Is that burden dead yet?

It is now well over a year since 28 November 2004, when Scottish land law was subject to the most significant changes for centuries. The feudal system was abolished and new statutory law regulating real burdens and tenements came into force. Naturally, it has been difficult to take in all the aspects of the new regime. In responding to opinion requests from the profession, we have realised that the question of which burdens survived feudal abolition, and what can be done to remove them where they are preventing development, are matters of key concern.

The issues of enforceability and extinction are governed principally by the Title Conditions (Scotland) Act 2003 (“the 2003 Act”). To a lesser extent the Abolition of Feudal Tenure etc (Scotland) Act 2000 is also relevant. Both statutes have been the subject of important amendments since their original enactment. It is essential to use an up to date version.

Formerly, there were several ways in which a burden could be extinguished. Obviously, methods of discharge tied to the feudal system (including minutes of waiver or letters of consent from superiors, and consolidation of the feu) are no longer available. But there remains a measure of continuity with the old law. Minutes of waiver, acquiescence, negative prescription and applications to the Lands Tribunal remain possible. Each is subject to various changes in the 2003 Act.

The approach now

A number of questions need to be asked, before considering the methods of extinction that apply now. We suggest that the solution to working out what must be done (if anything) about a burden which potentially blocks a client’s plans is to adopt a staged approach.

Stage 1 Is it a valid burden?

Stage 2 Does the burden survive feudal abolition? This may be resolved into the question of whether anyone has title to enforce.

Stage 3 If the burden survived, how is it to be interpreted?

Stage 4 If there has been or will be contravention, who can enforce the burden and what remedies do they have? In particular, interest to enforce needs to be considered.

Stage 5 What formal mechanisms can vary or extinguish the burden?

Stage 6 What informal mechanisms can vary or extinguish the burden?

Stage 7 Would an application to the Lands Tribunal be a solution?

1.    Validity

It is initially necessary to determine whether the burden is valid. This is important, but often ignored on the erroneous assumption that appearance on the Land Register confers validity. Registration does not – of itself – confer validity. It is necessary for burdens to comply with the usual rules on constitution based on Tailors of Aberdeen v Coutts (1840) 1 Rob 296, or, for new real burdens, the 2003 Act. These can be found in the standard textbooks, for example R Rennie, Land Tenure in Scotland (2004), ch 5 and Professor McDonald’s Conveyancing Manual, ch 15. Listed now are some specific matters which have been amended by the 2003 Act, or which have arisen in opinions.

(a)    Burdens cannot confer on a third party lacking title to enforce the burdens, the ability to waive or vary them – whether they were created after 28 November 2004 (2003 Act, s 3(8)) or before (2000 Act, s 73(2A)).

(b)    Before 28 November 2004 burdens had to be created in either a conveyance or a deed of conditions. Burdens created in other deeds (e.g. minutes of waiver) were not effective.

(c)    Burdens have to be set out in full within the constitutive deed. It is not permissible to refer to external documents or other sources (including legislation). The rule has been alleviated retrospectively in relation to certain maintenance and payment obligations: 2003 Act, s 5.

(d)    The burden must be registered against the title of the burdened property, and for (most) praedial burdens created after 28 November 2004 against the title of the benefited property too.

Failure to comply with the rules of constitution and validity means that the obligation is not a real burden and does not bind singular successors (although there may be contractual liability between the original parties).

2.    Is the burden subsisting?

General. The Keeper has an ongoing obligation to ensure that the title sheet contains only subsisting title conditions: Land Registration (Scotland) Act 1979, s 6. However the title sheet may not be accurate in this regard. First, the Keeper often cannot determine from examination of the title deeds sent in support of land registration whether or not a burden is subsisting. Secondly, in creating and maintaining the title, the law of burdens may not have been accurately applied. For example, we are aware of one case where prior to feudal abolition consolidation of the feu had taken place, but the feudal burdens still appeared in the land certificate.

The Keeper’s ongoing obligation to maintain the registers is tempered following feudal abolition. The scheme of the 2000 and 2003 Acts is that a number of burdens, originally validly created, will remain on the Land Register for many years despite having been extinguished on 28 November 2004. There are two important provisions: the 2000 Act, s 46 and the 2003 Act, s 51.

Section 46 provides that the Keeper is under no obligation to remove burdens extinguished by feudal abolition unless he is asked or ordered to rectify the register under the 1979 Act, s 9. It is not competent to apply for or to order rectification in relation to extinguished burdens for a prescribed period of 10 years from the appointed day. Further, the Keeper can continue to enter burdens in the title sheet even if they have been extinguished by feudal abolition. The 2003 Act, s 51 makes similar provision for burdens created in non-feudal deeds which would be extinguished by  s 49 of that Act. A number of burdens in the land certificate may therefore be wholly irrelevant.

