Portfolio Opportunities: The Best & Most Innovative Property Investment Concepts - Possessory Title
Possessory Title is a legal term which applies when someone claims a piece of land or an abandoned property and uses it for a commercial venture or simply as a home to live in and pays absolutely nothing for it.
Did you read about the squatter Timothy Ellis in Lambeth who was awarded ownership of a property worth over £200,000? Having lived in the house for 16 years and never having paid rent, he won the case on the grounds that the council, who owned it, had neglected the building and that he had maintained it over that time. Of course I don’t advocate squatting. Squatters are a nightmare for the legal owner, their actions illegal and they usually have no thought or consideration for the property in which they reside. However, I can’t see anything particularly wrong in utilising a piece of land or a building that has been left abandoned, perhaps open to the elements, fallen into disrepair and it ’s patently obvious that no-one is interested in the place. I’ve seen so many formerly beautiful properties that have been left to decay that I sometimes feel there should be a law against such neglect.
Before one can claim possessory rights one would naturally have to find property or land that one had a need or use for. If anyone decided to seize such an opportunity, what should you look out for?
Think firstly of your own area. Is there an old cottage, a derelict farm, a neglected terraced house, a crumbling cottage, a field or simply a garden-sized scrap of land that as far as you know doesn’t appear to have anyone interested in it?
If you spot land or a site that you feel has potential and appears to have no ownership, start to make some enquiries. Make a visit to your local council offices where you can examine the records on individual sites and buildings. Check to see if anybody (owners or not) has put in any planning applications. All records will be dated. Subsequently, try to establish if other parties are interested in the site. This service is free, we pay for it with our taxes, so use it. It ’s also worthwhile checking the electoral register, which can be a good way of tracing ownership. Local residents can also supply valuable information. Some will have direct knowledge of sites and old properties and can pass on essential details with regard to ownership, or, of course, the apparent lack of it. It might at this stage be wise to not make your intentions too clear.
Presuming that no known owner has been found it is then advisable to write to which ever Local Land Registry Office holds responsibility for your area. To find their address you would contact HM Land Registry (landreg. gov.uk). They will put you in touch with the local office that holds the information.
Ask your local office to make a search to enable you to clarify ownership. For a small fee they will supply a copy of the Title Plan, which lists the extent of the boundaries and the Title Register, which lists any registration. Send the office an enlarged copy of an Ordnance Survey Map showing the OS reference numbers and mark the land or property in pen and list the address, if applicable. You will then be asked to fill in either a Form 96 or a Form 109. If you don’t know whether the land or property is registered or not or its title number, which one would presume to be the case, then Form 96 is the one to use.
It is now law that all land and properties changing hands must be registered with the Land Registry. When you buy or sell any property today through the normal legal channels it becomes automatically registered as part of the sales transaction. However, if the place in question has not changed hands for a number of years then it is quite likely that it won’t be registered. It may, for instance, have passed through a family for hundreds of years with the last known relative having died without heirs. It might have been left to someone in a will who could never be traced, or if they have has never registered it and even forgotten about its existence (perhaps heirs who have emigrated).
The result of the search will open up various options. If you find the land is registered and the owner is still alive then there is nothing you can do. The law takes a very negative view of people occupying land that belongs to someone else.
If, however, the land is registered but not owned, you can still claim it. Providing the last owner is not alive you can use the land and property as your own.
The law states, in very loose terms, that you should possess the land for your own exclusive use for 12 years before you can obtain Possessory Title. On moving onto any land or property a claimant would have to make it visible that they had actually claimed it. This could be done by grazing a horse or goat, repairing fences or simply cutting the grass.
Having made use of the land or property, the claimant would need to establish a date from when the claim was to be made and should prepare a statement that was signed and dated by two witnesses. They could rent out the land to a third party and by keeping a rent book would have evidence when providing proof of use is called for. Whilst none of the above courses of action are in fact demanded by the Registry they help the claimant ’s case enormously. What the Land Registry does need, however, is a Statutory Declaration which a claimant will need to sort out with a solicitor.
