Case from the Lands Tribunal for Scotland considering an application for rectification of a number of inaccuracies in the Land Register.

Highland Ventures was the former owner of a hotel in Crieff. The company sold the hotel (whilst retaining some land for the personal use of a director and his wife) to a Mr Sancto in 2006 (the transaction triggered first registration) and the property was registered the Land Register. The hotel was subsequently repossessed and the bank sold it to MMSL, at which point Highland Ventures became aware of inaccuracies in Mr Sancto’s registered title.

The possibility of inaccuracy in the register was raised with the Keeper in November 2014. At that time, section 9 of the Land Registration (Scotland) Act 1979 was in force. Under s9, except in very limited circumstances, it is not possible to rectify the register to the prejudice of the proprietor in possession (in this case, MMSL). The application to the Lands Tribunal was made after the “designated day” on which the Land Registration etc. (Scotland) Act 2012 came into force[1]. The tribunal found that, in terms of the 2012 Act, transitional provisions[2] applied under which there is a presumption[3] that the registered proprietor (in this case MMSL) is in possession of the property. However, in this case the Tribunal found that Highland Ventures (which led evidence of use of the property by the director and his wife) had demonstrated possession of the subjects and consequently had rebutted the presumption that MMSL possessed the subjects.

As such, the tribunal found that that register was inaccurate and that the presumption in favour of the possession of the registered proprietor had been rebutted.

The full decision is available from the Lands Tribunal for Scotland here.

 All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

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[1] 8 December 2014.

[2] Contained in Schedule 4 of the 2012 Act.

[3] Para 18 of Schedule 4.

Background
Outer House case concerning the ownership of a house in Paisley. Title of the house was held in the name of Mr and Mrs Hill, equally between them and to the survivor, and was registered in the Land Register for Scotland in 1989.

Mrs Hill died in 1991. The court heard evidence to the effect that, shortly before her death, Mrs Hill had executed a codicil to her will in which she purported to revoke the survivorship destination in favour of Mr Hill. When she died, Mrs Hill’s share of the house was included in her estate for confirmation. Her son executed a formal nomination of entitlement to Mrs Hill’s share and then registered the nomination in the Land Register.

Arguments
Mr Hill argued that Mrs Hill did not have the power to evacuate the survivorship destination, and amongst other things, sought declarator that he had acquired title to the house on his wife’s death and an order ordaining the Keeper of the Registers of Scotland to rectify the register to that effect.

On the other hand, Mr Hill’s son argued that Mrs Hill had evacuated the survivorship destination and willed her share of the house to the son. Even if Mrs Hill had not been entitled to evacuate the survivorship destination, it was contended that (1) the son had acquired title by the operation of 10 years positive prescription based on the nomination registered in the Land Register and (2) that Mr Hill was personally barred from claiming title to the property and seeking rectification of the property due to mora, taciturnity and acquiescence (i.e. that there had undue delay and failure to assert a claim (on Mr Hill’s part) in a situation in which it would be expected that Mr Hill would have spoken up and that, viewed objectively, the facts suggested that Mr Hill had accepted his son’s ownership of the property).

Decision
Lord Jones rejected the son’s arguments.

The survivorship destination
With regard to the survivorship destination, Lord Jones followed the principle in Perrett‘s Trustees v Perrett[1]: i.e. that, where both parties contribute to the purchase price of a property and the title is subject to a survivorship destination, the arrangement is contractual (and not testamentary) meaning that it is not open to either party to evacuate the destination unilaterally in a will[2]. Lord Jones also confirmed that the principle in Perrett is not restricted solely to cases in which the disposition specifically stipulates that the parties have contributed equally to the price.

Prescription
With regard to the son’s arguments on prescription, Lord Jones found that he had not demonstrated possession for a continuous period of 10 years noting that, although he lived in the property between 1992 and 1995 and claimed to have continued to have access to the property afterwards there was no specification as to when or in what circumstances the access had been taken. (It is worth noting that the court made no judgement as regards the operation of prescription on a title registered under the Land Registration (Scotland) Act 1979[3] as the parties had not provided arguments in that regard).

