Possessory Title: What Did Your Mortgage Lender Require When You Bought?

Historical mortgage lender requirements for possessory title can matter when an earlier purchase comes under review. A buyer’s solicitor may now question the title, a remortgage may stall, or an owner may discover that part of the garden was registered with a different class of title from the house.

The immediate question is how to progress the present transaction. The separate historical question is what the original lender required and what the purchaser was told before committing.

What is possessory title?

Possessory title is a class of registered title. HM Land Registry explains that it is typically granted where ownership is claimed through adverse possession or where documentary evidence of title cannot be produced.

Both freehold and leasehold estates can have possessory title. The class appears at the beginning of the proprietorship register. It should not be confused with land that has never been registered.

See HM Land Registry’s Practice Guide 42 on classes of title and upgrading.

Identify which land has possessory title

Consider an illustrative example. An owner prepares to sell a house and discovers that a separately registered strip beside the driveway has possessory title. The house itself has absolute title.

Before anyone proposes insurance or an upgrade, the investigation needs to establish what the strip contains and why it matters. Does it provide access, parking, garden space or a route for services? What documents explain how it came into the seller’s occupation?

Useful questions include:

• Which title number carries possessory title?
• Does it affect the whole property or a separate parcel?
• When was that title first registered?
• Why was possessory title granted?
• What evidence supported the original registration?
• Has anyone asserted an adverse claim?
• What exactly is the buyer’s conveyancer asking to be resolved?

Our article on boundary problems when selling a house considers the related question of whether the land occupied matches the land legally acquired. A boundary enquiry and a question about the class of title should nevertheless be investigated separately.

Why the original lender and date matter

The Lexsure Lender Archive’s possessory-title page provides a route to historical lender-specific records. Requirements may differ between lenders and change over time, so today’s wording should not be substituted for the instructions applicable to an earlier purchase.

Identify the relevant date or dates before requesting records. Completion may be the starting point, but an investigation could also concern exchange or the issue of the Certificate of Title.

Read the dated Part 2 record alongside the applicable general instructions, mortgage offer and case-specific correspondence. A historical file review needs the instruction framework and evidence of what happened on the file.

The same importance of dates is explored in our article on historical CML Handbook Part 2 changes.

Build the review around evidence

A useful review should connect the title issue, the lender’s instructions and the work recorded in the purchase file.

Ask for the available documents, including:

• The register, title plan and relevant deeds obtained during the purchase.
• Evidence explaining the possessory registration and occupation of the land.
• Enquiries raised with the seller and the replies received.
• Any application or advice concerning an upgrade.
• Any indemnity policy, schedule and supporting correspondence.
• The mortgage offer, reports to the lender and written responses.
• The Report on Title and correspondence with the purchaser.

Record what remains unavailable. A missing document should be identified as a gap in the evidence, rather than replaced with an assumption about what it probably said.

Our discussion of lender file requests and conveyancing records explains why retaining instructions, enquiries and approvals matters.

Can possessory title be upgraded after 12 years?

An upgrade is not automatic. HM Land Registry explains that, once possessory title has been registered for 12 years, an application may be made to upgrade to absolute freehold or good leasehold title, subject to the relevant requirements.

The period runs from registration of the possessory title, not simply from the present owner’s purchase. An earlier application may be possible where additional evidence remedies the reason for the original class. Absolute leasehold title requires consideration of the superior title as well.

The availability and outcome of an application should be checked against the particular register and evidence. “You can upgrade it later” needs an explanation of the conditions and steps involved.

Keep insurance and an upgrade separate

If insurance was obtained, retrieve the actual policy before deciding what protection exists. Ask your conveyancer to explain the insured risk, beneficiaries, exclusions and any conditions relevant to the present transaction.

An indemnity policy does not itself change the registered class of title. Establishing what a policy covers and establishing whether an upgrade is available are separate enquiries.

Likewise, evidence that an earlier mortgage completed should not replace the search for any report, approval or insurance relied upon at the time.

What did the purchaser understand?

Compliance with lender instructions and advice to the purchaser are related questions, but they are not interchangeable.

What explanation did the buyer receive about the class of title? Was the affected land identified clearly? Were the proposed protection and any remaining uncertainty explained?

Our article on whether signing a Report on Title demonstrates client understanding considers why a signature is only part of that evidence.

For owners facing an unexpected problem, When I Bought’s possessory-title guide explores the purchase history and records that may help establish what was investigated and explained.

What can the historical archive establish?

A dated archive record can establish the lender’s recorded Part 2 wording. Where available, wider market records can also show what other lenders had published on the same date.

Those records do not establish what the conveyancer did, determine negligence or guarantee that a lender will accept the property now. An absence of express wording is not evidence of acceptance.

For a professional investigation, start with a defined issue, the relevant dates and the original file. Then use the historical instructions to help test the evidence.

This article concerns property in England and Wales. The driveway example is illustrative. Historical lender records form part of an investigation and do not determine liability. Obtain advice on the particular title, transaction and any potential claim.