Explain the effect of Possessory freehold on title risk and what options exist for addressing lender concerns.

• A. The title is absolute freehold and no issues.
• B. Possessory freehold allows for possible adverse third-party interests; upgrading title to Absolute or obtaining a title indemnity policy may be necessary.
• C. Possessory freehold means the property is leasehold and needs lease extension.
• D. Possessory freehold means the property is not registrable.

Answer: (B)

Possessory freehold means the registered owner has possession but the title hasn’t been proven to the Land Registry, so the grant of title is not indefeasible. That creates a real risk to a lender because there could be unknown or adverse interests that could later be asserted against the property. To address lender concerns, the usual options are either upgrading the title to Absolute freehold—by providing the necessary evidence to prove an unchallengeable chain of title—or obtaining a title indemnity policy. The indemnity policy protects the lender against losses if a future claim arises from the unresolved title issue, without changing the underlying title itself. The other possibilities listed don’t fit: it isn’t guaranteed as an absolute freehold with no issues, it isn’t leasehold, and possessory freehold can still be registrable, albeit with a possessory designation that signals potential risk.