Possessory Title

Midlander123

Hi all, 

I've sold my house and due to move out at the end of the month. I found my dream house, instructed solicitors and planned a survey (house is in disrepair) to then be told the house has a possessory title. My solicitor backed out. After 4 refusals from other solicitors, I found a brilliant one who went through the implications and said "withdraw your offer and run for the hills" 

She stated in the absence of the following the house is unsellable:

1. The seller is offering indemnity insurance. Evidence is required that the indemnity insurance will cover any additional outlay to improve the property.. (she believes no insurers will and it needs around £100k worth of work)

2. An independent valuation paid for by the seller should be done,  accounting for the possessory title 

3. The statement of truth and other associated documents should be provided for the perusal of an independent solicitor 

4. Further details around how the house was acquired. Whether the ex-wife is dead? Whether they had children etc. The story we have is allegedly a friend left the house to her in a will. He divorced in the 70s without children and brought his wife's half from her. 

5. Without the above she advised no solicitor will convince a mortgage company to lend. My lender said with solicitor approval and indemnity insurance they would accept. 

I feel totally misled by the estate agent and the buyers solicitors who at the start of the said there is no doubt the seller is the rightful owner and that the risks are tiny. 

Is there anything I can do other but withdraw? The house is what we have always wanted in a beautiful area, where houses don't come up for sale often. 

Any advice would be appreciated- thanks 

canaldumidi

Point 1) is nothing todo with the title.

It looks as if there are two issues with the property: the condition and the title.

Surely if it has possessory title that means it is registered? In which case as part of the process of registering it for possessory title, the applicant must have provided the Land Registry with the required documents eg Statement of Truths etc.?

Midlander123

canaldumidi said:

Point 1) is nothing todo with the title.

It looks as if there are two issues with the property: the condition and the title.

Surely if it has possessory title that means it is registered? In which case as part of the process of registering it for possessory title, the applicant must have provided the Land Registry with the required documents eg Statement of Truths etc.?

Thanks for your reply. Yes I understand what you mean. What the solicitor was saying is a possessory title is too risky without indemnity insurance? 

The condition in essence doesn't bother me, I have the funds to renovate and I'd negotiate further on the asking price (something the seller was open too) 

It is registered with the land registry, as a possessory title. And we can only assume documents were provided. Can i ask to see these? 

canaldumidi

Yes - indemnity insurance is sensible for possessory title, to cover you financially in case some unknown person appears claiming ownership. But that is nothing to do with the condition of the property as per your point 1.

Many properties are bought and sold with possessory title + indemnity insurance. Of course, if someone with a valid claim to ownership did appear in future, the insurance would protect you from any financial loss (and I believe legal costs to fight such a claim), but you'd still have the inconvenience and disruption if their claim was successful.

Yes - use form OC2 + £6 I believe to get documents from the LR.

Ramouth

Am I understanding correctly that the problem is actually that the indemnity policy would cover you for the purchase price but not for the increased value after the work is done?  So if someone were to turn up with a better claim you would loose the £100k you had spent renovating it?

If so, I would walk away if I were you.  We had to make a similar decision and it still makes me sad when I go past the house we didn’t buy but I love the house we are in too - you will find another.

GoogleMeNow

canaldumidi said:

Yes - use form OC2 + £6 I believe to get documents from the LR.

FYI, it's now £7 to obtain the documents.

user1977

Ramouth said:

Am I understanding correctly that the problem is actually that the indemnity policy would cover you for the purchase price but not for the increased value after the work is done?  So if someone were to turn up with a better claim you would loose the £100k you had spent renovating it?

The norm is just to get insurance for the current property value, but you can always increase it.

Midlander123

Ramouth said:

Am I understanding correctly that the problem is actually that the indemnity policy would cover you for the purchase price but not for the increased value after the work is done?  So if someone were to turn up with a better claim you would loose the £100k you had spent renovating it?

If so, I would walk away if I were you.  We had to make a similar decision and it still makes me sad when I go past the house we didn’t buy but I love the house we are in too - you will find another.

Yes! This is what my solicitor was saying. And advised me the same as you! 

I think im going to walk away! I raised my concerns with the estate agent today and she said ...if she knew what she now knows they would never have marketed the property without the vendor seeking further legal advice. 

Thank you!

Midlander123

canaldumidi said:

Yes - indemnity insurance is sensible for possessory title, to cover you financially in case some unknown person appears claiming ownership. But that is nothing to do with the condition of the property as per your point 1.

Many properties are bought and sold with possessory title + indemnity insurance. Of course, if someone with a valid claim to ownership did appear in future, the insurance would protect you from any financial loss (and I believe legal costs to fight such a claim), but you'd still have the inconvenience and disruption if their claim was successful.

Yes - use form OC2 + £6 I believe to get documents from the LR.

Fab! Will do this today. See what it tells me! Great to know. Thank you