Common Title Defects in Property

Title defects are legal issues which make properties un-mortgageable, un-saleable or problematic. They relate to the title deeds and affect buying, selling and remortgaging of the property. Legal title defects can be discovered during title checking by the buyer’s conveyancer, during inspection, whilst reviewing searches, highlighted by property survey, and / or whilst dealing with enquiries . This is why these are vital (and time-consuming) steps within the Conveyancing process.

NB: Not all properties will have title defects. That’s good! You want to avoid them.

What Happens If Defects Are Discovered

Indemnity Insurance

Some, not all, defects can be covered with an indemnity insurance policy which has a one-off premium and is instantly obtained. This Indemnity Insurance is passed on each time there is a sale of the property. See my blog article on indemnity insurance policies for more information. Indemnity insurance does not solve the problem. It simply insures against losses but you must adhere to the terms and conditions to avoid invalidating the policy.

Deed of Variation

Other title defects may require amended legal documents or deeds to be drafted. These are sometimes referred to as a Deed of Rectification or a Deed of Variation. This will take more time to deal with since several parties must negotiate, approve and sign these bespoke documents. No two properties are the same and each will have unique circumstances which will make the deed a bespoke document and not a standard template. The more parties that are involved the more time-consuming this will be.

Both of the above will result in further costs as these issues were impossible to foresee at the time of your conveyancing quote and will result in additional work by the conveyancers.

Any title defects that are discovered will be reported to you, and your lender (if any), as they could make the property poor security for the mortgage loan. That is why having the mortgage offer issued does not guarantee completion as the property itself must also pass title checks. If you have no lender (i.e. you are a cash buyer) then you will be asked to take a view as there is an element of risk. Your conveyancer will outline the issues for you. Bear in mind that you may need to mortgage or sell later on.

Examples of Title Defects & Concerns

• PRC properties (pre-cast reinforced concrete)

• Non-standard construction

• Concrete cancer or mundic on site

• Japanese Knotweed or Bamboo on site

• Giant Hogweed & other invasive plant species

• Leased Solar Panels on the roof

• Subsidence & / or successful mining claims

• Matters which invalidate buildings insurance

• Missing Rights of Way or Access issues

• Land locked properties

• Escalating ground rents (leaseholds)

• Estate rent charges (freeholds)

• Bona Vacantia* freeholders or landlords

• Unknown or missing freeholders / landlords

• Failure of cavity wall ties

• Spray foam insulation in loft

• Lack of firewall with terraced / semi-detached

• Contaminated land indicated

• Flying freehold properties

• Freehold flats

*Reverted to the Crown, for example because the party became insolvent.

The above is not an exhaustive list and standard practice does change over the passage of time. Lenders may alter their positions on certain defects and conveyancers will act accordingly to amend their standard practices. Your conveyancer will always refer to your mortgage lenders entries in the UK Finance Handbook to clarify what is acceptable, or not acceptable, to your lender. Building Societies have their own handbook that must be checked.

There are many title defects found today, which were not foreseen 10 or 20 years ago. As a result, older Leases on flats, maisonettes, and apartments will often have defective lease terms or clauses.

Buyer Beware

REMEMBER Caveat Emptor, also known as Buyer Beware, applies. This means a buyer takes the property as is, subject to all defects and repairs. This means searches, survey and inspection of the property are vital to avoid paying the price later on. It is also worth noting that you and your Conveyancer can raise enquiries with the seller’s Conveyancer but there is no guarantee that their replies are correct. The seller is unlikely to be an expert. You must independently investigate replies or instruct the relevant expert to do so. Your seller should not misrepresent matters but he is not required to volunteer information either.

The buyer always takes the risk when purchasing property.

Structural Defects

Structural defects are also of concern and that is why you should always obtain a building survey on a property purchase. Ideally all buyers would obtain a survey, and act appropriately upon the survey recommendations. This avoids buyer’s remorse following completion. See my articles on Adverse Surveys & on Buyer Beware for further details on why these are vital issues when purchasing property.

Further Information

Follow my property and conveyancing blog to find out more and to keep up with the latest property issues and how to deal with them. The blog is aimed at homeowners, homebuyers, homesellers, property sourcers, landlords with property portfolios, buy to let landlords, property investors and anyone involved with property. It is also a useful and free source of information for those in the property profession.

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You can also ask questions via the Facebook group “Conveyancing & Property Network UK”. The group membership includes many experts in the Property profession who will do their best to assist you. You can post anonymously if you wish and again the group is free to use. https://www.facebook.com/share/g/1Fz58Nvuxc/?mibextid=wwXIfr

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