The position is alleviated by the 2003 Act, s 58. In the 10 year period after the appointed day the Keeper has discretion, but is under no obligation, to enter a statement in the title sheet of a burdened property that there are third party enforcement rights and identify the properties holding the enforcement rights. If there is no such statement, a conveyancer must apply the transitional provisions in both the 2000 and 2003 Acts to determine which burdens subsist.

In determining which burdens survive it is necessary to consider, first, when the burdens were created.

For burdens created after 28 November 2004 the rules of creation in the 2003 Act apply. Generally, the burden must have been registered against the burdened and benefited properties, and a note of the benefited property (or properties) will appear in the title of the burdened property.

Where burdens were created before that date there are a number of possibilities. The applicable rules depend on whether the burdens were created in a feudal deed, ordinary disposition or deed of conditions.

Feudal deeds. Where burdens were created in a feudal deed there are three possible positions: (a) it was preserved by the feudal superior; (b) it is enforceable as a community burden; or (c) it was extinguished.

The first position is easily determined from examination of the register, because for a superior to preserve real burdens it was necessary to register a notice under Part 4 of the 2000 Act prior to the appointed day. Preservation was as a personal real burden (of which there were around 1,000 registered notices); or “shadow burden” under the 2000 Act, s 33 where the burden no longer encumbers the title, but breach triggers a compensation claim (there were fewer than 100 notices registered); or most commonly (with around 2,000 notices registered) as a neighbour burden under the 2000 Act, ss 18-20 – i.e., where the superior nominated a benefited property he or she owned in the vicinity of the burdened property.

Where a 2000 Act notice was registered against the burdened property it will appear in the D section of the land certificate or be apparent from a search in the Register of Sasines. Normally, a purchaser can assume that the burden will be enforceable by the owner of the nominated property. However, even where preservation notices were registered it does not necessarily mean that the burden encumbers the property. Registration of a 2000 Act notice cannot validate invalid burdens, or cure defects in the notice or intimation procedure. The purpose of registration is merely to inform, and the 2000 Act, s 43 excuses the Keeper from checking much material extrinsic to the notice. Accordingly, the burdened owner and/or purchasers should be prepared to look behind a notice to determine whether the burden is actually enforceable.

The lack of a registered preservation notice does not mean that the burden has been extinguished. In many cases there will be third party enforcement rights under the 2003 Act, ss 52 and 53. We turn to these later.

Non-feudal deeds. Where burdens were created in non-feudal deeds there were often, but not necessarily, third party enforcement rights. Some burdens were created as neighbour burdens, normally by subdivision with imposition of burdens on the plot sold for the benefit of the plot retained. Frequently no express provision was made as to enforcement rights, forcing reliance on the rule of implied enforcement in J A Mactaggart & Co v Harrower (1906) 8F 1101.

Under the 2003 Act, s 49 such implied enforcement rights will be abolished, unless it is competent to register a notice of preservation under s 50. This must be registered against both benefited and burdened properties on or before 27 November 2014. Consequently the register is unlikely at the moment to indicate whether burdens have been preserved as neighbour burdens.

Third party rights: overview. In feudal or non-feudal deeds it was possible to have third party enforcement rights. Prior to the appointed day these were often ignored in practice, due to complexity and impracticality. Ignoring the rights, though, caused problems. In Dalrymple v Herdman (1878) 5R 847 a superior agreed to contravention of a burden. A third party subsequently raised enforcement proceedings. It was held that the consent of the superior did not prevent the third party action proceeding. The law under the 2003 Act is similar in effect and removes the safety net many practitioners relied on. Feudal abolition means that it is generally no longer possible to apply to one party for consent while ignoring others. Further, the rules introduced by the 2003 Act greatly expand third party enforcement rights.

For burdens created before 28 November 2004, how can a conveyancer ascertain that there are third party rights? Occasionally the title expressly provides for such rights, for example, by reference to a jus quaesitum tertio. More frequently, however, the title deeds are silent, leaving their existence to be implied from circumstances (at common law under Hislop v MacRitchie’s Trustees (1881) 8R (HL) 96). While the 2003 Act, s 49 abolishes all implied enforcement rights, third party rights are established afresh by ss 52-56. These provisions are not particularly straightforward. Some deal with special cases: ss 54 and 55 with burdens in sheltered or retirement housing developments, and s 56 with facility and service burdens. The focus here is on the standard cases: ss 52 and 53. The provisions are cumulative in effect. Failure to confer rights under s 52 does not preclude rights arising under s 53, and vice versa.

