Would you buy a house with a possessory title?

[Smoggy96]

So I have been in the process of buying a house since the start of February, it's been dragging on and dragging on. Yesterday, my solicitor called me to tell me that they still had parts of the deeds missing and the house is unregistered, they wouldn't be able to get me an absolute title, only a possessory title.

In theory, this means someone could come along and claim they own it. This is unlikely to happen because the house was built in the 1950s and the sellers' parents bought it new. There's also indemnity insurance that covers this possibility, and after 12 years I can get an absolute title.

The main thing I am worried about is if I need to sell in the next 12 years. How put off would an average buyer be by the lack of absolute title? Would you buy a house knowing up front this was the case? I know I certainly wouldn't have done, but then I wouldn't touch any leasehold house with a bargepole, when clearly some people do.

On the other side, I lose thousands by pulling out. I had sold my last house in February due to a relationship breakdown and wasn't in a position to buy again when the house went up, so had to pay an early repayment fee of £4,000. However, doing a mortgage application within 90 days not only meant I got almost all of that money back upon completion, but also that I could continue on the old mortgage deal on early 2020 interest rates. This situation means a) I have less cash to do a house up with, b) a mortgage is suddenly more expensive because I am starting from scratch and c) house prices have gone up since February. My options are suddenly narrower. I saw a lovely house up for £149, which I could have just about afforded in February, but now I can't.

Every house is saleable to somebody at the right price.

My concern would be the price I was paying. This situation is just not as 'safe as houses' as other houses. So should the price you are paying reflect that?

Unfortunately, they're only willing to come down £2,000.

I can't see how anyone can come along and claim they own your house (if you were to buy it). You have a title, albeit possessory, and you would be living in it.

The other party would have to have all the paperwork to back up their claim and if the worse does happen, you have your insurance to fall back on.

Usual 'I am not a lawyer' applies.

We bought a house in similar circumstances. Our lawyer was comfortable with the situation (the house had been registered a couple of years before by the sellers but only with limited title because when they first registered they didn’t have the deeds). The original owner had died and they could provide the sale documents and I think the death certificate. I’m a lawyer (not property law) and I felt ok with it, the sellers paid for an insurance policy for us and a couple of years ago we got to 12 years so we were able to register full title to the house. Hope this is helpful. 💐

It's not necessarily the worry that someone is going to come and claim it, it's more being able to sell before the 12 years are up.

Your insurance policy would be assignable to the next buyer. (Your /their lawyer would sort this for you). Ask for your lawyer’s advice as to whether they are comfortable with it. If not walk away.

Someone is selling it to you, seemingly with no title. Why would you not be able to sell it yourself later if you have a title, albeit possessory?

Because OP is now in 2 minds whether to go ahead. She's only considering it due to the money she'll lose, so she's understandably worried future potential buyers will be put off too.

Does the 12 years start again if you sell before your 12 years are up, or does it carry over? If the latter, I guess this might make it seem less scary to anyone concerned.

I'd have a chat to your solicitor to determine how it's viewed by them as if they deem it a non-issue then I assume future buyers would receive similar advice.

Sorry, I don't mean literally not be able to sell, I mean it will put the vast majority of people off buying.

We bought our last house with a possessory title. The same owners were selling ours and the two next door. I was quite a long way in to the buying process before it was discovered that deeds were lost (to the three houses on my street and also a couple of houses in another city). The house on the end had been sold by the same owners previously, but the deeds for this were available...

We bought the house with indemnity policy and didn't sell for 17 years so obviously got absolute title before we sold it. The new buyers still wanted a new indemnity policy. But it didn't put them off. And during that time the house next door sold twice and the house next door to them sold three times, with a sitting tenant. No one seemed to have any trouble selling!

We had a similar situation, however it was a probate sale. Our solicitor wasn't happy to proceed and in the end the family/estate we were buying from had to register the title themselves before we bought, which isn't how it normally works. They got full title when they did so and we bought after but it took a long time.

I think you are right that it will put off a lot of prospective buyers, particularly if the market drops a little in the next couple of years. In a sellers market people will probably go for it but in a buyers market you might struggle.

Is it a house you see yourself in for a long time - aka 12 years or more? If so then go for it.

I also bought a house with possessory title. The sellers provided an indemnity policy as well as a Statutory Declaration confirming their ownership of 6 years. Once we had been in the property for 6 years, we were able to upgrade to Absolute Title so the 12 years can be before your purchase.

I agree with IanOsenfrote that it would be extremely unlikely that someone from the 50s would turn up with a bag load of evidence to prove that they owned the property. If a mortgage lender is happy to proceed with an indemnity policy in place (having been advised by your solicitor), then why wouldn't you be?

By the way, possessory title can be on freeholds as well as leaseholds.

No I wouldn't buy it.

It sounds really dodgy to me.. i wouldnt touch it with a barge pole. Why would anybody.

The fact the owners parents had it from new shows theres no other party that can come forward. With all safeguards in place and a plan for getting the full title in future, no it wouldn't bother me. The number of posters that are commenting that they've been in same situation proves this is quite common

There is a decreasing number of unregistered titles just because every time one is sold, it has to be registered.

Ask your solicitor to confirm that the indemnity insurance suggestion is something the majority of mainstream lenders will accept (you can refer to the UKF handbook if you want to!). If it is, and the indemnity cover is for the full value of the property, the risks are low. Each year you are there before you sell (before you upgrade the title), the risk is less as you're eating into the 12 year period.

You can't guarantee it won't put off any buyers at all but it shouldn't really do if you've got the right indemnity policy and stat decs.