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Leasehold title good and absolute

When a leasehold property is registered at the Land Registry there are two main classes of title. The first is 'title absolute' and the second is 'Good Leasehold'.

To own a leasehold title there are two elements. He must own the lease, and the lease must have been granted by somebody with power to grant that lease. When a lease is registered, the Land Registry consider the lease itself. The householder is then given either Good or Absolute title. The difference is simple. If the freehold title (the title owned by the landlord) is registered, then the Land Registry also guarantee the title of the freeholder. They are therefore equally content to guarantee that that freeholder had the right to grant the lease. The lessee therefore gets an Absolute Leasehold title. If the freeholder’s title is not registered, then the Land Registry have not guaranteed that title. Since they have not guaranteed it, they limit the title granted to the lessee. They grant a Good Leasehold title. 'Good Leasehold' means that the title is good unless it eventually turns out that the apparent landlord did not have the right to grant the lease.

In practice, the freeholds were only occasionally registered, and the large majority of leasehold titles outside London, and many in London, are Good Leasehold titles.

In 1999, the Council for Mortgage Lenders issued standards saying that their members (most mortgage lenders), were in general reluctant to accept good leasehold title, and would normally only accept a title absolute. This caused an outcry, and they have relaxed this standard. The standard now is, effectively, that they will accept a Good Leasehold title provided there is, with the deeds, satisfactory evidence of the freehold title. This standard is still much higher than the previously existing standards of conveyancing practice. There are, therefore, very many people who own leasehold properties where the title is not, as such, defective, but before a sale or re-mortgage can be made, further work will be required from the solicitor to obtain and “prop up” the leasehold title. He will need to obtain, and place with the deeds, certified evidence of the freehold title.

Freeholders will normally charge for providing documentation in this way and this charge will be an additional sum on our account when required. Sometimes this progresses easily, and we are happy to accept this extra work as part of our remit on the sale, but it remains extra work, and in case of any difficulty, we reserve the right to make an extra charge for the extra work incurred. Amounts we have to pay out must, in any event, be charged to you.

Important: Please note that our law-bytes are retained for archival purposes only. The law changes, and these notes are often, now, out of date. You must take direct advice on your own personal situation and the law as it currently stands.
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18 October 2013 370 18 October 2013