“Common scheme”. One key expression underpins both provisions, the idea of a “common scheme”. The term is not defined in the Act, although the explanatory notes offer some guidance. Paragraph 234 provides that “common schemes exist where there are several burdened properties all subject to the same or similar burdens”. This was one strand of the rules from Hislop developed in Botanic Gardens Picture House Ltd v Adamson 1924 SC 549, where it was held that the burdens did not need to be identical to be mutually enforceable, provided there was sufficient equivalence or similarity.

Section 52. In practice, this is an easier provision to operate than s 53 as it restates the common law rules. There are two general situations where third party rights arise in practice (referred to in Hislop by Lord Watson): type 1 cases, where there have been successive grants; and type 2 cases, where burdens are imposed over an area subsequently subdivided.

The rights arise where three requirements are satisfied:

(a)     there is a common scheme;

(b)    the title of the burdened property contains notice that there is a common scheme of burdens;

(c)    there must be nothing in the title of the burdened property that negates the existence of implied third party rights of enforcement.

The second and third requirements are apparent from examination of the title of the burdened property.

The type 2 case is the easier to apply in practice. Notice is given by the mere fact that the deed creating the burdens imposes them over a larger area than just the burdened property. For example, a deed of conditions will be an example of a type 2 case. Its application over that larger area will be apparent from examination of the description in the constitutive deed, or a note in the D section of the land certificate that the subjects “form part” of the burdened area.

For Hislop type 1 cases the position is more complex. Cases indicate the notice requirement is satisfied where the developer undertakes to create similar burdens in subsequent sales of the estate; or makes reference in the conveyance to a common scheme.

However, even with notice of a common scheme it does not necessarily follow that there are s 52 enforcement rights, due to the negative requirement. There must be nothing in the title of the burdened property that excludes implied enforcement rights, namely (a) the developer reserves the right to vary or waive all or particular burdens in the development; or (b) in Hislop type 2 cases only, there is a prohibition on subdivision.

It is not enough though to satisfy the requirements from examination of the burdened title alone. There must also be a common scheme. Benefited properties will be those that share the same or similar burdens to those encumbering the burdened property. Hislop type 2 cases are straightforward to determine. The properties subject to the same or similar burdens will be those within the larger area. Hislop type 1 cases require examination of the titles of neighbouring properties to determine whether or not they have the same or similar burdens. Even if they do, the boundaries of those with title to enforce cannot be determined without further examination. This may be very time consuming and costly.

Section 53. This is less mechanical in its application, and therefore even harder to apply in practice. It has two principal differences from the rules in s 52: there is no need for notice; and no requirement that there be nothing negating the existence of the common scheme. With s 52 an examination of the burdened title can show quickly and conclusively whether or not third party rights exist. Section 53 removes these advantages and often creates third party enforcement rights where none existed previously.

Section 53 provides that implied rights of enforcement arise where a common scheme is imposed on “a group of related properties” with “all units comprised within that group” being benefited properties. What then are “related properties”?

This “is to be inferred from all the circumstances”: s 53(2).

What circumstances are relevant in determining if there is a common scheme? There is little guidance in the explanatory notes, although they do provide that “properties on a residential housing estate… would normally be related properties”, meaning that implied rights of enforcement will arise for all properties within the estate (even where no such rights existed at common law). Additionally, there is statutory assistance. Section 53(2) gives examples that might give rise to the inference that the properties are related, including the properties being flats in the same tenement, or subject to the same deed of conditions. However, these are illustrative. The overriding flexibility inherent in the identification of related properties being inferred from the circumstances means that it is difficult to identify the benefited properties and to determine where the boundaries of related properties begin and end.

As we have seen, mere examination of the title is insufficient. Relevant factors may include the similarities of properties, their proximity, whether properties subject to the same or similar burdens were conveyed around the same time. As yet, there is no case law, and there was little guidance from the Executive when the legislation was passed. The flexibility inherent in s 53 means that where a case does not fall within the illustrative examples, it is often not possible to give clear advice.

This means that the conveyancer must assume for most burdens – whether feudal or non-feudal originally – that there are potential third party enforcement rights. The potential is all that can be considered, because even examination of neighbouring titles does not of itself determine whether there are third party rights. The title sheet, once the Keeper is permitted to remove obsolete burdens, may not differ much from the title sheet before 28 November 2004.

Contraventions of burdens, proposed or actual, potentially cause problems in post-feudal transactions, particularly as the generosity of s 53 in conferring multiple enforcing rights means that multiple parties may require to be involved in the grant of waivers. The result is that in practice, interest to enforce and non-formal discharge mechanisms will have to be frequently considered.

Dr Andrew Steven and Scott Wortley are lecturers in the School of Law at the University of Edinburgh