Questions of form

The Land Registration etc (Scotland) Act 2012 is still in its infancy. The Act replaced the previous legislation almost completely with a more structured approach that is less reliant on the discretion of Registers of Scotland (“RoS”). Inevitably such a significant change has taken some time to bed in fully.

RoS is continuing to make improvements to IT systems and to clarify guidance on registration criteria in areas where difficulty has arisen. The vast majority of applications for registration are being processed without difficulty. Of the applications being rejected, the most common reason is the application form being wrongly completed. The following sets out the most common questions and answers relating to the application form.

Dual registration

Q1. What forms do we need for dual registration?

A. This depends on which register the land is registered or recorded in.

Where both parties’ land is registered in the Land Register (or is being registered for the first time), only one Land Register application form (LAF) is required and both parties should be named as applicants.

Where the dual registration element is against unregistered (sasine) land, a sasine application form (SAF) will be required for the unregistered portion and a LAF for the registered portion.

Where only unregistered land is involved, such as a deed of servitude where both the benefited and burdened properties are still sasine, one SAF per party’s title will be required in the usual way.

Some guidance on when it is appropriate to review other parties’ forms is provided at Journal, May 2015, 10.

Q2. How are registration dues apportioned if there is only one form?

A. At the moment the LAF does not apportion the registration costs, and splitting the cost becomes a matter for agreement between the parties themselves. Both parties’ registration dues will be allocated to the firm whose FAS number is mentioned on the form.

It is also worth noting that for now, the application form automatically calculates the fee based on the consideration or value, and the number of title numbers on the form. This creates a slight anomaly where the dealing is a transfer of part of a registered title with new title conditions. In that scenario, there will only be one title number so far (the parent title). To ensure that the additional £60 for dual registration is added to the fee, the parent title number should be added twice in the title number boxes.

Automatic plot registration (APR)

Q3. RoS is going to register my landlord client’s title automatically, following grant of a registrable lease to a tenant. Do I need to submit another form for the APR?

A. No. The LAF will be for the lease (or other deed) triggering APR. However, applicants should select "automatic plot registration" as the appropriate application type.

Landlords will have an interest in making sure that the tenant’s application includes everything the landlord wants noted on their own title sheet, such as any unwritten servitudes benefiting their land. Both parties may therefore wish to agree the LAF to ensure the landlord’s title is registered accurately.

Common parts question (first registrations only)

Q4. How can I answer this question without spending too much time and money?

A. The application form asks whether the deed transfers any land owned in common with other people. If yes, it asks whether any of those owners have registered titles. If yes to that, the title numbers are requested.

This has caused a bit of concern in the profession because there may be numerous owners with registered titles in, say, a housing development, each potentially with pro indiviso rights in the common parts.

The cheapest way to deal with this in such cases is to obtain a plans report against the commonly owned part. That will list any title numbers that potentially benefit from common ownership. It would, of course, be possible to download and examine each of these, but strictly speaking that is not necessary. Instead, we suggest that the applicant simply copies and pastes those title numbers (or refers to the plans report number, if provided by RoS). If you have not examined them, it may be worth also stating that these registered titles may have pro indiviso rights in the common area, but that the applicant has not examined them.

Q5. Do I need to disclose the quantum share owned by my client?

A. Usual property law applies to pro indiviso shares, so the usual considerations will apply. In addition, the 2012 Act says that the quantum share in common parts is to be disclosed. However, there is a distinction between common parts which have been first registered under the 1979 Act, and those first registered under the 2012 Act. If anyone’s pro indiviso right to the common parts was registered under the 1979 Act, and the quantum was not disclosed, the transitional provisions in sched 4 mean that the quantum does not need to be disclosed under the 2012 Act either.

Servitudes question (first registrations only)

Q6. What servitudes need to be mentioned here?

A. The question is asking whether the property is affected by any pre-existing servitudes. Servitudes created in the deed being registered need not be disclosed here. The answer does not need to give any great detail – the relevant deeds will be enclosed with the application anyway, so it is possible to say “those in writs 1-3 on the inventory”.

Q7. Do I need to mention all unwritten servitudes?

A. Under the 2012 Act, servitudes created other than by dual registration under the Title Conditions (Scotland) Act will continue to burden subjects, whether disclosed on the title sheet or not. That is a similar position to servitudes as overriding interests under the 1979 Act.

