Days before exchange of contracts we find lenders won't lend based on defective title. Any thoughts?

MorecambeBay82

Hello,

I wondered if anyone has recent experience of this situation?

We have had survey done, quotes for considerable work, conveyancy fees, mortgage broking etc.  Should not this have been discovered at an earlier stage in the process?

Is the onus on us as prospective buyers to have investigated the easements, title docs or is it on the vendors and estate agents?

If we'd have known mortgage lenders would pull out 6 months into the process because of something only discovered now we would not have made an offer on this property in the first place.

Grateful to hear from anyone with experience or knowledge on the up to date law.

Many thanks

user1977

A bit more info needed! What sort of "defective" title are we talking about?

MorecambeBay82

The property is unregistered and on an unadopted road.  It's considered 'landlocked'.  There are no legal documents describing access.  Our solicitors have attempted to establish who owns the land to no avail and have advised not to go further as well as the lenders describing the property as 'may be defective'.  They've withdrawn the offer of mortgage.  We are seeing if there are ways to navigate in terms of alternative lenders as our solicitors said they were not able to accept a declaration of unbroken ownership for 15 years with no challenge alongside an indemnity policy.  So late in the game and so much investment we're looking to see if there's any possible way to proceed but understand some lenders are wary.  If there's no way to make the purchase we're left wondering if it's normal for buyers to spend this much time and money before sale?

nicmyles

It's not normal, but then this sounds an unusual situation.

In answer to your original Q, the onus is on you to investigate (definitely not the EA), and it sounds like your solicitors have done so and advised you not to buy the property.

Without knowing the circumstances of the vendor, hard to say why they would have thought they could sell this property to someone who needed a mortgage - is this a probate property by any chance? If so, and there has e.g. been a long-term resident who has died, these issues may not have been known, and may not have presented any practical problems before.

If you're the first person they've tried to sell it to, they now know they either need to resolve these issues themselves before trying again (but sounds like that might be hard), or look for a cash buyer who is prepared to take a view.

user1977

OP, similar thread here (also started yesterday) which may be of use:

https://forums.moneysavingexpert.com/discussion/6479508/buying-a-house-without-established-right-of-way#latest

Is it your own solicitor who is advising the lender?

MorecambeBay82

Thanks for responding.  It is our own solicitor advising the lender.
As far as we know we're the first people who have had an offer accepted by the vendor.  It's not a probate situation.  The seller has been living there for 15 years and has another property.  The seller is a property developer.
The EA have said other properties have acquired mortgages on the street in the past.  So, as far as they're concerned the unadopted and unregistered status has never been a practical problem.
The seller has the option to remarket but would they have to revalue and draw attention to the defective title or just see what people will pay in the hope cash buyers don't notice/mind a defective title?

MorecambeBay82

user1977 said:

OP, similar thread here (also started yesterday) which may be of use:

https://forums.moneysavingexpert.com/discussion/6479508/buying-a-house-without-established-right-of-way#latest

Is it your own solicitor who is advising the lender?

Thanks, this is actually from my partner also trying to get some clarity.  It's the same property being discussed.

Emily_Joy

MorecambeBay82 said:

The EA have said other properties have acquired mortgages on the street in the past.  So, as far as they're concerned the unadopted and unregistered status has never been a practical problem.

Never trust the EA. I was looking at an apartment in an ex-office building that had cladding and was in fact unmortgeable since the Greenfield Fire. The EA was adamant that because "there are people with mortgages living in this building you just need to look further/try harder".

Cloth_of_Gold

MorecambeBay82 said:

Thanks for responding.  It is our own solicitor advising the lender.
As far as we know we're the first people who have had an offer accepted by the vendor.  It's not a probate situation.  The seller has been living there for 15 years and has another property.  The seller is a property developer.
The EA have said other properties have acquired mortgages on the street in the past.  So, as far as they're concerned the unadopted and unregistered status has never been a practical problem.
The seller has the option to remarket but would they have to revalue and draw attention to the defective title or just see what people will pay in the hope cash buyers don't notice/mind a defective title?

Even if you can buy the house, what happens when you want to sell? Unless you can sort out all the issues now or are confident (and with good reason to be confident, having put all emotions about how much you like the house and what you have already done/spent to one side) you can do so once living there, you might face similar problems. Will you be able to find a buyer who is willing/able to proceed or might you have to accept a much lower offer than you would like. I wouldn't want you to be saving up problems for yourself in the future.

MorecambeBay82

Thanks @Cloth_of_Gold.
I suppose I'm still at the stage where I haven't put all emotional investment aside.  If there is a way through with an alternative lender that tells me it would be possible to sell in the future.  Also, we don't want to buy a property that is valued incorrectly with these issues brought to light.
I appreciate everyone @user1977 and @Emily_Joy responding when we feel confused with what's going on and adding their perspective.

MorecambeBay82

Thanks for your perspective @nicmyles