Historical mortgage lender requirements: possessory title

Possessory title does not establish that someone else has a better claim, but it provides less protection than absolute title and can affect a lender’s requirements. It is a class of registration: the registrar entered the proprietor without having been satisfied as to the full documentary title, most often because deeds could not be produced or because the claim rested on long possession. The register records who owns the land; what it does not do is guarantee the position against an adverse claim existing at the date of first registration.

It is distinct from qualified title, which is used where a specific identified defect is stated on the register, and it is not the same as adverse possession, which concerns the basis on which ownership is claimed.

For a lender the question is what might yet be asserted by someone with a better claim, and what that would do to the security and to a future sale.

In the version of the UK Finance Mortgage Lenders’ Handbook examined, the scheme turns on where the possessory land sits and what is on it rather than on the class of title alone. Indemnity insurance is required where there are buildings on the part in question, or where the land is essential for access or services.

It may not be required where the affected land has no buildings and is not essential for access or services. In that case the conveyancer must send a plan of the whole of the land to be mortgaged, identifying the area having possessory title. The lender then refers the matter to its valuer so an assessment can be made of the proposed security, and notifies the conveyancer of any additional requirements or if a revised mortgage offer is to be made.

It is worth being clear about what such a policy does. It may cover specified losses arising from an adverse claim, subject to its terms; it does not upgrade the registered title or resolve the uncertainty, and terms vary, with some products excluding losses connected with development or a change of use. Satisfying a lender’s insurance requirement is not the same as covering every risk to the buyer. Building societies using the BSA Mortgage Instructions work from a different framework, and the applicable framework and version need to be established for the relevant date.

One of the profiles examined records exactly that, within its answer about whether the indemnity policy must be sent: it does not allow possessory titles and will not accept an indemnity for them.

The change records date that position precisely. The same profile had recorded on 31 January 2022 that indemnity insurance might be required on a case-by-case basis for possessory titles; on 8 February 2022 that was replaced by the refusal. A transaction either side of those dates would have been looking at materially different recorded wording. Whether the underlying obligation changed, as opposed to the wording, would require the applicable historical general instructions, which have not been checked here.

Upgrading may be possible, but it does not happen automatically. There is a route to apply once twelve years have elapsed since registration with possessory title, which is not the same as twelve years of occupation, and further evidence can support an earlier application.

The outcome depends on the tenure. For freehold the application is to upgrade to absolute title. For leasehold the elapsed-time route leads to good leasehold title, and obtaining absolute leasehold title can require further evidence, including as to the freehold. Whether an upgrade is available in a particular case is a question for the register, the first registration papers and the applicable Land Registry procedure at the time.

The lender instructions examined do not address upgrading; they address whether the title as it stands is acceptable and on what terms. So an upgrade may resolve the underlying position without being what the lender required, and the absence of an upgrade does not establish that the lender’s requirements were unmet.

No. Part 2 silence does not establish acceptance, and on this topic the searches were deliberately run over two populations to reduce the risk of mistaking a search limitation for silence. Three profiles in the most recent scan have a position these searches identify: two found in answer text and one under a dedicated question. That does not exclude wording elsewhere in a record, or expressed in other terms, that neither search reaches.

Where an answer says nothing additional, the general framework applicable to that lender still governed, which for a UK Finance profile in the version examined includes the conditions on registration as proprietor of a possessory title, the requirements about indemnity insurance where buildings stand on the land or it is essential for access or services, and the plan and referral to the valuer otherwise. Which framework and which version applied on a historical date must be established rather than assumed.

The fact that a mortgage proceeded does not, by itself, establish that the lender’s requirements were met or that every relevant matter was reported.

The recorded population is small and recent. Searching answer text finds no profiles in the scans read from 2009 to 2017, one from 2018 to 2021 and two from 2022 onward; a dedicated question was first identified in the scans examined in one profile’s record in 2023. Four change entries match, in 2022 and 2023, across two profiles, and all four were read in full rather than screened. Three profiles in the latest scan and two profiles with matching change entries measure different things and are not inconsistent.

Three entries belong to one profile and record the 2022 sequence described above: case-by-case insurance wording, replaced eight days later by an express refusal, followed by an unrelated addition. The fourth records the dedicated question being answered, previously blank, with a referral.

Whether any of these changed an obligation, rather than introducing or replacing wording, would require the applicable historical general instructions for the dates concerned, which have not been checked here. A lender’s current published wording is not evidence of what it recorded on an earlier transaction date.