In law there are 3 types of title (ownership) that are given to registered properties:
Absolute Title. Which is awarded by the Land Registry if the ownership of the land is clear and not disputed.
Good Leasehold. Where the freehold is not registered, and the leasehold title can only be granted as Good Leasehold. This may be rectified by registration of the freehold unregistered title. Lenders do not like this title.
Possessory Title. Which is awarded when the ownership of the land is not clear. Lenders do not like this title. It is worth checking the online UK Finance Handbook for your lender’s requirements.
POSSESSORY TITLE
There are two reasons why the ownership of land may be unclear. The first reason is that the original Deeds of the property were lost. In order to register the property for the first time the seller provided Statutory Declarations regarding ownership and stated that the paper deeds were lost/damaged or destroyed. In these circumstances Land Registry will award a Possessory title as someone could, in the future, claim ownership by producing the original Deeds.
The second reason is via someone claiming ownership of the land through adverse possession. In other words, someone using an area outside of their boundaries, for example to the rear of their property, fencing it off and using it or claiming it as their land. Once a period of 10/12 years has elapsed, without any questioning this, the party having sole use of this land can claim a possessory title. Again, after further passage of time the possessory title may be upgraded to Title Absolute.
Possessory title is not classed as “Good” title to property and is sometimes refused by lenders. Lenders must be advised where title is Possessory to ensure that they are happy to accept the Title as it stands. They may not be.
It is always worth checking lender requirements via the UK Finance Handbook if title is anything other than Absolute Title.
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