Buying house with Possessory Title

chopkins

We have an offer agreed on a house, however it turned out the deeds had been lost and as the house was last sold in 1962 it had never been registered with the Land Registry.

The current owners inherited from their father, and during the sale process received a Possessory Title from Land Registry as they couldn't prove 15 years of deed history, and will be providing an indemnity insurance policy as we can't upgrade to Title Absolute for 12 years.

Solictor is happy with the details provided, mortgage company is also happy as there is the insurance policy in place.

We are happy with the risks of a title claim being made to be very small, however our concerns are about the impact on a future valution should we need to sell within 12 years (no way of predicting if we will or won't).

When we made the offer this title issue wasn't known about, and as we have had explained to us by our solictor it is a secondary class of property title and will be for the next 12 years. Had we known about this at the start we probably wouldn't have made an offer. So my concern is, if in the next 12 years we decide to sell that other prospective buyers will feel the same, or will factor in the added risk and make a much lower offer than the house would be with a Title Absolute.

My gut instinct is to first go back with a lower offer of around 80% of the original amount and see what the reaction is, and walk away if a reduction cannot be agreed.

For houses with a Possessory Title, is it generally accepted to have a lower value than a house with a full Title Absolute?

Slithery

So you're only going to offer 20% of your original offer. I know what I'd say if I was your vendor (the second word would be off).

chopkins

Lol yeh that's what I'm expecting. Although the agreed price was for a freehold property with no knowledge of the missing deed and only being granted a Possessory Title that can be challenged for the next 12 years.

I'm not just asking for 20% off for no reason, I'm just trying to gauge if there is typically a discount for properties without a full title? Is there no discount, 5%, 10%, 20%, 50%? Until buying this house I didn't even know this type of secondary class of property title existed

lincroft1710

Do you mean (a) 20% of your original offer or (b) a reduction of 20% from your original offer. If (a) my reaction would be to inform my solicitor to inform your solicitor that under no circumstances would I ever sell the house to you and stop wasting my time. If (b), either justify your offer or if you can't then procedure as in (a).

Slithery

Ah, I see.

You didn't say you were going to offer 20% off, you said you were only going to offer 20% (so 80% off).

chopkins

Updated original post, a reduction of 20% of the original offer.

My justification on offering a reduction would be the original offer was based on purchasing the property, the land and the full title. The purchase is now a Possessory Title which isn't the same thing and will take 12 years to become a full title.

The major concern I have is if I go ahead with the purchase and want sell this in 6 years, will it be a lot more difficult as people will immediately be put off by the lack of full title?

Tiglet2

I bought a house with possessory title (the vendor had lived there for around 5 years, so only 7 years to go). It was never a problem when I was buying, solicitor and lender both happy with the insurance policy. Admittedly I did sell after the 12 years had passed but I don't believe it would have been a problem as another insurance policy would have been in place for a new buyer

I think your solicitor/lender have covered any potential risks. It really is up to you. I don't personally think the house is worth less. I didn't pay less for mine. As an example, probate properties are often sold with Limited Title Guarantee because the executors will not know the history of the house and often don't have paperwork to back up any work done.