Acquiescence
The son’s arguments regarding mora, taciturnity and acquiescence were also rejected. Lord Jones found that the son’s title had always been open to challenge and that he had not in fact become owner of his mother’s share of the house. As such, Mr Hill could not have been said to have become aware that his son was the owner and could not be said to have delayed raising an action against his son as he had no reason to do so (until the son had raised an action of division and sale of the house in June 2015).

The full judgement is available from Scottish Courts here.

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[1] 1909 SC 522.

[2]  On the other hand, a party may be able to evacuate the destination if he or she has provided all of the funds for the property him/herself.

[3] Under the 1979 Act the operation of prescription was limited to situations where the Keeper had excluded indemnity in respect of the title. (The situation is different under Land Registration etc. (Scotland) Act 2012 which repealed the 1979 Act, however, the son’s title had been registered under the 1979 Act not the 2012 Act.)

Inner House case concerning a decision of the Land Tribunal relating to the Keeper’s refusal to rectify the Land Register in Ms Rivendale’s favour.

Background
Ms Rivendale purchased a cottage in Tarbert, Argyll in 2010 but was unable to register title to an area of ground in front of the cottage as it was included in her neighbour’s title.  After investigation, the tribunal found that, whilst Ms Rivendale did not own part of the disputed area, she was the “true owner” of another part of the area of ground and that the register was inaccurate in that respect. However, in terms of s9(3) of the Land Registration (Scotland) Act 1979[1], the register cannot be rectified where rectification would result in prejudice to a proprietor in possession. Ms Rivendale’s neighbour, who had used the disputed area to access two building plots and other land owned by her, argued that she was a proprietor in possession and would suffer prejudice if the register were rectified.

The tribunal refused to allow rectification of the register in respect of part of the property which it found that Ms Rivendale did not own and also part of the property of which her neighbour was found to be in possession. However, rectification was allowed in respect of parts of the property found to have been owned by Ms Rivendale but not possessed by her neighbour.

Arguments
Ms Rivendale appealed, arguing that she was entitled to rectification of the register in respect of a larger area of the property than had been granted by the tribunal on the basis:

1. That she was also the “true owner” of a larger part of the property than had been decided by the tribunal.
2. That the evidence of the neighbour’s use of the property was not sufficient to establish possession under s9(3) of the 1979 Act.
3. That the tribunal had erred in finding that the neighbour would suffer prejudice if the register were rectified.

Decision
The Inner House rejected all three arguments and refused the appeal.

The extent of the register’s inaccuracy
Ms Rivendale’s argument that she was the “true owner” of the additional parts of the disputed area was based on her contention that she had acquired it under the law of prescription. For that to be the case, the title on which she relied required to be habile for prescription (i.e. capable of being interpreted as including the track). On its own, the written description in the relevant disposition was habile to include the track. However the plan attached to the relevant disposition (to which written description referred) was not. The Court found that the particular wording in the description and the professionalism with which the plan had been prepared indicated that the plan was to have effect and Ms Rivendale’s title was not capable of founding the prescriptive possession on which she relied.

The neighbour’s possession
Ms Rivendale argued that her neighbour’s use of the part of the property of which the tribunal had found Ms Rivendale to be the true owner was not sufficient to amount to establish possession under the 1979 Act. However, the court found that, when taken together, the neighbours acts (which included culverting a burn (outwith the disputed area) through contractors, allowing the widening and improvement of the track and some slight personal use) were sufficient to put the neighbour in the position of a proprietor in possession in terms of s9(3) of the 1979 Act.

Prejudice
The Court also found that the neighbour’s loss of heritable rights (if the Register were to be rectified in favour of Ms Rivendale) would in itself amount to prejudice noting that it would allow Ms Rivendale to remove part of the track and impede access taken via the track.

