Application forms: should the seller adjust?

Q. The seller’s solicitors are refusing to adjust our land application form (LAF). Is this correct?

A. Under the Land Registration etc (Scotland) Act 2012, the Society’s Property Law Committee considers that it is no longer appropriate for land registration application forms to be adjusted between parties’ solicitors except in certain circumstances, which are explored below. This view has been formed having considered (1) the new civil duty of care to the Keeper, (2) the fact that the Keeper places reliance on the certification made by the applicant’s solicitor in the LAF, and (3) the following (using a sale transaction as an example):

(a) the purchaser’s solicitor examines title, the seller’s solicitor does not (so the seller’s solicitor’s knowledge of the title is or may be limited);

(b) the wording of the application form is such that it is clear that it is for the purchaser’s solicitor (and not
the seller’s solicitor) to certify the matters stated on the form;

(c) missives will usually oblige a purchaser to satisfy itself on title – if a seller’s solicitor were to “check” the contents of the buyer’s solicitor’s land registration application form, that would potentially cut across the missives; and

(d) although the purchaser’s solicitor will have to obtain certain information from the seller’s solicitor in order to complete the application form (e.g. the seller’s solicitor’s email address), this does not necessarily mean that the form needs to be adjusted between the parties’ solicitors. The purchaser’s solicitor can ask the seller’s solicitor for the details he or she needs.

Q. In what situations may it still be appropriate for both parties to adjust land application forms?

A. It will still be advantageous for parties to adjust or agree land registration application forms in a few circumstances. The general rule is that where both parties have an interest in the land (whether as landlord, benefited owner or otherwise), they should each be permitted to agree or approve the relevant registration form(s). The particular situations in which the Property Law Committee expects this rule to
apply are as follows.

(1) Dual registration

From the introduction of dual registration, each party would submit their own registration form. Under the 2012 Act, if both titles are registered, there will only be one form, but if title conditions are being created, it will be treated as dual registration in the usual way. As both parties have an interest in the application being correctly registered, they should each be permitted to adjust the application form.

Additionally, as the Keeper’s warranty is only given to the applicant named on the form (and their successors), both parties may wish to be named as applicants on the form so that both can benefit from the warranty.

With only one form but two or more applicants, the parties will need to consider the logistics of signing the form. Two solicitors could sign the same form, but the more practical solution may be for one to give the other authority to sign on their behalf, once the form is approved. Such authority does not need to be shown to the Keeper, but should be kept on the file. Practitioners may decide that simple email confirmation from one law firm to another will suffice.

Missives may also need to deal with apportioning registration costs between the two parties, since at the time of writing there is no way to apportion these solely via the application form. A disposition creating title conditions, where both parties’ agents are named as applicants on the form, will necessarily result in only one FAS number being included on the form. If payment is made by direct debit, the Keeper will take the full amount from that agent instead of charging the dual registration dues to the other one. Therefore the parties (or their solicitors) will need to arrange between themselves how to deal with reimbursement of the dual registration costs.

(2) Automatic plot registration

A landlord’s solicitor may wish to adjust or approve the land registration application form to be submitted by the tenant’s, subtenant’s or assignee’s solicitor where automatic plot registration is triggered, because the answers given in the application form will affect the landlord’s title.

In automatic plot registration, the tenant/subtenant/assignee will usually be the applicant on the form. Unlike dual registration, the Keeper’s warranty is not an issue because the Keeper can give warranty to the landlord as well as to the applicant, for their respective interests. As such, there is no need for the landlord to be named as an applicant on the form. Since, however, the landlord will have the greater interest in making sure their land is registered correctly, the landlord should be able to check the form and agree that everything listed in the inventory be submitted.

Parties may also consider extending the missives to cover registration of the landlord’s title with the view to making the tenant contractually liable to the landlord if they do not submit what the parties agreed (for example, not mentioning an unwritten servitude).

(3) Granter reserving or retaining rights in the land

In cases where there is a right of clawback, leaseback, liferent back to seller or other such cases of “reversion”, where the seller is receiving a subordinate right from the purchaser, the seller will be interested in making sure the disposition is correctly registered and the correct rights included. The seller may therefore wish to check and approve the purchaser’s form for the disposition. The purchaser may consider approving any application form for the onward grant to the seller, as that will effectively encumber their land; however, they should be under no obligation to do so.

Similar considerations will apply where the seller retains land in the vicinity of the property being sold. For example, a transfer of part will usually mean that the seller’s retained property may continue to benefit from existing title conditions. The seller should therefore be permitted to approve the relevant registration form to ensure that these title conditions are not being cleared without their authority.