After 12 short years have elapsed the claimant would write to the Land Registry with the Statutory Declaration and a list of what they have done to the land. Once granted a Possessory Title the claimant would have to pay a small fee to the Land Registry, which is set at roughly 0.2% of the value of the property or land. For example, if the value was priced at £50,000 the fee would be set at £100.
With a Possessory Title the claimant can then sell the land. To do this they would need to apply for an Absolute Title, which is apparently granted in most cases (each case being assessed on its own particular merits).
I’ve heard about some interesting cases of land being claimed by Possessory Title. One enterprising character planted apple trees on a smallish plot of unclaimed land in Devon and within a number of years his orchard was producing food which he sold to local supermarkets. Another clever chap utilised an unused field near his home and started to produce hay, which can be quite profitable. This demanded hardly any work and he even got his local water board to apply liquid fertiliser free of charge and as often as he needed.
However, it ’s important to stress that some ‘occupiers’ have not been so lucky. The Land Registry openly admits that there are at least 4,000,000 properties it cannot account for and yet many missing owners have returned to reclaim land they had neglected for a number of years. They’re not likely to react favourably to an unwanted occupier running a business on their property. This, for obvious reasons, can financially damage the occupier who has to abandon what possibly is a lucrative business.
The last major revision of the laws that involve Possessory Title claims was implemented in 1986, although it should be noted that slight variations have occurred after disputes have gone to litigation. Individual complexities are often unique and can create new rulings.
The above laws only apply to England and Wales and not to Scotland. Information on Scottish properties are held by the Scottish Land Registry. Although the fundamental principals to claiming a Possessory Title are similar, there are variations, particularly in legal terminology. It would, therefore, be wise to consult a solicitor who is conversant with property rulings in Scottish law.
As an interesting aside, recently Lambeth Council went to court fighting a legal battle to reclaim £14,000,000 worth of houses which it “forgot ” it owned. Yes, actually forgot . (What a way to run a publicly-accountable organisation!) The houses were transferred to the council when the Greater London Council (GLC) was abolished in 1986, and Lambeth only discovered it owned them when they installed a new computer system. One Victorian town house alone is now worth £800,000. A council spokesman admitted that the case could run for years.
I have two first-hand experiences of Possessory Title. The first is that patch of land I attended a property auction to buy. It was an acre of hilltop near to my home with staggering views over the Marches countryside. Only two stone walls of a farm building remain on this site, but, importantly, this represented building precedent. Planning for a residential dwelling would have been a formality. And as luck would have it, an electricity supply passed by over the neighbouring field. I was determined to have it and erect one of my old oak barns on there. On inspecting the area prior to the auction I noticed a beaten- up caravan parked and rotting alongside. ‘Better set fire to that,’ I thought, ‘on Health and Safety grounds.’ Of course this is what scuppered the sale and the lot had to be withdrawn at the last moment. The ‘owner’ of the caravan saw the land was being offered for sale at auction and put in a claim for Possessory Title, stating that he’d maintained the area for over 12 years. It wouldn’t surprise me if this was true. The owner was a forestry business, then in liquidation, that had moved out of the area 20 years ago. They’d obviously forgotten they owned it, or couldn’t care less, and it was only through the diligence of the Receiver that it came to light. I note that the lot has not come up for auction since, which suggests to me that either a strong legal case is being entertained or the land has already been handed over.
The second example is a small patch of land that lies next to a London property I have a joint interest. A friend an I bought the house 10 years ago, in a pretty run-down state, renovated it and it ’s now let and has been for a long time. We erected a garage on this unused area, which is owned by the council (not Lambeth, I hasten to add!). No one has ever said anything to us about it. If they had we’d have simply moved the garage. But in 2 year’s time … well, I’ll leave that to your imagination.