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

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[1] This aspect of the law has changed under the Land Registration (Scotland) Act 2012 which replaces the 1979 Act.

Background
This is an Outer House case in which Mr Aronson sought rectification of the Register. Mr Aronson had bought a property (on Dean Street in Kilmarnock) from the Bank of Scotland which was exercising a power of sale under a standard security following a repossession.

The property previously belonged to Mr Alexander who, in addition to granting the standard security in favour of the Bank of Scotland, had subsequently granted three further securities in favour of two other creditors. When Mr Alexander fell into arrears, the Bank of Scotland obtained a warrant to repossess and sell the property[1] (in May 2010) and subsequently disponed the property to Mr Aronson (in February 2011).  At the time of the repossession proceedings it was common for creditors to repossess and sell property without first following the calling up procedure and, in this case, the Bank had not served a calling up notice. However, in November 2010 the Supreme Court[2] decided that in any case where a creditor seeks repayment of a debt, failing which, the sale of the security subjects, it must first serve a calling up notice and thereafter wait two months before repossessing the property.

Mr Aaronson submitted an application to register the disposition in the Land Register in March 2011. In terms of the (Form 2) application, Mr Aronson required to indicate whether the necessary statutory procedures had been followed in relation to the Bank’s power of sale and, as a result of the Supreme Court’s decision noted above and the failure to follow the calling up procedure, Mr Aronson indicated that the necessary procedures had not been complied with.

When the Keeper registered the disposition, she excluded indemnity in respect of Mr Aronson’s title and, although the standard security in favour of the Bank of Scotland did not appear in the Charges Section of the Title Sheet, the three securities in favour of the other two creditors did[3].

In terms of the relevant legislation[4], where a creditor grants a disposition in exercise of a power of sale, the property is disburdened of that security and all other securities ranking equally with it or behind it. Mr Aronson sought to have the register rectified so as to delete the three remaining securities. The Keeper maintained that the register was not inaccurate as the property had not been disburdened of the standard securities on the basis that there had been no sale of the property in terms of the legislation as the Bank had not followed the correct procedure.

Decision
Lord Doherty rejected the Keeper’s argument and found that the register was inaccurate. There had been a sale by the bank, within the meaning of the legislation and, as such, the property had been disburdened of the securities.

As to a contention by the Keeper that, allowing the property to be disburdened of the securities where the correct procedures with regards to repossession and sale had not been followed, was to allow the Bank to benefit from its own wrong and was contrary to public interest, Lord Doherty said the following:

 “While I do not rule out entirely the possibility that the circumstances of some sales might be so contrary to public policy that Parliament might be taken to have intended to exclude them from the ambit of s. 26, I am very clear that the circumstances of the sale by the Bank to the pursuer do not fall within any such category.  In treating the loan default as a default in terms of standard condition 9(1)(b), and in proceeding down the s. 24 route, the Bank acted in good faith and in accordance with what was then understood (by the courts, conveyancers, and financial institutions and their advisers) to be a lawful route to sale.  There was no deception or bad faith.  There was no intention to depart from or undermine the proper procedures for sale…  …In such circumstances I see no scope for giving any weight to the canon of construction that a party should not be permitted to benefit from his own wrong.  I am equally clear that there is no justification for giving “sale” in s. 26(1) a strained construction in order to avoid the natural construction producing serious damage to the public interest.  On the contrary, in my view the natural and ordinary meaning relied upon by the pursuer serves the public interest.  On the other hand, deserving persons such as the pursuer would be prejudiced by the strained construction which the first defender suggests.  That strained construction is also one which runs counter to the presumption that a statutory provision should be construed so as not to produce injustice.”

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

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[1] Under s24 of the Conveyancing and Feudal Reform (Scotland) Act 1970.

[2] Royal Bank of Scotland plc (Respondent) v Francis John Wilson and another, [2010] UKSC 50.

[3] Notes were appended to the entries excluding indemnity both in respect of any loss arising from rectification of the register to delete the standard securities or from the property being found not to have been disburdened of the above standard security.

