Unregistered Property – What to Consider?
The Land Registry keeps a record of all property in England and Wales. The register includes all rights benefitting a property, who the legal owners are, rights over the property, covenants, and any restrictions or charges. In the 1990s, the government brought in compulsory registration. This requires all property transfers of ownership, including gifts, assents, and transfers of equity, and sales to be registered with the Land Registry within two months of the transaction being completed. Owners of an unregistered property and land could also opt to voluntarily register the property to prevent any issues arising in the future.
However, if a property has not been the subject of any transaction since the law changed in the 1990s, then it is likely it will be unregistered. Around 15% of property in the UK is not registered. If a property is not registered with the Land Registry, then it may be difficult to find or prove who the legal owners are because there is no central record of ownership to search.
In order to determine ownership of an unregistered property, the owner must evidence an unbroken chain of ownership for at least 15 years. This must be evidenced via production of original documents and title deeds, which proves that the legal owner has, what is called, good title.
If a property is not registered at the time it is purchased, the law requires it to be registered on completion of the sale of the property by the purchaser. This is done as part of the conveyancing process by the purchaser’s solicitor.
Issues with unregistered property
There are several risks associated with buying an unregistered property which are discussed below, which all have the ability to slow down the sale process and increase costs.
- Uncertainty of boundaries
The plans attached to old title deeds are regularly unclear or fail to contain the details you would see on a registered title plan. These include: scale, a North point, and boundaries of adjoining properties. It is therefore vital to make sure the boundaries shown on the plans held are sufficiently clear to establish accurate boundaries as they appear on the ground. Expensive issues can arise if any plans the seller holds are later found to be incorrect during the process of registration.If you are buying a property which is unregistered and the plans are not particularly clear, you can ask the seller to register the property before proceeding to exchange of contracts. Although this is likely to delay the sale whilst the Land Registry deals with the application for first registration, it will give you peace of mind that when you do assume ownership of the property, there will be no surprises.
- Adverse possession or squatter’s rights
If someone has used an unregistered property or plot of land exclusively for an uninterrupted period of 12 years or longer without objection, without permission and without payment to the true legal owner, then they may legally claim Adverse Possession of the whole or part of the property or land. This often happens with parts of gardens that can be fenced off and used as part of a garden of a neighbouring property.If the Land Registry receives an application for Adverse Possession, they must notify the legal owner, who may not have an automatic right to make objections to the application. The legal owners may not be known to the Land Registry, so they will not know who they should notify and serve the notice on. This could open up the possibility of a fraudulent claim being made on unregistered land, and almost certainly delay a purchase.
- Properties passing to the Crown
It is possible for property to pass into Crown ownership if, following the death of the legal owner, legal ownership cannot be established. This can be avoided if the property was registered.
- Lost title deeds
If the documents or title deeds are destroyed or go missing, it is probably going to be difficult proving who legally owns the property. In order for a property to be registered without title deeds, a conveyancer would have to reconstitute the deeds. This entails gathering and putting together sufficient evidence to allow the Land Registry to decide whether registration is possible. Each application will be decided on a case-by-case basis and on its individual facts. But will probably contribute to further expense and delay. Additionally, if the legal owner is still alive, they can prove their ownership by making a Statement of Truth about what happened to the deeds. This document can be prepared by a conveyancing solicitor experienced in first registrations, and then signed by the legal owner. The statement will need to show how the deeds became lost. This will give the seller the best chance of being granted ownership, which makes selling unregistered land a much easier process.
Are there any additional costs when dealing with unregistered property?
The Land Registry fee for processing first registrations is twice as much as their fee for dealing with registered property. The Land Registry generally takes a lot longer to complete first registration applications than applications relating to titles that are already registered.
There is more legal work involved in buying or selling an unregistered property and your legal adviser will probably charge a supplement reflecting this.
How long does first registration take?
It really depends on whether or not the title deeds are lost. If they are lost, then this can cause a significant delay to the time it would otherwise take to buy an unregistered property. There are also a variety of documents and steps to be taken in relation to a first registration, which also has the potential to increase the time it will take to complete a purchase.
Risks of unregistered property: a summary
- Proving ownership can be problematic if title deeds are destroyed or lost. If legal ownership cannot be proved, it can be problematic selling the property, and therefore, buying it.
- It is difficult to find out who owns unregistered land and the title deeds may need to be reconstituted by a legal professional, which can be expensive.
- Reviewing original deeds and documents can be time-consuming and expensive because they are likely to be old, handwritten, and in muddled order. This makes it more difficult to check and then prove the chain of ownership.
- There is a greater risk of property fraud if the property is unregistered.
- If a relative dies owning an unregistered property, which is perfectly possible if they have lived in it for most of their life, it may be extremely hard to find the title deeds. Particularly if they were someone to whom admin was unheard of. If the title deeds are lost, as we have discussed above, it is much easier to apply for a first registration if the owner is still alive and can make a Statement of Truth about what happened to the title deeds.
- It is worth talking to a conveyancer to discuss next steps with regards the unregistered property
A registered title:
- Provides definitive proof of ownership without the need to keep deeds
- Helps protect the land from identity fraud
- Makes it easier to sell a property and raise a mortgage
- If the title documents are lost, they can simply be replaced in minutes by ordering online from the Land Registry.