Buying Unregistered Property at Auction: What You Need to Know

Purchasing property at auction can be an exciting opportunity, offering the potential to secure unique investments or bargains. However, buying unregistered property at auction comes with additional complexities that every prospective bidder must be aware of. Without proper preparation, you could face significant delays, unexpected costs, and legal complications after the hammer falls.

In this guide, we outline the process of buying unregistered property at auction, the challenges you might encounter p0st-completion, and why it’s crucial to have a solicitor review the legal pack before bidding.

What is Unregistered Property?

Unregistered property is land or property that has not yet been recorded with HM Land Registry (HM Land Registry – GOV.UK) in England and Wales. While this doesn’t necessarily mean there’s anything wrong with the property, it does mean that ownership is not documented in the digital Land Registry system. Instead, proof of ownership relies on physical deeds, which can sometimes be incomplete or unclear.

Unregistered property is more common when ownership hasn’t changed hands for decades or when the property hasn’t been subject to compulsory registration requirements.

The Auction Process for Unregistered Property

1. Review the Legal Pack

Before bidding, the auction house will provide a legal pack containing essential documentation, including title deeds, searches, and special conditions of sale. For unregistered property, the deeds will play a crucial role in establishing ownership and understanding any associated rights or restrictions.

2. Obtain Legal Advice

Have a solicitor review the legal pack thoroughly before the auction. They will check for missing or unclear documentation, verify the seller’s ownership, and flag potential issues that could complicate registration.

3. Prepare for Completion

If your bid is successful, you’ll need to complete the purchase within the timeframe set out in the auction conditions, typically 28 days. Ensure you have funds and arrangements in place for a smooth transaction.

4. Post-Completion Registration

Once the purchase is completed, it will be your responsibility to register the property with HM Land Registry. This involves submitting the original title deeds and a completed application form, alongside any additional documents required, such as a stamp duty certificate (Stamp Duty Land Tax: Overview – GOV.UK). Your solicitor will handle all of this for you.

Potential Problems Post-Completion

After completing your purchase, the journey is far from over. Unregistered properties often present challenges during the registration process:

1. Incomplete or Missing Deeds

If the seller’s title deeds are incomplete or unclear, proving ownership can become a time-consuming process. This may require obtaining statutory declarations or other evidence to support your application.

2. Delays at HM Land Registry

The registration process for unregistered property is more complex than for registered property. HM Land Registry may take upwards of 12 months to process your application, especially if the documentation is incomplete or requires further clarification.

3. Boundary and Ownership Disputes

Unregistered land can sometimes lead to boundary disputes or disagreements over rights of way, as the exact limits of the property are not always clearly defined in historical deeds.

4. Impact on Future Transactions

If the property isn’t registered, it could complicate future sales or refinancing. Most mortgage lenders now require properties to be registered before they’ll consider lending against them.

The Importance of a Legal Pack Check

One of the best ways to avoid problems is to ensure you have a solicitor review the legal pack before placing a bid at auction. Here’s why:

  • Identify Risks Early: Your solicitor can flag missing or unclear documentation, which might indicate future registration difficulties.
  • Understand Your Obligations: The legal pack may include special conditions that place additional responsibilities on you as the buyer.
  • Avoid Costly Delays: By addressing potential issues before bidding, you can save time and money post-completion.
  • Peace of Mind: Knowing that a legal professional has thoroughly reviewed the documentation allows you to bid with confidence.

How We Can Help

At Spectrum Solicitors, our experienced conveyancing solicitors are here to guide you through the complexities of buying unregistered property at auction. We offer:

  • Legal Pack Reviews: Comprehensive checks of all auction documentation to highlight potential issues.
  • Post-Completion Support: Assistance with registering your new property with HM Land Registry, including addressing any delays or complications.
  • Expert Advice: Tailored guidance to ensure your auction purchase is as smooth as possible.

Final Thoughts

While buying unregistered property at auction can be a worthwhile investment, it’s not without its risks. Delays in registration, missing information, and potential disputes can all lead to stress and unexpected costs. By engaging a solicitor early in the process and ensuring a legal pack check is completed, you can mitigate these risks and move forward with confidence.

If you’re considering purchasing unregistered property at auction, contact us today to discuss how we can assist you.