Conveyancing - Leasehold title not absolute

13 AUGUST 2024 11:05

There are four different classes of title which the Land Registry can assign to an interest being registered: Absolute; Possessory; Qualified and Good Leasehold.  The title depends on the quality of evidence of the applicant’s legal right to the title.

 

The best class of title is absolute and is granted to the majority of freehold interests and most leasehold interests. Receiving this title means the Land Registry has no doubt about the owner’s right to the legal title.  

 

Good Leasehold title is given when the Land Registry decides the freehold (or headlease) title has not been satisfactorily deduced.  In most cases this is because the freehold title is unregistered and deeds missing. This means the Land Registry cannot approve the landlord’s entitlement to grant the lease.

 

This is a problem because the Land Registry cannot guarantee title to the freehold interest which means the validity of the lease may be vulnerable to challenge. In addition, the property may be subject to unknown restrictive covenants or other incumbrances, which may affect the use of the property.

 

A good leasehold title can be upgraded to title absolute. However, this is dependent on possessing documents which show the freeholder or landlord’s right to the freehold.

 

The other problem is that it can cause the lease to be unacceptable as security for a loan. Good Leasehold Title is only acceptable to the majority of lenders in limited circumstances:

 

1. A marked abstract of the freehold and any intermediate leasehold title for the statutory period of 15 years before the grant of the lease is provided; or
2. A conveyancer is prepared to certify that the title good and marketable; or
3. An indemnity policy can be arranged.

 

An indemnity policy is a sticking plaster and does not resolve the underlying legal issue. This means that while one lender might accept an indemnity policy at present, it might not in the future and we cannot confirm different lenders requirements. Therefore, you may struggle to re-mortgage or sell to purchasers with a mortgage in the future.

 

Therefore, you should consider carefully whether you wish to proceed with the purchase by taking into account the specific circumstances of your case and by way of discussion with your solicitor.

 

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