Trial·Breaker SQE1
SQE1 › FLK2 › Property Practice › Question
SQE1 · FLK2 · Property Practice

Investigation of title — SQE1 Property question

A worked single-best-answer question on investigation of title, with why each wrong option is wrong — the way SQE1 traps candidates.

Investigation of title

Your firm acts for Dev, who wants to buy a freehold warehouse from Elm Holdings Ltd. Official copies show that Elm Holdings is registered with possessory title, which was registered six years ago following a first registration based on a statutory declaration of long use. Dev's lender has asked for a report on the class of title. Dev asks you what the class of title means for him.

Which of the following best explains the effect of the possessory title?

  1. AThe title is guaranteed only from the date of first registration, so Dev would take subject to any adverse rights that existed at that date, and he should consider title indemnity insurance.
  2. BThe title is as good as absolute title, because all registered freehold titles carry the same state guarantee.
  3. CThe title is qualified, so a specific defect excepted from the register is the only risk.
  4. DElm Holdings can apply now to upgrade the title to absolute as of right, because six years have passed.
  5. EDev's lender cannot lawfully lend on a possessory title, so the purchase cannot proceed with mortgage finance.
Show answer and reasoning
A is the best answer. Registration with possessory title has the same effect as absolute title except that it does not affect the enforcement of any estate, right or interest adverse to the proprietor's title which subsisted at, or was capable of arising at, first registration (LRA 2002, s 11(7)). The state guarantee therefore runs only from first registration. A freehold possessory title can be upgraded to absolute only after 12 years as possessory (s 62(4)), so indemnity insurance is the usual protection meanwhile.

Rule: A possessory title takes effect subject to any adverse interests subsisting at first registration and can be upgraded to absolute after 12 years' registration where the proprietor is in possession.

  • B A possessory title does not protect against adverse interests subsisting at first registration, unlike an absolute title. (wrong rule)
  • C A qualified title excepts a specified defect; possessory title leaves open all adverse interests existing at first registration. (wrong rule)
  • D A freehold possessory title may be upgraded once it has been registered for at least 12 years and the proprietor is in possession, so six years is not enough. (right rule, wrong facts)
  • E There is no rule prohibiting lending on a possessory title; it is a risk for the lender to assess, often with indemnity insurance. (wrong rule)

Source: Land Registration Act 2002, ss 11(7), 62(4)

Practise more Property Practice   All Property subtopics