Good Leasehold Title - clarification

simplymegreg

Hi,

So the property I am looking to buy turns out to be 'good leasehold title'. I have some specific questions and would appreciate some specific answers.

1) I understand that the freeholder (who is probably dead) or his beneficiary MAY challenge the grant of the lease in the first place. My question is - is there no time frame within which this must be done? Is there a certain time period that elapses post the date the property was registered with the Land Registry as leasehold after which the title can be upgraded to absolute title?

2) Ultimately can the freeholder's beneficiary kick you out of the house and is the indemnity insurance in place to compensate you for your loss here?

3) In my circumstance, the 'parties' to the lease on the land registry are both limited companies back in the 1950s. Are these 'parties' the lessee and lessor? From my research it appears that both of these companies are no longer in existence. Is the only way to upgrade the title to obtain a copy of the lease which apparently has not been lodged with the land registry. I guess the question then is, where the hell is it?!

Quite a few practical questions there I know.

Thanks

simplymegreg

Any ideas?

ValHaller

simplymegreg wrote: »

Any ideas?

I think you need to explain a bit more what is going on, because your apparently self contained questions indicate snippets of a much larger issue, where I surmise that the underlying early situation has escalated to the point that ground rent has not been paid for a long period leading to the freeholder attempting to take possession or the beneficiary of the freeholder's will believing that he has ownership of both freehold and leasehold - or maybe you even have a nutter on the loose who does not understand the situation and thinks he in effect owns both leasehold and freehold.

Or something messy like that.

With the lack of detail you have given, the only advice is drop it and move on. But I would suggest a conversation with the EA to provide the background. They may say that they do not know - but you can challenge them and say that they advertised the property 'with good title', which is an unusual term suggesting that they know that there is an issue and they know the arguments why the title is good. So you would appreciate a full explanation before you commit money to the purchase.

If you can give a reasonably coherent account here, I think that the leasehold experts will be able to set you on a sound path

simplymegreg

Ok let me explain the situation fully.

An offer has been accepted on a leasehold property. My solicitor has just inspected the title of the property and has found that the title is 'good leasehold' as opposed to absolute title. My questions above were merely speculative of what COULD happen if a freeholder comes out of the woodwork at some point. Basically, I want to know the implications for me in plain English.

I believe the title is good leasehold because when the lease was granted in the 1950s a copy of the lease was not provided to the Land Registry.

The ground rent is £3p.a. and the lease has about 950 years left on it.

There isn't really much more to it than that.

ValHaller

I take it you have seen this http://www.landregistry.gov.uk/professional/guides/practice-guide-42-upgrading-the-class-of-title ?

On a brief scan, it seems to me that 'good leasehold' is probably roughly as good as it normally would have been before the Land Registry, in that on transfer of the Leasehold, the Freehold could have been sold in the interim and without modern database technology, you would never have been able to do a cross reference anyway.

You do need the correct advice - I know nought about it really. But I would be reassured if possession of a leasehold could be proven without dispute for whatever the limitation is on disputes over possession of leasehold.

Land_Registry

• Whether a time period exists re challenging the lease is something you would need legal advice on
• There is no time period for upgrading a Good Leasehold title
• Legal advice should be taken re any existing indemnity insurance but may simply be a case of checking it to see what eventualities are covered
• Yes, the 'parties' listed should be the lessor and lessee (in that order)
• Upgrade will only be possible if the original defect can be corrected.

Valhaller has linked you to the online Practice Guide from which you will note that to upgrade the good leasehold title it is necessary to effectively correct the defect which existed at the time the lease was registered for the first time. To do this it is likely that you will need to try and trace the freehold ownership from the date of the lease through to the last owner. The following may assist in understanding what may or may not be required if you choose to pursue the matter of course.

