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If you’re attempting to sell a leasehold or freehold property but there is limited or no title guarantee for the home, you may find that it’s more of a challenge to get buyers interested compared to a home that has a full title guarantee. This guide explains why that’s the case and it also provides advice on the best steps for attracting a quick and competitive offer.
- What does it mean to have a title guarantee at a property?
- The three types of title guarantee when selling a home
- Buyers may be wary of limited or no title guarantee at your home
- Reasons for selling a home with limited or no title guarantee
- Obtaining indemnity insurance before selling your house
- Four ways to sell a property that has limited or no title guarantee
- Top questions about selling a home with no or limited title guarantee
What does it mean to have a title guarantee at a property?
If you are preparing to sell any type of property, one important consideration may be whether you have a full, limited or no title guarantee for the home. Whichever of the three types of title guarantee applies to your house could make it easier or harder to find a buyer.
In broad terms, a title guarantee is a legal document that gives an assurance to a potential buyer that the person selling a house is the legally recognised owner of it and has the authority and right to transfer that ownership to the buyer. If any problems arise with the title after the home is sold, the title guarantee can provide insurance to compensate the new owner.
Title guarantees are typically involved with the sale of properties where the person selling the home has little or no knowledge about the history of the house and its ownership, as explained by A.V.Rillo Conveyancing.
Common situations where this can occur include where someone has inherited a property but has no interest in keeping it and wants to find a buyer for it, or where an attorney or other professional who is executing the estate of a deceased property owner is attempting to sell their home.
Solicitors who perform conveyancing – a complicated process of collecting all the necessary documents for transferring the ownership of a property – will typically produce title guarantees. As part of this work, they will look to see if there are any issues that could create hurdles to the sale of your home, for examples if there are restrictive covenants at the property.
The three types of title guarantee when selling a home
If there is either limited or no title guarantee at the property you’re attempting to sell, you may find that this can sometimes make it more difficult to get buyers interested in the home.
These two types of title guarantee differ from a full title guarantee, where there is no uncertainty that the seller has the legal right to find a buyer for the property.
If the home being sold is leasehold, where you only own it for a set number of years and pay the freeholder a ground rent, then a full title guarantee implies the lease continues to be valid with and that you’re in compliance with its terms. If the home is registered then that title is presumed to transfer to the new owner, and if it’s unregistered then the presumption is you’re selling the freehold, or if it’s clear the house is leasehold, it’s presumed you’re selling the unexpired lease.
By contrast, with a limited title guarantee, this implies that you as the seller have no direct knowledge of the history of the property, as BBS Law explains. The likeliest scenarios where this can happen is where a trustee has repossessed the home for sale, or where it’s being sold in the execution of an estate.
If you’ve got a limited title guarantee then this means the seller can’t vouch that there are any financial provisions affecting the house. The seller also cannot guarantee that covenants do not exist that might place restriction of the property, or any other rights someone may have over it.
And if the house you’re attempting to sell has no title guarantee, this means the seller has zero knowledge, or very little information, about the home. This increases the risk that there could be serious problems with the property that a prospective buyer will not be able to find discover before making an offer, such as someone else having a legal claim to the house.
Buyers may be wary of limited or no title guarantee at your home
You could find that it’s harder to convince potential buyers to make an offer to purchase your freehold or leasehold home once they learn that it has limited or no title guarantee.
If your home has limited title guarantee, that means there are still some partial factors that can help with the sale, such as an implication that you have the right to sell the property and transfer its ownership, and that you’ll pursue reasonable efforts at your own expense to guarantee that you are providing the title as accurately as possible, as Thomson Reuters Practical Law notes.
So, you could find that certain buyers are willing to accept a limited guarantee despite the fact that it will nevertheless mean some uncertainty or missing information about the home.
But it might be much more difficult to get a prospective buyer to make an offer on a house that has no title guarantee. That’s because the buyer will not have any information about the title that you’re not able to disclose to them, and the details you can provide will be very limited.
This could a buyer to worry that there may be issues with the ownership of the home that could create legal disputes in the future once they own it, such as restrictive covenants or someone else having a claim to the property, and this might be enough of a dealbreaker for the buyer.
Reasons for selling a home with limited or no title guarantee
Although the fact that a property lacks or has a limited title guarantee can be a deterrent for certain potential buyers, some sellers may have their reasons for selling a home this way.
Every home sale situation is unique, but some of the common explanations for why someone might want to sell a property without offering a full title guarantee include:
Outdated registration: If the ownership of a property has changed throughout the years as a result of an inheritance or other reasons, this can create gaps in the home’s registration that can be expensive to fix, so you may have to sell with limited or no title guarantee as a result.
