5 Types of Property Title Problem That a Cash Buyer Can Still Work Around

Title problems are the issues that appear when a buyer’s solicitor examines the legal ownership of a property and finds something that doesn’t add up. They rarely show up on a viewing, which is why they tend to surface weeks into a sale, right when everyone thought they were heading for exchange. For a buyer relying on a mortgage, a title defect often means the lender walks away. For a cash buyer, most title defects are manageable, either through indemnity insurance, a price adjustment, or a bit of patience with the Land Registry. Here are the five we deal with most often, what each one means, and how we approach it.

1. Unregistered Land Or Missing Deeds

Around one in seven properties in England and Wales remains unregistered at the Land Registry, usually because it hasn’t changed hands since compulsory registration was introduced in the area. Ownership of an unregistered property is proved by the physical title deeds, and if those deeds have been lost, perhaps by a solicitor’s firm that closed down or in a house clearance, proving ownership becomes difficult.

The fix is an application to the Land Registry for first registration based on the evidence available, supported by a statutory declaration explaining how the deeds came to be lost. The Registry may grant only a possessory or qualified title at first, which brings us to the next problem. Cash buyers can proceed while a first registration application is pending, or accept a lesser class of title with indemnity insurance, in a way lenders usually can’t.

2. Possessory Title

Possessory title is granted when the Land Registry accepts that someone is in possession of land but can’t verify their ownership fully, often because deeds are missing or the land was acquired through adverse possession. It’s a lesser class of title than absolute, and it carries the risk that someone with a better claim could come forward.

After twelve years of possessory title without a challenge, you can apply to upgrade it to absolute. If you’re selling before that point, a lender will often decline to lend, or insist on indemnity insurance and a deed of guarantee. A cash buyer can price the risk, take out an indemnity policy, and complete without needing anyone else’s approval.

3. Boundary Discrepancies And Disputes

Land Registry title plans show general boundaries, not precise ones, and it’s common for fences, hedges and walls to sit somewhere other than where the plan suggests. Usually that’s harmless. It becomes a title problem when a neighbour disputes the position, when a structure such as an extension or garage encroaches onto land you don’t own, or when part of the land you thought was yours turns out to be registered to someone else.

Disputes must be disclosed on the property information form, and a live boundary dispute deters most buyers because they don’t want to inherit it. Cash buyers who are experienced with these situations will look at the size and value of the land in question, the strength of each side’s position, and whether a boundary agreement or a determined boundary application could settle matters. Small discrepancies can often be covered by indemnity insurance. Larger ones are reflected in the price.

4. Breached Restrictive Covenants

Restrictive covenants are promises in the deeds that limit what can be done with the land. Common examples include restrictions on building extensions, running a business from home, keeping certain animals, or altering the front of the property. Many are decades old and practically unenforceable, but a breach still appears on the title and a buyer’s solicitor will raise it.

If a previous owner built a conservatory in breach of a covenant against extensions, for instance, the risk is that the person with the benefit of the covenant could seek to enforce it. In reality, that’s rare, and restrictive covenant indemnity insurance is cheap and widely available. Lenders will generally accept a policy, but they can be slow to confirm it, and some breaches, particularly recent ones, fall outside the insurers’ appetite. Cash buyers can take a view on the actual risk without waiting on a lender’s underwriter.

5. Restrictions, Charges And Entries On The Register

The charges register of a title records anything that affects the owner’s ability to deal with the land. Alongside mortgages, this can include:

• Charging orders from creditors who’ve obtained a court judgment
• Restrictions requiring a third party’s consent before a sale can be registered, such as a housing association or a family member with a beneficial interest
• Old mortgages that were paid off but never formally discharged
• Notices from a former spouse claiming home rights
• Restrictions arising from a deceased owner’s estate where probate hasn’t been completed

Each of these needs resolving before or on completion. Some are quick, like obtaining a discharge for a paid-off mortgage. Others take longer, such as waiting for a grant of probate. The advantage of a cash sale is that the buyer isn’t answering to a lender’s timetable, so if the restriction can be lifted or the consent obtained, the sale can be structured around it.

How We Handle Title Problems In Practice

If you plan to sell your house to a cash buyer and you already know there’s something unusual on the title, tell us at the outset. Our solicitors will review the title early, identify what needs fixing, and work out whether the answer is insurance, a Land Registry application, a third-party consent or an adjustment to the offer. Most title defects have a known solution, the question is simply who’s willing to wait for it – and cash buyers like us are usually in a better position to do so than anyone else.

FAQs

What is a title defect?

Any issue with the legal ownership record of a property that makes it harder to sell or mortgage. It could be missing deeds, a lesser class of title, a disputed boundary, a breached covenant or an entry on the register that restricts dealings.

Can you sell a house with a title problem?

Yes, in most cases. The problem needs to be identified, disclosed and addressed, either by fixing it, insuring against it or agreeing a price that reflects the risk. Cash buyers are usually the most flexible on this.

What is indemnity insurance in conveyancing?

A one-off policy that covers the buyer, and often their lender, against financial loss arising from a specific title defect. It doesn’t fix the defect, but it transfers the risk, which is enough to allow many sales to proceed.

How long does it take to fix a title problem?

Indemnity insurance can be arranged in days. Land Registry applications for first registration or boundary determination can take months. Consents from third parties depend entirely on the third party.

Will a title problem reduce my sale price?

It depends on the severity and the solution. A defect covered by inexpensive insurance may have little effect. A defect that carries real risk or requires a long wait to resolve will be reflected in a cash buyer’s offer.

Do I have to disclose a title problem to the buyer?

Known disputes and issues must be disclosed on the property information form. Title defects are also visible to the buyer’s solicitor on the official copies, so there’s no benefit in trying to hide them.