As many buyers look to take advantage of the temporary stamp duty holiday, now could be the right time to sell your home. To ensure any sale progresses smoothly, it is important to make sure the title to your property is in order.
Last month, we outlined five potential problems with the title to your property.
In the second of this two-part series, Deirdre McSorley, a residential property solicitor with James McNulty & Co. Solicitors in Omagh, looks at five more possible title problems, which could disrupt your plans and offers some solutions.
Your property is leasehold
Unlike a freehold, a lease is a wasting asset. If you have a term with 80 years or fewer left, then you may find it harder to sell because buyers sometimes struggle to find a suitable lender as many require a minimum term.
The good news is you may have a legal right to extend your term. This can be a lengthy and complicated process and is best started before putting your home on the market. Sometimes, if your buyer agrees and the necessary legal structure is put in place, you can start this process and complete your sale before an extension is agreed.
Your buyer will also be concerned about any breaches of the terms of your lease, as these could result in the landlord seeking to end the lease early. For example, the lease may contain a restriction against alterations without first obtaining the landlord’s consent. Your solicitor may be able to obtain consent retrospectively, although sometimes title insurance cover is a better option. This would compensate the buyer should the landlord require reinstatement and can be a pragmatic solution if you are looking to complete quickly.
Your class of title is not absolute
All registered land has one of four classes of title. The best and most common is called ‘title absolute’. This means the Land Registry has looked at the title and is satisfied that you have the right to transfer it, subject to any matters referred to in the register. It provides, in effect, a state guarantee of title.
If your property is registered with another class of title, this does not automatically mean there is a problem, but the buyer’s solicitor is likely to scrutinize it carefully and may ask you to address any perceived defect. For example, some leasehold properties have ‘good’ leasehold title. This shows the Land Registry considers the owner’s title is basically sound. However, it has not investigated the landlord’s title so will not guarantee his right to grant the lease in the first place.
Most lenders will accept a good leasehold title provided the buyer’s solicitor is satisfied as to the landlord’s title, or there is suitable title insurance in place. This will take time though, which could unnerve your buyer. A proactive solicitor can check your class of title at the start of the transaction and address any possible issue then. For example, in the case of a good leasehold title, she can apply to upgrade it to title absolute, a process which is usually straightforward.
The other two classes of title are ‘possessory’ and ‘qualified’. The Land Registry may grant a possessory title where the owner relies upon adverse possession or cannot show documentary evidence of his title. Qualified title means there is a specified defect in the title excluded from the Land Registry’s state guarantee. Both are fairly common in practice, so hopefully will not be an issue on your sale. However, should one of them apply, your solicitor can advise you on the best way forward. As with good leasehold title, there is a process for upgrading them. Your solicitor may need to make further investigations, although upgrading a possessory title should be relatively straightforward if it has been registered for 12 years or more.
Resolve any boundary problems
Nobody wants to buy a home with an ongoing boundary problem. You must reveal any disputes on the property information form called Pre Contract Enquiries which will be given to the buyer’s solicitor. You should discuss any boundary issues with your solicitor early on. She can help by advising on solutions or, if the issue is historic, ensuring there is sufficient evidence of the resolution to satisfy your buyer.
Sometimes boundary issues only emerge during the sale process. This can be the case where there is a difference between the Land Registry map and the physical extent of your property. This could be because you, or a previous owner, informally incorporated other land into your garden, or it could be a mapping error. By checking your Folio map before you sell, your solicitor can see if there are any potential issues and suggest how best to resolve them. For example, if you have treated land as your own for a long enough period, you can apply to the Land Registry to be registered as the legal owner.
Planning and building regulations
Your buyer will want to be sure any changes made to the property have the necessary planning permission. Otherwise, the council could require him (as owner) to return the property to its original state.
Lack of permission need not derail your sale and your solicitor can suggest ways to remedy the situation. Depending on the circumstances, this could be applying for a certificate of retrospective planning consent. Sometimes for a relatively small cost, a title insurance policy could cover the risk, allowing your sale to proceed quickly.
Changes may require or Building Control consent and lack of this could also result in the local council taking enforcement action. This is a risk to the purchaser because the council could apply to court to prevent use of the property if it believes there is a serious safety risk. Were the buyer remains concerned, a specialist report or suitable insurance cover can provide reassurance.
Other unusual issues
There are other matters that could, in theory, affect your title. Some are primarily local in nature. For example, rent charges may affect properties in certain areas. These charge the property with the payment of an annual sum. Such sums are generally small, often a few pounds and rarely cause any problems. Although their existence may unnerve some buyers, a solicitor with local knowledge and experience should ensure they are not blown out of proportion.
Some ancient rights can also affect land. These include the liability to contribute to the cost of repairing the local church’s chancel, or the right for the lord of the manor to extract minerals. Fortunately, these types of rights are rare and becoming increasingly so. However their existence could unsettle a buyer, in which case you will definitely benefit from having an experienced conveyancer on board. She will understand any risks and suggest a pragmatic and practical way forward.
The variety and complexity of title issues can sometimes appear daunting. In practice though, few are insurmountable and your solicitor will always do her best to resolve any which could threaten your sale.
For further information about buying or selling your home, please contact Deirdre McSorley on 028 82 242 177 or email email@example.com
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published