“Everyone will know who owns Scotland”
- Environment Minister Paul Wheelhouse, May 2014
On the 8th December 2014, the land registration system in Scotland will experience its biggest overhaul since the introduction of the Land Register almost 35 years ago. On that date the Land Registration etc. (Scotland) Act 2012 (“the Act”) will come into force, radically altering the landscape for anyone with an interest in property in Scotland, and aligning the Scottish system much more closely with its English equivalent.
The current system of registration in Scotland relies on a complex series of protocols combining ‘property’ law, ‘registration’ law and solicitors’ insurance. The Act is designed to realign these sometimes opposing angles, improve transparency and efficiency, and above all facilitate the stated aim of the Keeper of the Registers of Scotland (the “Keeper”) to register the whole of Scotland within the next ten years. But how?
- New Triggers for Registration
Under the current system, only transfers of property for value result in a first registration of property in the Land Register. As a result, only about 26% of Scotland’s land mass is currently on the Land Register. The Act aims to speed up the completion of the Land Register through the introduction of new triggers for first registration, to be implemented on a phased basis.
From 8th December, all transfers of property not yet registered in the Land Register – whether for value or not – will trigger first registration. Further triggers will be brought in through secondary legislation (with regard to the Keeper’s capacity and ability to deal with the additional workload).
The Act also actively encourages the submission of Voluntary Registrations, and the Keeper has publicly stated that she is happy to accept these.
Finally, the Act introduces the concept of “Keeper-induced Registration”. This effectively means that the Keeper may choose to register property in the Land Register at her discretion. There are various points of controversy surrounding this – not least who will pay for such registration – but it should be noted that the Scottish Parliament has indicated that there will be no Keeper-induced Registrations during the current parliamentary term and so this is something that will fall to be considered at a later date.
The cadastral map is the foundation of the new system of registration, and is effectively one large map, based on the Ordnance Survey map, covering the whole of Scotland. Each registered property will be a “cadastral unit” and be allocated a “cadastral number”. The Act also introduces the concept of “shared plots”, which will have a unique cadastral number but may be owned by more than one person in common.
It should be noted that unlike the current index map system, the cadastral map will extend to include the seabed of Scotland out to the 12 mile territorial waters limit, which will be useful particularly to those involved in offshore renewables projects.
Similar to the English system of priority searches, Advance Notices will protect deeds for a period of 35 days, meaning that the deed to which the Advance Notice refers will take priority over any other deed submitted during that time. For already registered titles, Advance Notices will appear on the Application Record for the 35 day period and will then be removed. For transactions inducing first registration, Advance Notices will require to be recorded in the Sasine Register. Applications must be made by the person who is able to grant the deed referred to – for example, the seller will apply for an Advance Notice in relation to a transfer of title.
Act removes the existing Keeper’s Indemnity and replaces it with the Keeper’s Warranty. Compensation will be payable on a breach of the Keeper’s warranty which has resulted in a manifest inaccuracy on the title, which has then been rectified. However, there are certain circumstances where compensation will not be payable, for example where an inaccuracy is caused by an act or omission on the part of the claimant.
In submitting applications for registration, solicitors will now certify that the information provided regarding the property is accurate. The Keeper will rely entirely on this information when making the registration – and will hold the solicitor in question to account for any error that occurs in registration as a result of their certified information. If the information supplied leads the Keeper to make the register inaccurate, then there is a possibility that the solicitor in question may have committed a criminal offence. This means that high levels of due diligence will need to be carried, even for titles already on the Register, as any discrepancies or competing interests will not be picked up as part of the registration process.
Under the current system, once an application has been submitted to the Register the Keeper may (if she requires further information) raise a requisition, typically allowing 60 days for a response. Under the new system, this requisition period will be abolished. If the application is not considered by the Keeper to be full and complete on submission, it will automatically be rejected, a rejection fee will be charged, and it will be necessary to re-submit the application. In these circumstances the protection of the Advance Notice may be lost, which will cause particular concern for lenders trying to obtain first ranking security. It will therefore be more important than ever for clients to make complete disclosure of all pertinent facts to their lawyers, to ensure that applications are complete and correct from the start.
The Act is of course too large and complex to cover in its entirety in this one article, and we have therefore only summarised some of the key changes that will come about in December. This is the start of a whole new era in Scottish property law and practice; only time will tell how successful it will be, and what new challenges will arise.