When I was buying my rangie once my ideal one came up, the guy was an idiot to deal with, looked HPI came back ok but with 11 previous owners.... the price was right and it was 8.5 years old but when he started telling me it had no V5 then it was the deal breaker I'd been looking for. Oh he wanted cash only too.
A V5 isn't proof of ownership but cash isn't exactly proof of a purchase either, I could apply for the V5 the keeper would get a copy of my request. Report the car stolen and then that's me screwed. I think your circumstances are slightly different though. I'd advise signed receipts and a traceable transaction though to protect yourself.