The onus should be on benefited owners to evidence these. In a voluntary registration, for example, there is no need to determine and gather evidence for unwritten servitudes which burden the applicant’s land – although, if any are known to (and accepted by) the burdened owner, and there are already appropriate affidavits, they should be disclosed to RoS. Those which benefit the land should, however, be investigated.

With that in mind, purchasers usually try to find out about any unwritten servitudes both benefiting or burdening the land as part of their due diligence. Such rights may only become evident on examining the written servitudes: for example, where a written access has been rerouted, depending on the terms of the original deed the current route may now be partly covered by the original written grant and partly covered by unwritten rights obtained through prescription. The burdened owner will be less likely to realise that there are any such unwritten rights than the benefited owner (by whose actions they were created). So, as usual, it will be for the purchaser to proactively check and raise requisitions on title – the sooner the better, so as to leave time to arrange for any affidavits.

The ability to register unwritten servitudes is seen as permissive, so applicants do not necessarily have to tell RoS about them. Lack of inclusion of an unwritten servitude does not of itself affect the servitude’s validity. Notwithstanding that their inclusion is optional, however, there are good reasons for taking the time to include these rights at first registration, over and above the simple fact that the benefited owner will usually prefer to see the servitude on the title sheet.

First, it will be harder to include the servitudes on the title later, since adding existing servitudes onto a registered title requires rectification. That needs RoS to be satisfied that omission of the servitude represents a manifest inaccuracy, and RoS will normally need either agreement between the parties or a court declarator to be so satisfied, whereas for first registration the standard of proof is lower and RoS will simply rely on the applicant having been satisfied and confirming the same via the application form (“tell not show”).

Secondly, there could arguably be a personal bar argument. Quite simply, a benefited owner may find it more difficult to claim an unwritten servitude in the future if they have publicly told RoS that they do not believe there are any, particularly if that application was recent. That particular question would, however, need judicial determination, so we mention it here just as a factor to consider.

It is also important to remember that the applicant is only one of two (or more) owners involved in any servitude. RoS will update both parties’ titles on the cadastral map for any servitudes being mapped, and will notify the non-applicant owner if RoS hold their details, such as where they have a registered title. Since there could be potential for dispute with neighbours who suddenly find their title being updated, particularly if they disagree as to the exact route, the client may not welcome efforts to improve their written title.

Moreover, the solicitor should always keep at the forefront of his or her mind the statutory duties not to make the register inaccurate.

From a professional practice point of view, solicitors should therefore advise clients as to the application question about servitudes and what it means to include, or to omit, such a right from the title. Clear instructions should be obtained from clients not only as to the accuracy of any existing servitude route being mapped, but as to whether this is a course of action they wish to take.

Q8. Do RoS need to see affidavit evidence?

A. No. The signed application form is sufficient to satisfy RoS that the applicant is satisfied as to the legal existence of the servitude. However, solicitors should protect themselves and their client by not submitting an application form stating that there is an unwritten servitude unless they are in possession of affidavit evidence to support the claim, otherwise there is a danger of making the register inaccurate without the usual level of care being taken. Although RoS do not need to see the affidavit, we recommend this is submitted anyway as RoS will add it to the archive record.

Burdens question (first registrations only)

Q9. Which burdens do we include?

A. A high number of application forms are being answered incorrectly here. It is very rare for a title to contain no real burdens, yet many forms have been received stating that there are none.

Applicants should be careful to note all burden writs as well as all encumbrances in answer to this question. Again this can be done with a simple reference to the inventory and so is hopefully not too administratively burdensome.

Q10. What are “encumbrances”?

A. This term relates to all registrable encumbrances on the property. Title conditions such as burdens and servitudes are included, but so are other registrable matters which somehow encumber the land. Tree preservation orders, scheduled monument entries, public rights of way and core paths are all examples of encumbrances which RoS need to know about.

Q11. What happens if I omit an encumbrance or burden?

A. It is possible to tell RoS not to include a particular encumbrance or burden because it no longer subsists. However, due to the risks to the solicitor and the client and due to the ostensible lack of benefit in making a decision to cull encumbrances from the title sheet, it is relatively rare for applicants to do so.

As long as there is “title” (as opposed to certainty of both “title and interest”) to enforce, then the encumbrance should be included on the title sheet.