[4] S26(1) of the 1970 Act.

Inner House case considering whether damages were due in respect of wrongful interdict after an interim interdict was granted on the basis of a deed which was later rectified with retrospective effect.

Background
Mr Mirza was the owner of a shop and yard on Cumberland Road in Glasgow. Mrs Salim took an assignation of a lease of the premises. The parties had intended that only the shop (and not the yard) be let to Mrs Salim. However, due to an error, both the shop and yard were included in her title.

Mr Mirza commenced construction of a new shop in the yard. A dispute then arose as to who had a real right in the yard and, in February 2008, Mrs Salim sought and obtained an interim interdict preventing Mr Mirza from entering the yard and building and operating the new shop. However, in August 2009 the Court found that the yard had been included in the lease as the result of a conveyancing error (for which neither of the parties were responsible) and granted a judicial rectification[1] of the lease removing the yard from the leased subjects (the rectification being retrospective in effect). Mr Mirza then sought damages for wrongful interdict.

In the Outer House Lord Woolman refused to grant damages taking the view that, although rectification altered the deed and the register, “it did not airbrush history. It did not convert a rightful interdict into a wrongful one”.

Decision
By majority decision[2] the Inner house allowed an appeal and found that Mr Mirza was entitled to damages[3].

After construing ss8 and 9 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 (which deals with rectification of defectively expressed documents) and s9(3A) of the Land Registration (Scotland) Act 1979[4] (rectification of the Land register), the court found that the clear effect of the legislation was that rectification would act retrospectively (i.e. the rectified entry would take effect from the date the original entry was made)[5].

The court also confirmed that the obtaining of an interim interdict is at the risk of the applicant meaning that, if an application is ultimately found to be unsuccessful, the applicant will be liable for loss caused by the interim interdict. In the words of Lady Dorrian:

“The position in relation to interim interdict is clear, and well understood by practitioners, namely that such an order is sought periculo petentis [at the risk of the perpetrator].  This rule means that, in general, where loss has been caused, damages will automatically follow where an interdict has turned out to be unjustified.  A petitioner for interdict perils his case, and places himself at risk of damages if it prove to be otherwise, that he will eventually be vindicated in his claim.”

The full judgement is available from Scottish Courts here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Case from the Lands Tribunal for Scotland considering the title to the common parts of a development at Corstorphine Road in Edinburgh.

The case follows on from PMP Plus Ltd v The Keeper of the Registers of Scotland and others[1] and Lundin Homes Ltd v. the Keeper. PMP confirmed that it was not competent to convey the common parts of a development which are described by reference to a future event (e.g. conveying what will be left when the development has been completed). Lundin also made it clear that, for titles registered in the Land Register, there must be a sufficient description[2] of property within the conveyance[3] (whereas for Sasines titles it is competent for the extent of property to be identified by extrinsic evidence).

This case considers whether the owners of houses within the development with titles recorded in the Register of Sasines[4] may have obtained rights in the common parts by prescriptive possession.

The dispositions in favour of the home owners contained the following clause:

 “… (Three) a right in common with the proprietors of all the other dwellinghouses in the development of which the subjects hereby disponed form part to areas of open space amenity ground and/or wooded areas and unallocated parking spaces formed or to be formed in accordance with the requirements of the Local Planning Authority (the exact extent of which areas may not yet have been defined) unless and until said areas and unallocated parking spaces may be formally taken over by the Local Authority …”.

The developer (Miller Homes) received a conveyance of an undeveloped area of ground within the development from a group company and registered a title to it in the Land Register. The Keeper excluded indemnity on the basis that proprietors of the houses who held Sasine titles may have acquired prescriptive rights of common ownership in the area.

Miller argued that, in accordance with the decision in PMP, the house owner’s titles were not habile to found prescription as they were described by reference to an uncertain future event.