Missing title deeds: It’s possible that the title deeds for your property are missing, and that the process of trying to recover them could take much more time than you’re prepared to wait, in which case you may need to sell with a limited title guarantee due to these missing details.
Unknown problems: Despite your best efforts to provide a comprehensive title, there could still be the risks that there are defects with the property that you don’t know about, so providing a limited title guarantee may provide protection for you if the defect causes an issue in the future.
Don’t be concerned that having limited or no title guarantee at your home will make the property unsellable. You still have methods available for selling, such as contacting a quick home buying company like LDN Properties that has experience with making fair and fast offers for houses like yours.
Obtaining indemnity insurance before selling your house
If you find that your property does not have a title guarantee or only has a limited title guarantee, one solution to consider is purchasing indemnity insurance before you seek a buyer.
Indemnity insurance could help protect you against legal liability and costs as the result of a defect with the property or other problem that occurs in the future under the new owner. For example, if there’s a restrictive covenant at the home that is not covered by limited or no title guarantee, and this causes issues for the next owner, indemnity insurance may cover you.
But the process of getting indemnity insurance can be quite time-consuming and costly, as the HomeOwners Alliance notes. This can make obtaining insurance before attempting to find a buyer not a viable option for people looking to sell fast and with minimal costs.
If you have neither the time, money nor interest in purchasing indemnity insurance ahead of selling your property then you still have choices available for finding a buyer.
For example, you could get in touch with a quick home buying company like LDN Properties, as they are known for making fast and fair offers to purchase almost any type of house, even those that have limited or no title guarantee. There are several advantages of selling with this method, including that you won’t pay any commission and it should only take a few short weeks.
Buyers are also able to obtain indemnity insurance to cover themselves for legal liability and costs that could occur when they purchase a home with limited or no title guarantee.
Four ways to sell a property that has limited or no title guarantee
A major choice to make when selling a home with limited or no title guarantee is selecting how you want to find a buyer. You can generally pick from selling with an estate agent, selling at a property auction, selling without any third-party help or selling to a quick home buyer.
Some of these methods have prominent benefits, like not being required to pay any commission if you sell to a true no-fee quick buyer like LDN Properties. Other selling choices have notable drawbacks, like potentially having to wait more than a year when you sell on your own.
A useful tactic can be to write down your top aims with the sale of the property, such as your preferred selling price, how long you can wait before you get a serious offer and whether or not you are open to paying any commission. Then compare these important facts against the details of the four options below to discover the most suitable selling option for your situation.
Selling with an estate agent
You will not need to do much work when selling via an estate agent because they will handle most of it, which begins when then create a listing that features photographs of your house and describes its main features. They’ll advertise this online, in local newspapers and in their office, schedule viewing for anyone interested to tour the home, and hear offers from buyers.
This is one of the slower ways to sell a property because it can take many months or even more than a full year. Remember also that a buyer could make an offer but then change their mind and rescind it, causing the sale to fall apart. You’d have to start over with looking for a buyer, delaying the process further, and the buyer can’t be penalised if contracts aren’t exchanged.
Having to agree to viewings can also be a major negative aspect of selling your home using this method, as some buyers don’t like the idea of having potentially dozens of more people touring the inside and outside of their home, often with very little notice about when this happens.
Another drawback of selling via an estate agent is that you’ll need to pay them commission, typically within a range of 1.15 percent to 1.40 percent of the property’s final sale price. This will be deducted from the final sale proceeds, which will add to your overall expenses. Some estate agents might charge under 1.15 percent but others could charge over 1.40 percent.
Selling at a property auction
A property auction may not be the best choice if you’re looking to keep costs low because they will charge commission, typically at 2.5 percent of a house’s sale price, and this will increase your expenses because the fee is deducted immediately from the final proceeds.
The auctioneer charges this fee to reimburse them for the effort they put in with producing and advertising a listing for your property, hosting the auction and overseeing a successful sale. It can help to reduce stress when selling knowing that the auctioneer will handle most of the work.
Another disadvantage with this approach to selling is that it’s not very fast, with several long waiting periods involved. Once you decide to sell this way, there will be a wait of many weeks or months before the auction is held. If your property does sell at the auction, the buyer then has about 28 days to sign all the legal papers and complete the other tasks to finalise the sale.
Some auctioneers could be open to negotiating aspects of the sale that make it more favourable to the buyer, for example reducing their rate of commission, having the buyer pay some of the seller’s costs or setting a shorter deadline than 28 days for the buyer to complete their after-auction tasks, so you should always ask about whether such options are possible.
Selling without any third-party help
Selling without any third-party help means doing so without the assistance of an estate agent or auctioneer, whose tasks when selling are outlined earlier in this guide.
