Each registered title to property in England and Wales is given a class by the Land Registry. The class is stated on the official copy of the register of title and, despite appearing relatively innocuous, it can reveal some far-reaching risks which any owner, buyer, tenant or lender should be aware of and which might benefit from demystification…
There are broadly four classes of title which the Land Registry can apply to a title of property in England and Wales:
Absolute (freehold or leasehold)
This is the gold standard of title and is given when the title is such as a willing buyer could properly be advised to accept without any further investigation.
Essentially title absolute means that the registered proprietor owns the title together with the related interests and, other than the provisions of the lease in a leasehold title, is only subject to the entries which are on the title register at the time of registration, overriding interests (interests which do not appear on the register but nonetheless bind purchasers) and certain rights of adverse possession of which the proprietor had notice.
Good leasehold (leasehold only)
This takes the silver medal and is given in cases where the Land Registry is satisfied as to the title of the leaseholder only and not the freeholder. For example, this may happen where the freeholder’s title is unregistered and it has not provided the necessary deeds and documents to prove that it had full and unrestricted power to grant the lease or where the freeholder’s title is registered with less than absolute title. This class of title has the same qualifications as absolute title but is also subject to the risk a third party may have (and look to enforce) an interest or right in the property which conflicts with the title the landlord purports to have.
Possessory (freehold or leasehold)
This class of title is quite rare and is given in cases where ownership has been awarded based on adverse possession (“squatters’ rights”) or where documentary evidence of ownership has not been provided to the Land Registry. After 10 years’ adverse possession, a squatter can apply to be registered as the registered proprietor in the absence of any objection by the true owner. However, there is a risk that in so doing, the true owner is alerted to the fact that the squatter is acquiring rights.
In addition to the qualifications attached to absolute title, possessory titles are (like good leasehold) also subject to the risk that a third party with interests or rights in the property which are subsisting or capable of subsisting at the time of registration could seek to enforce such interests or rights.
Qualified (freehold or leasehold)
…is even rarer than possessory title but is given when the Land Registry have identified certain reservations to the title which cannot be disregarded or if the title has only been established for a limited period.
Beyond the matters to which absolute titles are subject, qualified titles are also subject to any rights or interests which may be excepted from the registration by the Land Registry.
Absolute title is the gold standard: the highest form of registered ownership – what you would most want to see on the official copies if you are buying a property.
But what can be done if the gold standard of absolute title has not been achieved? Can this be remedied, or the risks mitigated?
There a couple of possibilities which should be considered depending on the circumstances:
Applying to Upgrade Title
The following have the right to apply to the Land Registry to upgrade the class allocated to the title:
(i) the registered proprietor of the relevant title;
(ii) a person entitled to be registered as the proprietor (e.g. someone who had just completed the purchase of a registered title);
(iii) a proprietor of any registered charge affecting the title; and
(iv) a person interested in a registered estate that derives from the registered estate to be upgraded (e.g. a tenant).
The application will only be successful if the Land Registry are satisfied that the reasons for the less than perfect title having been originally awarded have been remedied, for example missing documents have been located or the landlord’s title has been proven and awarded title absolute. In respect of a possessory title granted in cases of adverse possession, the title can only upgraded once the title has been registered for 12 years.
Where there is no new evidence, or, in the case of adverse possession possessory titles, not enough time has passed, defective title insurance may be worth considering as a potential way to mitigate the risks associated with good leasehold, possessory or qualified titles.
Ultimately, the class of title which a property has, reflects the level of guarantee from the Land Registry based on the strength of evidence they have been provided with at the time of first registration of title. So, ignore at your peril the seemingly innocuous statement in the Proprietorship Register of the class of title to your property…