Solicitor completes leasehold transaction with concerns over title class

Fridaysmove Conveyancing Solicitor Irene Bonsu-Amoako came across an unusual property title when acting for the buyer of a leasehold house near Peterlee, Tyne & Wear, SR8. Instead of being registered with ‘title absolute’ (which guarantees that the lessor has the title to grant the lease) at the land registry, the seller was only registered with ‘good leasehold’ title.

An absolute title is one which the land registry considers is not open to challenge by anyone else, whereas a good leasehold title could be challenged on the grounds that the person or body who granted the lease did not have power to do so, or had not obtained a necessary consent. As this was an obvious concern for the buyers, Irene raised queries to the seller’s Conveyancing Solicitor.

The sale was negotiated by local estate agents Pattinsons located at 2 Yoden Way, Peterlee, Tyne & Wear SR8 1BP.

Leasehold properties are usually registered with this class of title (absolute or good) when at the time the leasehold title was first registered the freehold title was not registered and no evidence of the freehold title was lodged with the land registry. While the owner of a leasehold property might be able to show that the title had been passed through a succession of owners from the original leaseholder, they would not be able to show that the lease was granted by a landowner who was entitled to grant the lease.

This situation frequently arises with leases which were originally granted many years ago, at a time when land titles were not generally registered. Although it was always considered good practice for a freeholder to show title to land when granting a lease, by producing copies of the title deeds was not a strict legal requirement. Many landowners who owned large estates did not as a matter of policy deduce title when selling property by lease. Landowners with extensive landholdings, such as family estates or local councils, would not show their freehold title on the grounds as finding the deeds for any particular property would take too much effort.

If the land registry could not see the freehold title when application was made for the leasehold title to be registered, they would register with ‘good leasehold’ title. That was for many years considered acceptable to buyers, but it is now less acceptable to mortgage lenders, which is why Irene was concerned.

The land registry will accept applications to upgrade good leasehold to freehold title, provided that either the freehold title is now registered or if evidence of the freehold title can be produced. Irene asked the seller’s Solicitors for further information. Fortunately it was revealed that the freehold title had subsequently been registered, and a copy of that title was obtained. This enabled an application to be made to the registry when the application for registration of the transfer was submitted.

When the issue of title was reconciled and all the additional legal documentation was up-to-date, Irene was able to proceed with the exchange of contracts and negotiated a completion date without any additional delays.  

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