Examples of the risks are:
(a) Your client is purchasing a property on an estate. Since it was not common practice for benefited properties to be named in deeds before 2004, the whole of the estate may have been burdened by those title conditions. Consider this with the Title Conditions (Scotland) Act 2003 which potentially increases the number of parties with title to enforce a burden, by the possibility of common schemes and so on. It is, in most cases, difficult and expensive to prove a negative, such that no party can have title to enforce an existing title condition any more. Interest to enforce is a separate issue and not one which matters for the application.

(b) A change in practice could put the principle of caveat emptor at risk and may change the nature (and cost) of conveyancing. It has been, and should continue to be, for purchasers to satisfy themselves on title. For title conditions to be omitted, sellers would often become embroiled in examining their own title, negotiating with the purchaser, and debating the legal implications of the title conditions. This would vastly increase the time and cost of transactions for arguably little benefit.

(c) Under s 91 of the 2012 Act, good-faith purchasers of registered titles acquire the same free of (most) encumbrances not shown on the title sheet. Rectification of the register will not be possible if the encumbrance is cleared in such a way – once it is gone, it is gone. Therefore a benefited party can lose their right through no fault of their own.

With these risks in mind, solicitors should take great care not to omit potential title conditions or other encumbrances. We appreciate that purchasers will not want their title sheet to be littered by title conditions which they see as irrelevant. However proving a negative is difficult, negotiations would be expensive and ultimately, if parties lose rights, they may seek a remedy from the solicitor who caused the omission. On the other hand, there is little reason not to include all existing title conditions and encumbrances, since the title included them all immediately before registration. In other words, a solicitor should seek to transpose what is already on the land onto the Land Register. Great caution should be exercised before trying to make the title somehow “better”.

Q12. What if RoS have already examined the writs?

A. If a legal report says that the property is in a research area, this means RoS have already examined some of the prior writs and do not need to do so again. Typically this will be deeds which affect various properties, such as a deed of conditions. It is unlikely that all splitoff deeds and so on will have been examined even in a research area.

While the relevant deed being registered will refer to all such deeds, the application itself need not include copies of those which RoS have already examined. However RoS will not check the legal report (as it is not submitted), so the application form should state that particular writs are not included since the property is in a research area. In time it is hoped RoS may facilitate reference to legal reports in the LAF for this purpose.

Q13. What if the deed is a statutory conveyance clearing burdens?

A. Existing burdens being cleared by the statutory conveyance need not be included in the application. The application form should state why the writs are not included, i.e. because they are being cleared by the statutory conveyance. If writs contain servitudes benefiting the property that will continue, the relevant writs for those should be included.

Links in title

Q14. Do applicants need to submit links to RoS?

A. Unless they are necessary to show extent of the property or any title conditions, these are not required; however, applicants do need to be satisfied that they are in place. RoS is relying on the certification in the form that the appropriate links are in place. If these are submitted regardless of the fact RoS do not need to see them, they will likely form part of the archive record. RoS do not reject applications simply for having excess information included.

Q15. What if title is in the name of a statutory predecessor?

A. If a title was recorded in the name of, for example the Secretary of State for Scotland, and the Scottish Ministers are their statutory successors, this should be disclosed on the form. So where it asks if title is held by the granter, the correct answer is “no”. The next question asks whether this is a s 43 application: again the answer is “no” because that relates to a non domino applications. A statement should be added into the “other information” box to say, for example, “The Scottish Ministers are the statutory successors to the Secretary of State for Scotland, the last recorded owner”.

Value/consideration

Q16. For a disposition do I just mention the price?

A. Registration dues for dispositions and notices of title are based on the higher of the value of the property and the consideration paid. RoS’s real concern here is just to ensure that the correct fee is paid, therefore the solicitor is obliged to make reasonable enquiry as to the value to check whether it is roughly the same as the consideration. However, where the consideration falls comfortably within a registration fee band and the client believes the value is likely to sit in the same band, there is usually no need for a surveyor’s valuation to be carried out if it would not otherwise be instructed.

Q17. What is the value/consideration of a lease?

A. This is based on any premium paid, plus 10 times the rent. The form calculates the multiplication, so in the relevant field just the (one year’s) rent should be included. Where the lease provides for a higher rent to be paid within the first 10 years of the term than the rent payable at the start, the highest amount of rent provided in the lease in that period should be used. In more unusual cases, where the rent payable is uncertain due to the nature of the lease, an estimate of monetary value of a year’s rent should be used.