Bold Steps Forward - Overhaul of the Land Register

The Land Register of Scotland superseded the Sasine Register, introducing a map-based system of registration that carried with it the boon of the Keeper's indemnity. Over 30 years later, the system has once again been found in need of overhaul.

A real right in heritable property is only created through registration of the deed purporting to transfer ownership. Many vital aspects of the registration process have largely been left to the discretion of the Keeper of the Register of Scotland. For several reasons, (protracted processing times and a dearth of triggers for registration being chief amongst these), uptake of the Land Register of Scotland has been slow, with roughly 75% of land in Scotland yet to be entered onto the register.

The 2012 Act brings sweeping reforms to present conveyancing practice in Scotland, which notably include:

  • Rectification of the Register
  • Acceptance/Rejection Deadline
  • Advance Notices
  • Keeper-Induced Registration
  • Rectification of the Register

Perhaps the most significant feature of the Land Register is that once title is registered the Keeper will refuse to rectify any mistakes in this record against a proprietor in possession, (except in the case of the fraud or manifest error of that proprietor). Upon discovering such an error it has therefore been known for someone with no rightful claim to an area of land to take advantage of the Keeper's position by taking possession over it, thereby making rectification impossible. The only remedy available to the rightful owner of the land is to claim compensation from the Keeper for her mistake.

With the aim of re-aligning the process of registration with the principles of property law, the 2012 Act reverses this policy by requiring the Keeper to rectify errors in the register. This is limited, however, to cases of manifest inaccuracy; a term which is not defined in the Act and is therefore left to the Keeper's discretion. It is acknowledged that the test for rectification necessitates a high evidential standard, and it is likely that in order for an application to succeed, the applicant will require a declarator from the courts.

Acceptance on to the Register

At present no deadline is imposed for the acceptance of an application for registration and this too is left to the Keeper's discretion. The potential for the registration process to drag on for months (and even years) is particularly troublesome where subsequent transfers follow in quick succession. If the original application is rejected, the subsequent application will fall also.

The 2012 Act provides powers for the Scottish Ministers to set a deadline by which the Keeper must accept or reject applications. Perhaps the more cynically-minded commentators will be wary of the possibility that the pressure of such a deadline will force the Keeper to reject applications for which the deadline is looming, where there is not enough time to carry out the required examination.

Bridging the "Gap"

Because the real right in property is only acquired following registration of the deed transferring title, there is a danger that between completion of the sale (where money changes hands) and registration of the deed either the seller becomes insolvent (a particular concern in today's market) or a competing interest is registered against the property.

Professional indemnity insurance is currently used to bridge this gap, however the 2012 Act introduces the procedure of "advance notices", a system already common in England. Submission of an advance notice will give a protected period of 35 days in which no deeds other than the deed specified in the notice to the Keeper can be registered against that property.

Although this refinement of conveyancing practice will be welcomed by lenders and solicitors alike, it is worth noting that only the party with interest in the property (i.e. the seller) can submit an advance notice, or authorise another party (e.g. the purchaser's solicitor) to do so on their behalf. It is likely that this will be covered off in the contract between the parties, and in the rules applicable to solicitors acting on behalf of lenders.

Keeper-Induced Registration

The slow uptake in the Land Register can partly be blamed upon the lack of triggers inducing registration, and the Keeper's reluctance to accept voluntary registrations.

The 2012 Act preserves the current position in relation to voluntary registration, whereby the Keeper may accept or reject such applications depending on whether or not she views registration as expedient in that case. The Act reserves powers in favour of the Scottish Ministers to remove this discretion, indicating that although it remains an uncertain option for the time-being, voluntary registration may one day be available as an effective approach for parties wishing to enter their property in the Land Register of Scotland.

A further step to encourage greater participation with the Land Register is evidenced by the new provisions of the 2012 Act, which will allow the Keeper to register a plot of land (or any part of it) without any application and without the consent of the landowner. Indeed, the current provisions do not allow the landowner to object to such registration. As it is unlikely that the costs of registration would fall to the landowner in such cases, their objection is unlikely unless the extent of their property is particularly difficult to determine and they fear this will be reduced by registration.

The provisions outlined above reinforce the aim of the 2012 Act to streamline the process for registration and encourage completion of the Land Register of Scotland. A great amount hinges on the practical application of the new procedures in order to achieve these goals.