Buying a house is a big decision, and there are many factors to consider before making a purchase. One of the things that can make a home purchase more complicated is if the property is being sold with possessory title.
Below we will explore what possessory title means, the pros and cons of buying a house with this type of title, and some tips for navigating the process.
What is Possessory Title?
Possessory title is a type of legal ownership that is granted when someone has been in possession of a property for a certain amount of time without having legal title to it.
This can occur when there is a defect in the title or if the original title has been lost or destroyed. In the UK, the law allows for possessory title to be registered after 12 years of continuous possession.
Pros of Buying a House with Possessory Title
- Lower Purchase Price: One of the advantages of buying a house with a possessory title is that the purchase price is likely to be lower than if the property had full legal title.
This is because there is more risk involved for the buyer, and it can be more difficult to obtain a mortgage for a property with possessory title.
- Potential for Full Legal Title: If the seller has been in possession of the property for 12 years or more, they may be able to apply for full legal title after the sale.
This can provide reassurance to the buyer that they will eventually have full legal ownership of the property.
Cons of Buying a House with Possessory Title
- Risk of Legal Issues: Buying a property with possessory title can be risky because there may be legal issues associated with the property that the buyer is not aware of.
For example, there may be a dispute over ownership or the property may have been illegally obtained by the seller.
- Difficulty Obtaining a Mortgage: It can be more difficult to obtain a mortgage for a property with possessory title because there is more risk involved for the lender.
This can make it more challenging for buyers to secure financing for the purchase.
Tips for Navigating the Process
- Get Legal Advice: It is important to seek legal advice before purchasing a property with possessory title.
A solicitor can help you understand the risks and potential legal issues associated with the property and advise you on the best course of action.
- Do Your Research: Before making an offer on a property with possessory title, it is important to do your research.
This includes checking for any legal disputes or issues associated with the property and ensuring that the seller has been in possession of the property for the required amount of time.
- Consider the Risks: Buying a property with possessory title can be risky, so it is important to consider the potential risks before making a purchase.
This includes considering the potential legal issues associated with the property and the difficulty of obtaining financing for the purchase.
The legal process of obtaining possessory title
Obtaining a possessory title can be a complex legal process that requires meeting specific requirements and following specific steps.
The first step in obtaining possessory title is proving that the applicant has been in continuous possession of the property for a period of 12 years or more.
To prove possession, the applicant must provide evidence that they have been using the property as if they were the legal owner during this time period.
This may include providing utility bills, council tax bills, bank statements, and other documents that demonstrate the applicant has been living in and maintaining the property.
2.Applying for Possessory Title
Once the applicant has gathered the necessary evidence, they must then apply for possessory title with the Land Registry.
The application will require the submission of a completed Form ADV1, which includes information about the property, the applicant’s possession of the property, and any known defects in the title.
The application must also include a detailed description of the property, including any boundaries or easements.
3. Land Registry Examination
After receiving the application, the Land Registry will conduct an examination of the property and title.
This examination is intended to identify any potential legal issues or defects in the title that could prevent the applicant from obtaining a possessory title.
If any issues are identified, the applicant will be notified and given the opportunity to address them before the application is approved.
4.Publication of Notice
Once the examination is complete and any issues have been resolved, the Land Registry will publish a notice in the local newspaper, informing the public of the application for possessory title.
This notice is intended to give anyone with a potential legal claim to the property the opportunity to come forward and assert their rights.
5. Adverse Possession Claim
If an adverse possession claim is made during the notice period, the Land Registry will investigate the claim and determine whether the applicant has met the legal requirements for obtaining possessory title.
If the claim is successful, the applicant may be required to pay compensation or give up possession of the property.
6. Registration of Possessory Title
If no adverse possession claim is made during the notice period, and the Land Registry is satisfied that the applicant has met all of the legal requirements, possessory title will be granted.
The applicant’s name will be added to the register as the legal owner of the property, subject to any limitations or defects in the title.
It is important to note, however, that the process can be risky and that legal issues or disputes may arise during the application process or afterwards, and therefore it is highly recommended to seek professional legal advice before proceeding.
The potential for legal disputes
One potential risk associated with purchasing a property with possessory title is the potential for legal disputes to arise.
Below, we will explore some of the common types of legal disputes that can occur and what steps buyers can take to protect themselves.
One of the most common types of disputes that can arise when purchasing a property with possessory title is a boundary dispute.
This can occur when the property’s boundaries are unclear or disputed, and neighboring property owners disagree on where the boundary lines should be drawn.
This can lead to disputes over property ownership, access rights, and even physical altercations.
To avoid boundary disputes, buyers should carefully review the property’s title deeds and boundary maps to ensure that they are clear and accurate.
If there is any uncertainty, it is recommended to seek legal advice and potentially even commission a professional land survey.
Another potential dispute that can arise is an easement dispute. This can occur when a neighboring property owner claims a right to use a portion of the property for a specific purpose, such as accessing their own property.
These disputes can be particularly contentious, as they often involve conflicting claims of ownership and use.
To avoid easement disputes, buyers should review the property’s title deeds and any existing easement agreements to ensure that there are no conflicting claims or restrictions.
These defects can include errors or omissions in the title documents, undisclosed liens or encumbrances, or even fraudulent activity by a previous owner.
To avoid title defects, buyers should conduct a thorough title search and review all relevant title documents.
It is also recommended to obtain title insurance, which can protect buyers from financial losses associated with title defects.
Deciding whether to buy a house with possessory title is a complex decision that requires careful consideration of the potential benefits and risks.
On the one hand, purchasing a property with possessory title can be an affordable way to become a homeowner, particularly in areas with high property prices.
On the other hand, it comes with potential legal risks, including the possibility of disputes arising over boundaries, easements, and title defects.
Ultimately, the decision to buy a house with possessory title will depend on individual circumstances, including the buyer’s budget, risk tolerance, and access to legal resources.
It is highly recommended to seek professional legal advice before proceeding with the purchase of a property with possessory title.
In the Gold Coast area, the best buyers agent Gold Coast is the perfect solution for that. A qualified legal professional can review the title documents and advise on any potential risks or issues, helping buyers make an informed decision.