Altered deeds? Mind the rules

Registration applications and invalid deeds

Recently, Registers of Scotland (RoS) has had to reject a number of applications for registration where it has been clear to staff examining them that the deeds submitted were invalid as a result of an unauthenticated post-subscription alteration. In the particular cases, a page or pages had been substituted.

Under the Land Registration etc (Scotland) Act 2012, it is a condition of registration that the deed submitted for registration in the Land Register is valid. That means that the granter must have both title and capacity and also that the deed must be properly authenticated. The latter issue is the subject of this article.

Section 2 of the Requirements of Writing (Scotland) Act 1995 provides that a traditional (paper) deed is formally valid if it is subscribed by the granter. In the cases identified, the deed as presented had not been subscribed by the granter.

Any alteration made to a traditional deed after the granter has subscribed the deed that is not also authenticated in accordance with the provisions of s 5(1) of the 1995 Act is not formally valid, whether the alteration in question involves the substitution, deletion or insertion of text.

Registration of an invalid deed on or after 8 December 2014 (the designated day) has no effect: there is no longer a “Midas touch”. The register instead contains an inaccuracy or inaccuracies that the Keeper may be obliged to rectify.

Consequences

RoS would like to emphasise that there is no suggestion that in the identified cases there was any intention on the part of the solicitors involved to alter the substance of the particular transactions. However, had registration proceeded there would arguably have been a breach of the duty owed to the Keeper under s 111(1) of the 2012 Act.

The unauthorised alteration of a deed post-subscription also has the potential to affect adversely people who act in reliance on it, as evidenced by the case of Pocock’s Trustee v Skene Investments (Aberdeen) Ltd, addressed in Sheriff Bowen’s Report on Consumer Protections in Conveyancing.

Professionals and members of the public transacting with land must be able to trust in the register’s integrity. Consequently, it is an offence under s 112 of the 2012 Act to make a materially false or misleading statement in relation to an application for registration, or intentionally to fail to disclose material information in that respect.

RoS retains scanned images of every application for registration in the Land Register, including rejected applications. Consequently, where RoS staff identify that a deed submitted to the Land Register has been altered post-subscription by the inclusion of a replacement page, but that the alteration has not been properly authenticated, or a fresh replacement deed re-executed, the application will be rejected.

RoS and the Law Society of Scotland both wish to underline the importance of the well established legal requirements relating to the authentication of deeds, and the possible implications of submitting invalid deeds both for those whose interests may be adversely affected and in terms of the duty of care set out in the 2012 Act.

Detailed application guidance is available from the new RoS knowledge base microsite, which contains user-friendly registration guidance and additional support content (getting started guides, tutorials, hints and tips, etc). The site is currently in beta, but the basic underlying principle is that content is task-based, accessible and searchable, based on user testing and input from end users.

Registers of Scotland consults on digital transformation

On 30 November, Registers of Scotland (RoS) published a consultation on the next steps in the “journey” towards digital transformation, some of which would, in due course, require changes to the Land Register rules.

Three new digital services are being developed – digital discharges, digital securities and digital dispositions – and the intention is that all of them should be in place by the end of 2017.

Indeed, the first of these new services, digital discharges, is already being trialled. Between them, the three most common deed types – discharges, standard securities and dispositions – account for more than 88% of all conveyancing-type deeds registered in the Land Register.

These new services will build on the success of advance notices, which were introduced by the Land Registration etc (Scotland) Act 2012. By 31 October 2016 some 233,000 advance notices had been submitted and processed electronically. We now propose to move towards a fully digital approach in relation to advance notices over part by 1 April 2018, which will include receiving plans prepared in digital format.

The consultation also sets out various proposals for simplifying and streamlining the registration application form, thus saving time and reducing errors which lead to rejections. In addition, we propose that the content of the form should no longer be prescribed in the rules but published administratively by the Keeper, following consultation. That in turn would allow RoS to respond quickly to changing customer and business needs and new technological developments.

2017 is the 400th anniversary of the General Register of Sasines – the oldest national property register in the world. Conveyancing and the registration of deeds have for centuries been paper-based processes. That world is rapidly disappearing and being replaced by new digital services. It is important that we get it right.

The consultation is open for responses until 22 February 2017. We welcome your views and comments as we embark on the next steps in the digital transformation “journey”.

RoS policy: unmappable common areas

The article “Common areas: keep Pandora’s box shut”, by Andy Todd and Robbie Wishart (Journal, October 2016, 26), suggests that when Registers of Scotland (RoS) omits pro indiviso rights of ownership from the Land Register under the policy set out in our published guidance for customers, the effect is always that the registered proprietor is not an owner of the common area.

The RoS guidance highlighted in our response to Todd and Wishart’s earlier letter (Journal, September 2016, 35) was published in July 2015 and highlighted to customers through our e-newsletter, and has been discussed with the Law Society of Scotland’s Property Law Committee.

This guidance confirms that where the disposition submitted for registration was capable under property law of conveying a valid pro indiviso right in common because the common area is sufficiently identified or because positive prescription has remedied an originally inadequate description, the register is inaccurate.

This is because in terms of ss 49(2) and 50(2) of the 2012 Act, the effect of registration of a valid disposition is that ownership does transfer to the grantee, notwithstanding that the title sheet and cadastral map do not disclose the proprietor’s pro indiviso right of ownership. Where the register is inaccurate, the registered proprietor can seek rectification.

However, as our guidance makes clear, in addition to setting out the evidence of the register’s inaccuracy, the proprietor would require to supply a suitable plan showing the extent of the common area in question with their evidence that the register was inaccurate.

We would also reiterate that RoS is not proactively removing purported rights when processing an application for registration which affects the whole of a registered title. Our policy of omitting such rights of common ownership where we cannot map the boundaries of the common area on the cadastral map applies when we process an application for registration of a conveyance of an unregistered plot, an application for voluntary registration and applications relating to a disposition of part of a registered title.

However, we are obliged to consider requests for rectification on their merits and, indeed, to process applications for registration of dispositions by developers affecting land that might, in the view of plot purchasers, be perceived as common land. Clearly not all developers, or those advising them, consider themselves to be “accidental” owners.