A Guide to Possessory Title Deeds

In the world of property ownership and conveyancing, possessory title deeds are a topic that often sparks curiosity and confusion. Whether you’re a first-time homebuyer, an experienced property investor or someone in between, understanding possessory title deeds is essential if you’re considering buying a property that has one. In this article, we will delve into the world of possessory title deeds, what they are, the risks involved, and the key considerations if you’re thinking of acquiring a property with such a title.

What is a Possessory Title Deed?

A possessory title deed is a form of legal ownership granted to an individual or entity who has occupied a piece of land or property without a documented, absolute title to it. This form of ownership is often granted when the absolute title holder is unknown, missing, or when the property has been adversely possessed (also known as “squatter’s rights”) for a specific period. In the United Kingdom, the minimum period of adverse possession to be eligible for a possessory title is 10 years for registered land and 12 years for unregistered land.

The Risks of Possessory Title Deeds

While a possessory title deed does confer a level of ownership, it is not without its risks. Here are some key risks associated with possessory title deeds:

1. Incomplete Ownership Rights: The rights associated with a possessory title deed are limited and may not offer the same level of protection as an absolute title. This can lead to uncertainty and potential disputes over the land or property in the future.
2. Challenge to Title: A possessory title can be challenged by someone claiming to have a better title to the property. If the challenger can provide sufficient evidence, the possessory title may be revoked, and the property transferred to the challenger.
3. Issues with Financing: Many mortgage lenders are hesitant to lend money against properties with a possessory title deed due to the potential risks involved. This can make it difficult to secure funding for a purchase or refinance.
4. Reduced Property Value: Properties with possessory title deeds may be perceived as less valuable than those with an absolute title, which could affect their resale value.

What to Bear in Mind When Buying a Property with a Possessory Title Deed

If you are considering buying a property with a possessory title deed, it’s crucial to take the following factors into account:

1. Seek Expert Advice: Engage the services of a qualified conveyancer or solicitor with experience in dealing with possessory title deeds. They can help you navigate the legal complexities and offer advice on how to mitigate the risks involved.
2. Conduct Thorough Research: Research the property’s history to understand how the possessory title was obtained and whether there are any potential claimants to the title. This may involve examining Land Registry records, historical maps, and local archives.
3. Obtain Title Indemnity Insurance: Title indemnity insurance can provide financial protection in the event of a successful challenge to the possessory title or any other title defects. Discuss the options and coverage available with your solicitor or conveyancer.
4. Consider the Financing Options: Before making an offer on a property with a possessory title deed, speak to a mortgage broker or lender to understand the financing options available to you. Some lenders may be willing to provide funding for such properties, albeit with stricter requirements and potentially higher interest rates.
5. Negotiate the Price: Due to the risks associated with possessory title deeds, you may be able to negotiate a lower purchase price for the property, reflecting the potential risk and reduced value.
6. Plan for the Future: If you are successful in purchasing a property with a possessory title deed, consider working with your solicitor to upgrade the title to an absolute title. This process typically involves waiting a specified period (usually 10 to 12 years) after the possessory title was granted, demonstrating continuous and uncontested possession of the property during that time, and providing sufficient evidence to the Land Registry. Upgrading to an absolute title can help to reduce the risks associated with a possessory title and increase the property’s value.

Purchasing a property with a possessory title deed may present unique challenges and risks, but with thorough research, expert advice, and careful planning, it can be a viable option for property buyers. By considering the factors discussed in this article and working closely with a qualified conveyancer or solicitor, you can make an informed decision and potentially secure a property at a reduced price. However, it is essential to weigh the potential risks against the potential rewards and ensure that you are prepared to address any challenges that may arise during the process.