The Tribunal found that, whilst it was not possible to found prescription on titles to common areas still to be formed or to be defined[5] at the time the dispositions of the individual plots within the development were granted, the clause also refers to areas which had been formed and defined and it was possible that prescription could run on Sasine titles where the common area had been formed and defined at the time a disposition[6] of the relevant plot was granted.

No individual owner had entered appearance in appeal and the Tribunal decided to re-intimate the appeal to all the individual proprietors in order that they should have an opportunity to enter appearance and attempt to set up a competing title.

The full decision is available from the Lands Tribunal for Scotland here.

A blog on Registers of Scotland’s policy with regard to development common areas is available here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

The problem
It has long been common practice for developers to dispose of the common parts to developments by selling individual plots with a right of common property in whatever is left at the completion of the development. (This has the advantage that the developer does not have to decide on the ultimate layout of the development before it starts and has the flexibility to change the layout as building proceeds).

However, in terms of both property law [1] and registration law [2], it is incompetent to convey an area that is indeterminate. Although there have long been doubts about the competence of the practice [3], the practical benefits to developers have meant that it was nevertheless common practice and the common areas of many developments have been described in this way.

PMP
In 2008 the case of PMP Plus Ltd v The Keeper of the Registers of Scotland and others [4] confirmed that the practice is not competent. In that case a developer sold plots in a development with a share in the common areas (which were described as being those areas not exclusively alienated to the home owners) but decided prior to the completion of the development to sell a part of the development (which would otherwise have formed part of the common areas) to PMP for the building of a health centre. The Keeper excluded indemnity in respect of PMP’s title  on the grounds that the home owners may have acquired title to the common parts as a result of the conveyances in their favour. However, the Lands Tribunal for Scotland decided that the home owners did not have an effective title to the common areas due to the absence of a sufficient description.

Update 27
In response to PMP, the Keeper issued update 27 which contained guidance on how the Keeper would deal with applications relating to such developments post PMP. It made it clear that, for developments where the first split off deed/plot sale occurred on or after 3 August 2009 (described as “new developments”) there was a change in policy and, where identification of the common areas depended on completion of the development (or other future uncertain event), the Keeper would no longer show the conveyance of the common areas in the title sheet.

However, for developments where plots had been sold before 3 August 2009 (described as “existing developments”), the Keeper would continue to reflect the terms of the conveyancing showing the conveyance of common areas in the title sheet even where identification of the common areas was dependent on completion of the development (or other future uncertain event). This approach was intended to ensure consistency and equality within developments. It was also intended to take account of the possibility that rights in the common areas may be created when the last plot is sold[5].

Lundin
In June 2013, the Lands Tribunal for Scotland issued the decision in Lundin Homes v Keeper of Registers of Scotland[6]. Lundin went a step further than PMP as it made it clear that the identity of the common areas does not become fixed merely because the last plot in the development has been sold and, where the common parts have been insufficiently described in the original purchases from developers, subsequent sales of the properties will not cure the defect[7].

AI27
Following Lundin, rather than issue a replacement for Update 27, the Keeper issued an “additional information” paper (referred to here as “AI27”) to be read alongside it. This approach can be slightly confusing as some of the guidance in AI27 conflicts with Update 27. The following is an attempt at consolidating the provisions of Update 27 and AI27.

New developments (First registrations)
AI27 makes no change to the guidance issued in Update 27 in respect of “new developments”. In such cases, the Keeper will continue to take steps to remove wording from the title sheets which identifies the common areas by reference a future uncertain event.

Existing developments

First Registrations and transfers of part
As noted above Update 27 takes account of the possibility that rights in the common areas may be created when the last plot is sold.  AI27 acknowledges that, following the decision in Lundin, the occurrence of a future event/sale of the final plot by itself will not create rights in the common areas.

However, AI27 also makes the point that, if a deed is drafted so as to properly identify the common areas, it may[8] (along with the positive effect of registration/“the Midas touch”) have the effect of creating rights in the common areas. The Keeper will therefore consider applications for a first registration or transfer of part within an existing development where there is an attempt to identify the common areas and recommends that solicitors considering this approach should contact pre-registration enquiries.

