Heritable property law in Scotland has undergone a turbulent period of reform within the last 35 years. From introduction of the Land Register in 1979 to the abolition of feudal tenure in the imaginatively named Abolition of Feudal Tenure etc. (Scotland) Act 2000, there has been a clear intention to simplify conveyancing. The Land Registration etc. (Scotland) Act 2012 aims to modernise the law further and will have a major impact on Scottish conveyancing practice on 8 December 2014 when the Act comes into full force. Given that for many Scots, the purchase of heritable property represents the most costly and significant investment they will ever make, any change to heritable property law, whether substantive or administrative, will naturally have a significant impact across society-at-large. So what does the Act do?
1. Unification of registration law and property law.
This ethos underpins much of what the 2012 Act aims to achieve. Whilst original implementation of the Land Register may have helped simplify conveyancing, the creation of a system based on the English “Land Registry” was always going to create discrepancy between Scottishproperty law and the rules governing registration in Scotland. The existence of the Keeper’s soon-to-be-doomed “Midas Touch” being an obvious example of this dichotomy. At present, if a title is land registered and contains no exclusion of indemnity, scope for challenge against the “proprietor” of that title is limited; regardless of whether the challenge is founded upon sound legal principles. This potentially unfair arrangement ends with the 2012 Act. A land certificate will no longer hold the same conclusive value as it previously had, with the Keeper’s indemnity replaced by a “warranty” that the title sheet is accurate. However, Section 80 of the 2012 Act now obliges the Keeper to rectify the Register on discovery of a “manifest inaccuracy”. Whilst “inaccuracy” is now defined (Section 65), “manifest” is not. Based on the Act’s Explanatory Notes, this appears intentional: providing the Keeper flexibility in respect of what qualifies here and adapt to individual circumstances, as well as judicially-induced changes to property law concepts. As such, Section 80 demonstrates the 2012 Act’s emphasis on reconciling registration rules and property law. Whilst what constitutes “manifest inaccuracy” is to be a high standard under Section 81, that rectification is now possible, even against an individual in possession, is an important moment: heritable property law reasserting its supremacy over registration rules.
2. Advance Notices.
Much to the relief of many law firms (and professional indemnity insurance providers) the 2012 Act will introduce “Advance Notices”. This is based on the similar English system whereby an applicant submits an Advance Notice (which will cost £10) against a title and thereafter obtains a period of protection (35 days) during which only the deed specified within that Notice may be registered against title. All other deeds will be blocked; thereby eliminating the need for solicitors’ letters of obligation. Whilst this may be a plus for solicitors, danger still lurks insofar as only the owner of a property (or his agent) may lodge Advance Notices. In most cases this will pose little problem, but a purchaser’s solicitor must ensure they have protected their client in their offer.
3. Registration Triggers.
The 2012 Act broadens the list of transactions which will trigger first registration in the Land Register. Currently transfer of a Sasine title for no consideration will not trigger first registration. A similar position exists in relation to standard securities taken out over a Sasine title. Under the 2012 Act, all Sasine transfers, not just those for value, will require first registration. However, the Act also empowers the Scottish Ministers to set a deadline closing the Sasine Register to new deeds and allowing the Keeper to transfer all Sasines onto the Land Register. Through this, the 2012 Act shows its true colours: providing a framework within which the Sasine Register will terminate. This is a necessary step in completing the Land Register.
4. One Shot Principle
Presently, there is what can generally be described as an easy-going exchange between conveyancers and the Keeper in respect of first registrations or registered dealings. The Keeper may seek further information on a transaction, allowing the conveyancer a period of time to answer such queries and submit further material as necessary. This is very much to the benefit of the practitioner and client: avoiding the hassle of having to resubmit new forms and payment. However, this arrangement will be but a memory come 8 December 2014. The Keeper is now required to take a harder line and reject such lacking applications with an automatic rejection fee of £30. A “de minimis” exception will apply in relation to very minor pieces of missing information, which the Keeper may still requisition without rejecting an application outright. Of more concern is the fact that, given the inevitable increase in rejected applications, there will be instances where deeds have not been registered as expeditiously as may be needed, in turn increasing the risk of competing deeds or securities being registered in priority.
5. Conveyancers’ Liability
As well as reforming land registration law, the 2012 Act introduces, under Section 112, the offence of (i) knowingly or recklessly making a false or misleading statement in an application or (ii) intentionally or recklessly failing to disclose material information in an application. This provision applies both to applicants and their solicitor or legal advisor. Whilst the number of convictions under this section is likely to be small, it is likely that clients may now be asked to pre-approve all registration forms in the same way as occurs with SDLT Returns. Whilst this may be helpful in ensuring clarity of purpose between solicitor and client, the new Land Register forms are not designed for review by non-solicitors. This may well slow down the overall conveyancing process.
6. Deed Validity
Sections 22-28 of the 2012 Act codify a variety of principles governing when a deed is “valid”. The Keeper will now only accept “valid” deeds. Section 113(2) defines this as a requirement that a deed is capable of doing what it is intended to do, with the granter of the deed having title and capacity to grant it. The applicant must demonstrate a deed’s validity to the Keeper; this being achieved through the new system of applicant certification of validity which will accompany applications. The Keeper will rely on such certification as evidence of a deed’s validity and eventual discovery that such certification was given without justification is likely to form the basis of many of the charges brought under Section 112.
The changes in the 2012 Act are a welcome update. However there will be a settling in period just after 8 December 2014 as everyone get to grips with the new forms and processes. However, in the long term, we will likely look back at 8 December 2012 as the day Scotland completed its transition to a modern system of recording land ownership.