Possessory Title Help!

[Vicsleighbob]

We are currently buying a house and were due to exchange tomorrow and complete next week. It came to light recently that a small strip of land at the bottom of the garden only has a posessory title since 2010. Apparently it was land gifted to houses on the street back in the 1960's after a road widening scheme was scrapped. All of the houses along this road have part of this land but nothing was ever done formally through the land registry.

The vendor of the property has paid for full indemnity insurance to cover the land and our solicitor have referred this back to our mortgage lender (Nationwide) to make sure they were happy. Straightforward, or so I though!

Today we've been told that our lender have referred this back to the surveyor who carried out the bank valuation on the house for them to make the decision. Is this usual? Im panicking now that the house will either be down valued or that the lender will now refuse our mortgage altogether.

Does anyone have any experience of this please? I'm so stressed! We're living out of boxes because nearly everything has been packed because we thought we were ready to move. The first house we were buying fell through when the vendor decided not to sell after 4 months, so we 7 months into the process now and our buyer is almost ready to walk as they've been waiting since Christmas. Help!!! Has anyone else been through this?

When you say it has possessory title, has it been registered at the Land Registry as such? If it was formally gifted ( by the Council?) there is presumably some document showing this, in which case I would have thought it could have been registered with title absolute. In short, it’s hard to say without seeing the title documents. What has your solicitor said?

Sounds like that bit of land has a possessory title precisely because , although there was an intention to gift it, the Land Registry transfer was not carried out.
But if this dates back to the sixties, it's vanishingly unlikely to get challenged, and it will get converted to an absolute freehold title in about 10 years.Its standard that a title which has not been transacted in a totally regular way is first granted as possessory, and later converted to absolute.
It wouldn't put me off buying.
I can understand a mortgage provider wanting to be cautious and check it out, and arguably the surveyor who's actually seen the property might have a better overview as to whether this matters a jot or not, than the mortgage people get from just looking at the paperwork. It's not an absolute impediment to getting a mortgage.
It must be v stressful for you, but I can't see why it wouldn't work out fine.
Hold tight, and hope it's all cleared up soon.

A friend had a similar situation but with a new-build. She and her husband were required to fence off the "offending" piece of land, which had belonged to British Rail. Once they moved in and were established, they removed the fence so the land was incorporated into their garden.

NB This was over 30 years ago, the house was a new-build and situated in Scotland. To prevent a delay, you could try asking your solicitor if it would be possible for you to do the same.

Hopefully a PP is right and the mortgage lender just wants to check. Only suggesting the above if the lender demurs.

The surveyor just needs to confirm it doesn’t reduce the value.

Given that it’s only a part of the garden, it has possessory title (which will convert to normal title in 10 years), and there’s insurance in place it shouldn’t reduce the value at al.

All you can do is reassure the buyer: at one point we sent our buyer proof that we’d booked movers, photos of our boxes packed etc to show that we really were just waiting for the final documents to be sorted out.

It should be fine for all the reasons stated above.

Solicitors are no longer allowed to take a view on things nowadays and any potential flaw in the title has to be reported to the lender. It's all very standard so try not to worry I'm sure it can be sorted quickly and I have to say Nationwide are very good at coming back quickly on such things.

www.cml.org.uk/lenders-handbook/englandandwales/nationwide-building-society/#C8777

5.6.3A title based onadverse possessionorpossessory titlewill be acceptable if the seller is or on completion the borrower will be registered at the Land Registry as registered proprietor of a possessory title. In the case of lost title deeds, the statutory declaration must explain the loss satisfactorily;

5.6.4We will also requireindemnity insurancewhere there are buildings on the part in question or where the land is essential for access or services;

5.6.5We may not need indemnity insurance in cases where such title affects land on which no buildings are erected or which is not essential for access or services. In such cases, you must send a plan of the whole of the land to be mortgaged to us identifying the area of land having possessory title. We will refer the matter to our valuer so that an assessment can be made of the proposed security. We will then notify you of any additional requirements or if a revised mortgage offer is to be made.

Just a formality. The lender has to refer it back to the valuer to confirm the valuation isn’t affected. It’s a small piece of garden land so it won’t be a problem. They don’t like it if say a parking space was included but now it isn’t.

Thank you all so much, I feel a bit better now! Fingers crossed it all works out!!