AI27 makes it clear that, where there is no attempt to identify the common areas, the Keeper will continue to reflect the terms of the conveyancing. This is the same approach as Update 27. However AI27 goes on to suggest that, where a solicitor considers that rights in common have not been validly created in a split off disposition, he or she may wish to reflect that in the deed submitted for registration.

Dealing of a whole
The hierarchy of the headings in Update 27 is slightly confusing and may at first sight seem to indicate that the guidance relating to applications for the registration of the dealing of a whole falls under “new developments”. However, as noted above, the Keeper will remove wording transferring rights in common areas from the title sheets to new developments where it refers to a future uncertain event[9]. Such wording will not therefore arise on a “dealing” occurring in a “new development”. On the dealing of a whole within “existing developments”, Update 27 made it clear that the Keeper’s policy (as with first registrations) will be to make no changes to wording relating to common areas (and not to exclude indemnity). That does not change. However, Update 27 did indicate that completion of the development may create rights in common areas. Whereas, AI27 makes it clear that it will not.

In addition AI27 acknowledges that it may be possible in some cases to fix the problem with some remedial conveyancing. In this regard we are advised that the Keeper will consider applications which attempt to identify the common areas[10].

Vague verbal descriptions (no reference to future uncertain events)
PMP made reference to deeds containing verbal descriptions of common areas which do not specifically identify the common areas by reference to the OS map. Update 27 advises that the Keeper’s policy is, and will continue to be, to reflect the terms of the conveyancing without requiring a full bounding description of or plan delineating such common areas[11]. However, Update 27 also notes comments in PMP to the effect a description without reference to extraneous material might well be thought to be a central feature of a map based registration system and suggests that applicants consider those comments. This advice proved to be well founded as Lundin makes it clear that reference to extraneous material (with the possible exception of other publicly accessible registered titles) for description is incompetent. Consequently, where such wording appears on a registered title it will be superfluous and ineffectual. (However, see comments on prescription below.)

Update 27 also suggests than an applicants may want to request (with the support of a certified plan or deed plan) to have such areas mapped on to the title plan for its interest (albeit indemnity is likely to be excluded unless the other owners and developer are also parties to the plan). No further guidance on this issue was given in AI27.

Sale of potential common areas by developer

Registered titles
This policy on the sale of potential common parts by a developer perhaps represents the biggest change in policy. Update 27 provides that, where a developer was attempting to convey possible common areas, the Keeper would require evidence that the developer’s title to the land being sold was not void or voidable.  That is changed in AI27. In cases where the developer’s title is registered in the Land Register the Keeper will no longer require such evidence and will register titles without exclusion of indemnity.

Sasine titles
However, where the developer’s title and subsequent plots sales have been recorded in Sasines the situation is treated differently as prescription may play a role in creating rights to the common areas[12]. Where the relevant split off deed has been recorded in Sasines, and the title is habile[13] prescription may have cured defects in the title thus giving the owners of individual units in the development title to the common areas. Thus, where a developer is attempting to sell parts of a development in which the dispositions conveying individual plots have been recorded in the Register of Sasines, the developer will require to provide evidence that there is no conflicting possession by persons other than the developer.

Superfluous wording
The Keeper’s policy with regard to “existing developments”[14] will result in superfluous and ineffective wording in registered titles and we are again told that no steps will be taken to remove such wording at present due to the effect of prescription. In addition to its role with regard to Sasine titles, AI27 also refers to the impact of prescription on Land Register titles.

Land Registration (Scotland) Act 2012 and prescription
Whilst prescription does not currently play a part in Land Register titles[15], the Land Registration (Scotland) Act 2012[16], changes that and will allow prescription to run on deeds presented for registration[17]. AI27 advises that the Keeper is currently considering the implications of the 2012 Act. She will not  therefore take steps to rectify the Register (unless she receives an application for rectification) until that consideration is complete.

