Can You Give Full Title Guarantee For Possessory Title

Can You Give Full Title Guarantee For Possessory Title

For a property with possessory title the seller would not be able to provide a full title guarantee to the buyer, only a limited guarantee, unless the title has been upgraded from possessory to absolute. Purchasing legal indemnity insurance is advisable when buying under limited title.

Possessory title is a type of land registration where the registered proprietor’s ownership of the land is not absolute. It arises where the occupier cannot produce documentary evidence of ownership, or is claiming ownership through adverse possession (squatter’s rights).

Some key points about the possessory title:

• It provides weaker protection compared to absolute title. There is a risk that someone else could show a better title and claim ownership.
• The possessory title holder can still sell the property, but would likely only be able to provide a limited title guarantee to the buyer, not a full guarantee.
• Over time, possessory title can potentially be upgraded to absolute title. This requires applying to the Land Registry and providing evidence of unchallenged possession for at least 12 years.
• Legal indemnity insurance can be purchased to cover risks associated with a limited title guarantee. This provides protection to the buyer if any title issues arise.

What Is 12 Year Possessory Title?

Possessory title arises when someone has occupied a property for 12 years (10 years if registered land) without the legal owner taking action to evict them. After this period, the occupier can apply to the Land Registry to be registered as the legal owner with a possessory title. The title can be upgraded to absolute after a further 12 years of unchallenged possession.

Key points about possessory title:

• It arises through adverse possession (squatter’s rights) when the owner takes no action for 12/10 years
• The possessor can apply to the Land Registry to be registered as legal owner
• Initially a possessory title is granted which can be challenged by the previous owner
• After 12 years of unchallenged possession, the possessory title converts to absolute title

Buying a property with possessory title has risks as the previous owner could attempt to reclaim it within the 12 years. But after this period, the title is very secure.

How To Upgrade From Possessory Title

Upgrading from a possessory title to an absolute title involves a process that requires meeting certain eligibility criteria, completing specific forms, and potentially paying a fee. Given the legal complexities and potential risks involved, it’s advisable to seek legal assistance when undertaking this process.

Upgrading from a possessory title to an absolute title involves a process that is primarily governed by the Land Registry. Here are the steps and considerations involved:

Eligibility for Upgrading

Before you can upgrade your title, you must meet certain eligibility criteria. The primary requirement is that the possessory title has been registered uninterrupted for 12 years.  During this period, ownership of the property should not have been challenged.

Application Process

1. Statutory Declaration: It is usually necessary for the applicant to complete a Statutory Declaration confirming that ownership of the property has not been challenged during the 12-year period
2. Additional Evidence: Alternatively, additional evidence can be provided such as missing deeds.
3. Application Form: The application to upgrade the class of title is made using form UT1.  In the case of upgrading a possessory or qualified leasehold title, form CS can be used in conjunction with form UT1
4. Fee: There is normally a fee payable to the Land Registry for an application to upgrade the class of title. However, no fee is payable if the application to upgrade is accompanied alongside an application upon which a scale fee is payable, or if the application to upgrade contains a covering letter stating that the consent was.

Considerations

1. Legal Risks: Upgrading a possessory title to an absolute title can be complex and some restrictions may apply.  It’s important to understand that a possessory title is subject to restrictive covenants, even though there is no way of knowing what these may be without the old deeds.

2. Potential Challenges: As the holder of a possessory title, you may lose your rights to ownership if the land was bought by adverse possession or if someone else can prove beyond doubt that they are the owner of the property
3. Legal Assistance: Given the complexity of the process and the potential legal risks involved, it’s advisable to seek legal assistance when attempting to upgrade from a possessory title to an absolute title.