This puts the burden on you to handle all this work, including putting together a listing, advertising it, scheduling viewings and trying to get a serious offer through to exchange of contracts. It’s a huge undertaking and can take up a lot of your time and be very stressful.
For these reasons you should only consider this approach to selling if you have managed to sell a home with limited or no title guarantee before, or if you have a qualified friend or family member that might be willing to help you at no cost with selling. Otherwise, you could be facing a lengthy wait to find a buyer, possibly up to more than an entire year.
And someone can make an offer but then cancel it, which they can do without facing any penalties if contracts have not yet been exchanged. This would add much more time to your selling schedule because you will have to begin again with trying to find a buyer.
The only clear perk of selling this way is that you won’t need to spend any money on commission that would otherwise be paid to a third party. But this cost saving may be wiped out by the funds you’ll have to spend on various other parts of the selling process.
Instead, consider selling to a no-fee quick buyer like LDN Properties because you will still achieve the same benefit of not paying any commission, but you’ll also get a much swifter sale because the typical timeline should only be a few weeks from beginning to end. That makes it a streamlined, zero-hassle and stress-free alternative to trying to sell on your own.
Selling to a quick home buyer
Quick buyers are companies such as LDN Properties that don’t need to wait for weeks or months to get approved for a mortgage before they can purchase your home, because they already have the funds necessary to make a competitive and speedy offer right away.
This advantage cuts the usual timeline when selling this way down to just a few short weeks, and this covers the time required for exchanging contracts and paying you the proceeds. Compared to the three other choices, it makes quick buyers often the speediest way to sell almost any type of property, which is perfect for people hoping to sell in a hurry.
You’ll also still get a fair offer even if your house has limited or no title guarantee, because quick buyers are well known for making decent offers on properties regardless of any legal problems or structural issues and no matter their age, condition, location shape, size or type.
As well as buying and making offers for homes that have limited or no title guarantee, LDN Properties has 15-plus years of experience making fair and fast offers to purchase a wide variety of homes including flats that do not have a landlord’s certificate, roof space, off-plan properties, homes that have a right of way, flats in a building without lifts, houses that do not have a structural warranty, properties that have a regulated tenancy, investment homes, buy-to-let flats, properties damaged during a flood or storm, flats with very short leases remaining, and many other examples.
For those homeowners wanting to keep their costs low when selling, quick buyers are also a good choice because they will never charge you any commission, so you can count on receiving the full sale proceeds. That’s preferable for many sellers compared to the commission that they would have to pay if they sold at a property auction or with an estate agent.
Top queries and answers about selling a property with limited or no title guarantee
LDN Properties has purchased many houses with a limited or no title guarantee, and here you can find our answers to frequently asked questions about selling this type of home.
Your top questions when selling a property with limited or no title guarantee
The title guarantee can be a crucial part of the process of selling a property because it’s a document that proves the person trying to sell the home has the right to do so and transfer ownership to whoever buys it. Title guarantees are often used in situations where the seller has little knowledge of the property’s history, for example if it’s being sold through probate.
A full title guarantee means that all the information needed to prove the ability to transfer ownership exists. By contrast, with a limited title guarantee the seller is not able to fully provide details on potential legal issues that may apply to the home, but can guarantee some aspects. No title guarantee means the seller is unable to even provide partial assurances.
It can prove more difficult to get buyers interested in your property if there is limited or no title guarantee, because they could have concerns that there might be significant legal issues with the house that they’re unable to learn before making on offer. These problems can include someone else having a legal claim to the home, restrictive covenants and more.
There are a few reasons why it might be preferable for a property owner to try and seek a buyer for the home without providing a full title guarantee. These scenarios include when the title deeds are missing and it would require too much time to try and locate them, where the property registration is out of date and it’s too costly to update it, and several other situations.
Purchasing indemnity insurance could potentially be one way to address problems that might arise when trying to sell a house that has either limited or no title guarantee. This would provide protection against legal and financial claims that the next owner of your home could make if issues omitted from the title guarantee cause problems in the future, like restrictive covenants.
You will be required to pay commission if you choose to sell your home using an auctioneer or an estate agent, and this will increase your total expenses because this fee will be deducted right away from the final sale proceeds. But you won’t have to pay any commission if you sell your property on your own or if you sell it to an honest no-fee quick buyer like LDN Properties.
A fast way to sell your home that has limited or no title guarantee could be contacting LDN Properties or another quick buyer, as the timeline – including exchange of contracts and paying you the full proceeds – should only take a handful of weeks. Expect to wait at least several months if you sell on your own, with an estate agent or at a property auction.
