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Review Your SQE 1 Practice Records

Examination Timing: 00H01M34S

Jim is the freehold owner of Elm House, a former stately home that is not registered at HM Land Registry. Jim is in the process of converting Elm House into flats and enters into a contract agreeing with Emily that he will grant her a 999-year lease of one of the flats in three months when the works will be completed. Assuming that no defects exist in the title that Emily is granted by Jim, what grade of title could she expect to achieve should she apply to register her flat at HM Land Registry?

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Emily could expect to be registered with good leasehold title. Her title would be based upon the grant of a lease rather than possession, meaning that she would not have possessory title. Qualified title is only granted where the title being presented for registration is defective. Absolute leasehold title can only be given where the landlord's title is registered, and in this case, Jim's freehold estate is unregistered. 


Key Point: In situations where the freehold is unregistered, a leasehold tenant can typically expect to receive a good leasehold title upon registration. Absolute leasehold title is only available if the freehold is registered, ensuring clear and undisputed ownership.


Clarification of Differences Between Question 35 and Question 58: The distinctions between question 35 and 58 scenarios lie in the specific assumptions and details provided about the landlord's (freehold owner's) title and its registrability status:


Question 35 Scenario:

  • Tom is the freehold owner of Rosewood Manor, which is not registered at HM Land Registry.

  • Tom agrees to grant Lucy a 999-year lease of a flat in Rosewood Manor once the works are completed.

  • Tom deduces his freehold title to Lucy but does not register the freehold.

  • Lucy's title: She could expect to be registered with absolute leasehold title.

Explanation:

  • Lucy is granted absolute leasehold title because, even though the freehold title is unregistered, the lease can still be registered with absolute leasehold title. This is based on the assumption that the landlord's title would be registrable if an application were to be made, ensuring Lucy's leasehold title is robust and not dependent solely on possession.


Question 58 Scenario:

  • Jim is the freehold owner of Elm House, which is not registered at HM Land Registry.

  • Jim agrees to grant Emily a 999-year lease of a flat in Elm House once the works are completed.

  • Jim does not register the freehold.

  • Emily's title: She could expect to be registered with good leasehold title.

Explanation:

  • Emily receives good leasehold title rather than absolute because the landlord's title is unregistered, and there is no assumption provided that the landlord's title would be registrable. Good leasehold title is granted when the landlord's title is not registered and evidence of that title is not presented to the Land Registry when the lease is registered.


Key Differences:

  1. Assumptions About the Landlord's Title:In question 35, it is assumed that the landlord's title (Tom's) would be registrable if an application were made.
    In question 58, there is no such assumption about Jim's title being registrable.

  2. Resulting Title Registration:Lucy could expect absolute leasehold title because the registrability of Tom's title is assumed.
    Emily could expect good leasehold title because there is no assumption about the registrability of Jim's title.

Collect Question

But absolute leasehold title can be obtained even if the landlord's title is unregistered, what's the difference here?

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CELE SQE PASS wishes from Lucky Lion_

Thank you for your question. Your diligence in understanding the distinctions between different grades of title is commendable.

In your question, you mentioned that absolute leasehold title can be obtained even if the landlord's title is unregistered. However, this isn't the case under English law. Here’s a bit more detail to clarify:

The Land Registration Act 2002 sets out the types of title that can be registered. When Jim's freehold estate is unregistered, it limits the type of title Emily can achieve if she were to apply for registration of a 999-year lease.

**Absolute Leasehold Title** is considered the best grade of title but can only be granted when the landlord’s title is registered. This grade of title confirms that the landlord has an absolute title to the freehold and that the lease is validly granted with no undisclosed interests affecting it.

**Good Leasehold Title**, on the other hand, is normally what is granted when the landlord’s freehold title is unregistered. Good leasehold title still assures Emily in relation to the lease itself, but does not guarantee the status of the landlord’s freehold title, since it is unregistered and has not been investigated by the Land Registry.

So, to directly address your question: since Jim's freehold estate is unregistered, Emily would typically be able to register her flat with good leasehold title, but not absolute leasehold title, which is only available if the landlord’s – Jim's – freehold is registered.

These distinctions ensure that the registered titles reflect the state of documentation and investigation conducted by the Land Registry, thereby providing a scale of certainty and protection to all parties involved.

I hope this provides clarity. Keep up your hard work and dedication!

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