It may be that the operation of prescription under the 2012 Act helps to shore up titles in need of fortification. However, we should bear in mind that it will also bring about an end to the “Midas touch” (which, where common areas are correctly identified, can presently cure defective descriptions).

Prescription as a cure
Whether under Land Register titles or Sasine titles, it will seldom be that prescription provides a complete fix for the problem and we should also bear in mind some of the limitations of possession to demonstrate title. Whilst a proprietor is likely to be able to show prescriptive possession of the common areas it uses regularly (e.g. a communal bin store), there will be other areas for which it may be hard to show (and harder yet to prove) possession (e.g. communal flower beds). And others that may prove more useful to some people than others (e.g. communal parking bays may not be of too much to a plot owner who doesn’t own a car). Consequently relying on prescription is therefore likely to lead to patchy, inconsistent and unclear ownership of the common areas in developments.

The lack of a share in a communal flowerbed will most likely not be of huge importance to most owners. Carless proprietors are unlikely to be overly concerned about the parking bays until they come to sell the property to someone with a car. However, in all cases a lack of ownership in the common areas is likely be more of an issue if they come to be sold by the developer and used for something the plot owners find undesirable.

Where we are now?
The combination of PMP, Lundin, Update 27 and AI27 leaves us in the following situation.

• Many units within developments do not include a share of the common areas[18]. Clients and their lenders will require to be advised accordingly.
  • This should be clear from the land certificate on the dealing of property within a “new development”[19]. (Albeit there may be some instances where the applicant has not paid heed to the advice in update 27 and ineffectual vague verbal descriptions which do not identify the common areas by reference to a future event remain on the title.)
  • When involved with first registrations, or dealings of properties in “existing developments”, descriptions will need to be examined carefully. Those purporting to identify and convey common areas by reference to a future event[20] will be ineffective[21]. However, AI27 makes it clear that the Keeper will consider attempts to rectify the situation which do correctly identify the common areas.
• On a purchase of potential common areas (identified by reference to a future event) from the developer, the Keeper’s approach, after Update 27 but prior to AI27, was to require evidence that the applicant’s title was not void or voidable and would exclude indemnity if not satisfied.  Since AI27:
  • The Keeper will not require such evidence nor exclude indemnity for Land Register titles.
  • But, where plot sales have been recorded in Sasines, she will require evidence that there has been no possession adverse to that of the developer.

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Case from the Lands Tribunal for Scotland in which Ms Rivendale sought to appeal the Keeper’s refusal to rectify the Land Register in her favour.

Background
Ms Rivendale purchased a cottage in Tarbert, Argyll in 2010 but was unable to register title to an area of ground in front of the cottage as it was included in her neighbour’s title. The tribunal found that Ms Rivendale was the “true owner” of part of the area of ground and that the register was inaccurate in that respect. However, in terms of s9(3) of the Land Registration (Scotland) Act 1979, the register cannot be rectified[1] where rectification would result in prejudice to a proprietor in possession. Ms Rivendale’s neighbour, who had used the disputed area (on part of which there was a track) to access two building plots and other land owned by her, argued that she was a proprietor in possession and would suffer prejudice if the register were rectified.

Reasoning
When considering the issue, the tribunal took the view that, in this case, it was not sufficient simply to decide whether or not the neighbour was in possession of that area as a whole. Rather, because there were two different characters of use of the area in question (Ms Rivendale used the area as garden ground and her neighbour used it as an access track), the matter became a question of finding where one use ended and the other began.

Decision
As such, the tribunal found that the neighbour was the proprietor in possession of part of the property on which there was a track but not a part which was grassed nor a part on which there were flower beds. As a consequence, Ms Rivendale was entitled to rectification of the register in respect of the part of the disputed area which extended to the edge of the track but not to the part on which the track was situated.

The full decision is available from the Lands Tribunal for Scotland here.

(See appeal to the Inner House below)

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Case from the Lands Tribunal for Scotland in which Lundin homes appealed against the Keeper’s decision to exclude indemnity from their title to a development site.

