The V5 and V5C act as proof of title: http://www.direct.gov.uk/en/Motoring/BuyingAndSellingAVehicle/RegisteringAVehicl- e/DG_4022310

For checking for outstanding finance you should run a check (at a small cost) with HPI: http://hpicheck.com/ . These sites are not just for IMCDbers to check up what cars are ;).