affect things too much.

Thanks

ZC

kingstreet

It would depend on the lender's surveyor's view of the valuation without absolute title.

Presumably you are having a survey? Ask your surveyor how he would value it for a lender without full title.

zcrat41

Thanks Kingstreet. We are not actually having a survey done so cannot ask that!

May dig around my contacts to see if I know a surveyor who may offer an opinion on the matter.

kingstreet

Colleys is the LBG-owned survey firm for the lender group, so it does all the valuations for Halifax etc.

Give your local surveyor a ring, tell them you're considering a Halifax mortgage and explain the situation. They may be able to give you a steer;-

http://www.colleys.co.uk/customer/contact-us/find-your-local-surveyor/

I'm not going to bore you with the risks of not having even a basic surveyor done on a property also with defective title, as hopefully you will already have considered them and mitigated them where possible.

amnblog

zcrat41 wrote: »

our solicitor has advised us it might be difficult to sell as purchasers may struggle to get a mortgage. Is she being a bit nervy or is she right?

Her advice is what you pay her for. Why ignore it?

zcrat41

Thanks Kingstreet. very helpful.

We are well aware of the risks of no survey and have fully considered them. I'd have thought the title issue was more of a solicitors issue than a surveyors one? I would be happy to stand corrected on this though.

zcrat41

Amnblog - because she's a solicitor not a mortgage advisor thus I am just looking for corroboration and some other experience. She also uses the word 'may' and will not be drawn on it any more.

I'm not ignoring the advice - I'm weighing it up for our own situation to see if it's going to stop our purchase or not.

kingstreet

As it is likely to adversely affect the value of the property, it's very much a surveyor's issue where a mortgage is concerned.

The solicitor handling the transaction on behalf of the lender will, of course, have to disclose the defective title to the lender, but it should be disclosed early enough that the surveyor can take it into account when doing the inspection.

If it isn't the lender will simply refer it back to the surveyor later in the process when the solicitor raises it with them.

Our last "lost deeds" case where the owner had died and had not registered the land saw the value of the property reduced to 75% of market, as the potential pool of buyers was reduced.

amnblog

If a solicitor does not like the look of the title - drop it.

Even if one of us says XYZ lenders will do this case, we don't know if XYZ will change their criteria in the next few years.