Background
The site had been part of a larger development and had been intended as a detention pond for surface drainage run off but was not required for that purpose. Lundin bought the site from the receiver of the original developer. However, the Keeper excluded indemnity from Lundin’s title on the basis that the site could have been conveyed to the proprietors of the houses in the larger development as part of the common parts.

In the case of PMP Plus Ltd v The Keeper of the Registers of Scotland and others[1] it was established that it is not possible to create rights in common areas where the identification of those areas is dependent on a future uncertain event; for example, where a developer dispones properties (before the development has been completed) with a right of common property in the areas of the development which will be left over after the houses have been erected[2].

Keeper’s Argument
The Keeper argued that this case differed from PMP in that the development had been completed and the owner of the last of the houses in the larger development could have obtained title to the common areas (including Lundin’s site) as, at the time the last property was conveyed, the common areas became identified and were no longer uncertain.  On this reasoning, the Keeper argued, subsequent re-sales of the houses (after the common areas became identified by the sale of the last house in the development) would also carry a share of the common parts. The “Midas effect” effect (under which an entry on the register cannot be void, meaning that, if a title is registered, and so long as the subjects can be identified[3], that title becomes the actual title even if that does not represent the correct legal position) was important to the Keeper’s argument.

Decision
The tribunal rejected this argument finding that the common parts had not been sufficiently identified in the title to the last of the houses and noted the difficulty in determining with certainty when a development has been completed[4]. The title to the last of the houses did not show or attempt to describe the extent of the common parts or all of the boundaries of the other properties. The development title which had been marked up with progressive titles by the keeper did show all of the boundaries and common parts but it had been “closed” meaning that it was not public and could only be searched internally by Registers’ staff.

The tribunal found that reference to extraneous material, (with the possible exception of other publicly accessible registered titles) in order to establish completion and identify common parts is incompetent. As such, the owner of the last house to be sold in the larger development had no right to the Lundin site (or indeed the rest of the intended common areas within the development) and the Keeper had not been entitled to exclude indemnity when registering Lundin’s title.

It was also noted that re-sales of the houses did not include a right to the common areas as, even with the assistance of the “Midas” effect, the conveyance only disponed what was contained in the title sheets and the titles in the re-sales suffered from the same lack of description as the first purchases.

The full decision is available from the Lands Tribunal for Scotland here.

(See also Miller Homes Limited v The Keeper of the Registers of Scotland, LTS/LR/2013/06).

A blog on Registers of Scotland’s policy with regard to development common areas is available here.

All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.

Outer House case in which Mr and Mrs Motion sought interdict to prevent their neighbours, Mr and Mrs Binnie from encroaching on, or interfering with their property (consisting of two cottages, a paddock and a strip of land) and from interfering with or obstructing servitude rights of access (over farm roads) to that property. The Motions’ titles to the property and servitude rights were registered (and defined on plans) in the Land Register without exclusion of indemnity.

In their defence, the Binnies argued that the Motions did not have a vehicular right of access over part of the access route, contending that to exercise a vehicular right would involve them driving over part of the Binnies’ property. This, they argued, was not a challenge to the Motions’ title but a challenge to the physical extent of the servitude rights.

However, in the view of Lord Bannatyne, it was impossible to read the Binnies’ arguments as anything other than a challenge to the Motions’ title. The Motions’ rights were set out clearly on plans and registered in the land register but the Binnies did not seek to rectify the register. As such, the Binnies’ defences were found to be irrelevant. In coming to his conclusion Lord Bannatyne quoted from the Scottish Law Commission’s Report on Land Registration (SLC Report No. 222) which states:

“Rights in land are what the Register says they are and the Register says what the Keeper decides it should say. The Keeper giveth and the Keeper taketh away.”; and

“Everything that the Keeper touches turns to valid.”

 The full judgement is available from Scottish Courts here.

 All of our property and conveyancing case summaries are contained in the LKS Property and Conveyancing Casebook here.