You refer to the freeholder as being dead but the details of the lease refer to two companies as being the parties to it - which is it or was the freehold title conveyed to a private individual and has still to be registered as this happened prior to the need to compulsorily register?
Dates for compulsory registration appear in our Practice Guide 51 - identify the administrative area for the property and check the listed date. This should give you an idea of how long it has been since the freehold title has been in the same ownership. This may appear irrelevant but may at least offer some reassurance as to how long the lease has been in place unchallenged.

The details of the lease as set out on the register are simply a means to match the title details with the lease itself i.e. the original details of the lease. The parties should represent the freeholder and leaseholder at the time that the lease was granted. If you know the freehold was conveyed to a private individual then pursuing the original freeholder may not be worthwhile.

Your focus should be on the freeholder here as the leasehold title is registered and the current leaseholder is known. Whilst tracking back through the leaseholders might seem worthwhile the odds may be that they have been in the same position as you and either drawn a blank or simply not tried to remedy the defect. If there are other leaseholders involved i.e. the property is one of many out of the same freehold what have they done?

If you understand that the original freeholder remains in place but no longer exists it may help to establish how it stopped trading - this may have a bearing on what has happened to their assets, including the freehold. If you know though that it was conveyed to a private individual who is probably dead then finding proof of that change of ownership and then identifying his/her beneficiaries would probably be the route to take, starting with whether Probate was applied for and issued for example.

As you will already appreciate Land Registry cannot provide legal advice and we would always recommend seeking legal advice on such matters, especially with regards the risks involved in buying a Good Leasehold title. Has your solicitor not advised you on this already or are you really simply trying to establish whether anyone has experience of losing out over a Good Leasehold title perhaps?

Richard_Webster

The issue is that when the title was first registered - in most areas this would be when it became an area of compulsory registration some years after the lease was granted, the Land Registry did not have produced to them a copy of the original lessor/freeholder/ landlord's title to the freehold to show that he actually owned the freehold and could grant the lease.

Pre Land Registration it was often not the practice to keep copies of the freehold deeds with a set of leasehold deeds, so at the time it wasn't thought be anything unusual. Apart from London and a couple of Sussex coastal towns compulsory Land Registration didn't start in earnest until the 1960s, and even then it was only big cities. So solicitors didn't really think about what might happen on a future registration. Many provincial solicitors simply didn't understand registered land at all!

So the highly theoretical possibility is that the company that granted the lease in the 1950s didn't own the freehold. You would have expected the "real" freeholder to have showed up at that time wondering what all these houses were doing on his land! If there is a different "real" freeholder then if he showed up now and sought to repossess the property saying that the lease had not been validly granted I can't see any judge being very sympathetic.

Prior to the Council of Mortgage Lender's Handbook being published in 1999 most major lenders were not particularly concerned about the issue, but now the rules for anyone getting a mortgage are:

5.6.2 Good leasehold title will be acceptable if:

*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
*you are prepared to certify that the title is good and marketable when sending your certificate of title (because, for example, the landlord’s title is generally accepted in the district where the property is situated); or
*you arrange indemnity insurance. Our requirements in respect of indemnity insurance are set out in section 9.

The first of these three is what the solicitors who first registered the title should have produced but possibly did not have, so that's no help unless this can be obtained e.g. the freeholder is contactable and his solicitors can provide the documents - I have done this with a local authority landlord.

The second is more contentious. It depends on the area and what solicitors generally accept - so in my immediate Southampton/ Eastleigh area there are quite a lot of them around, but it is a local quirk not found outside the immediate area. For a solicitor in London or even nearer in say Portsmouth, this is unusual and they require an indemnity policy. However in some Northern Industrial towns/cities there are thousands of such titles and they are more easily accepted without a policy.

So in most cases unless you have, say, a Sheffield solicitor dealing with a purchase of an old Sheffield terrace, your lender will require a policy. They are quite cheap - £50-£150 as a one-off in most cases.

That's the long explanation, but please don't get concerned about it - in 99% of cases it is going to be a pure technicality and nothing to worry about. Purely Lender back protection.