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The Title Conditions Bill

1 November 00

The approach adopted by the Scottish Law Commission in its Report on Real Burdens, and draft Title Conditions Bill

by Kenneth Reid

What?

‘Title condition’ is not, at the moment, a technical term of law. That may be about to change. In the draft Title Conditions (Scotland) Bill, ‘title condition’ is used as a generic term for real burdens, servitudes, conditions in long leases, and other obligations which are capable of variation or discharge by the Lands Tribunal. Its closest equivalent in the current law is ‘land obligation’, as used in part I of the Conveyancing and Feudal Reform (Scotland) Act 1970. The Title Conditions Bill, as its name suggests, contains provisions affecting all title conditions. But overwhelmingly the Bill is about real burdens.

When?

It is understood that, following a period of consultation, the Title Conditions Bill is likely to be introduced to the Scottish Parliament next year. Once enacted, some of its provisions will come into force at once but most will await the day of feudal abolition (still some time in the future). Thus the intention is that the Abolition of Feudal Tenure etc (Scotland) Act 2000 and the Title Conditions (Scotland) Act 2001 should come into force on the same day.

Why?

There are a number of reasons for proposing legislation on real burdens. One is the unsatisfactory state of the current law, which is sometimes confused and incoherent, or needlessly complex. Conveyancers have done their best, but the background law is unhelpful.

Another reason is the forthcoming abolition of the feudal system, and hence of feudal real burdens. This makes it necessary to recast the law of real burdens in a non-feudal form. At the moment real burdens are often held by superiors. In the future they can be held only by neighbours. A non-feudal real burden is like a servitude. There must be both a ‘benefited property’ and a ‘burdened property’ (to use the language of the Title Conditions Bill); and the burdens are enforceable by the owner of the former against the owner of the latter. Non-feudal burdens are perfectly familiar under the present law, of course. Every time a real burden is created in an ordinary disposition, or in a deed of conditions granted in association with dispositions, it is non-feudal in character. But after feudal abolition all real burdens will be non-feudal.

Then there is the issue of transparency of the registers. At the moment the registers give a very incomplete picture. Even although non-feudal burdens involve two properties, one benefited and one burdened, the law requires registration against the burdened property alone. Of course sometimes, by chance, the burden appears on the title sheet (or search sheet) of the benefited property as well. More usually it does not, in which case the person with title to enforce may have no idea of the burden’s existence. Small wonder, then, that real burdens are rarely enforced.

Worse than this, the identity of the benefited property may actually be unknown. Here the law operates inconsistently. In creating a real burden it is necessary to set out its terms in clear and unambiguous language. A burden which fails to meet this exacting standard is penalised by invalidity. But the exacting standard does not extend to the nomination of the benefited property. A well-drafted deed will make express provision, of course. Where this is not done, however, the law will often imply the existence of a benefited property or benefited properties on the principle sometimes described as implied jus quaesitum tertio. Unfortunately the relevant rules are so complex as to be almost unworkable.  The result is that, while the burdened owner is in no doubt of his obligations, he may have not the first idea as to who has title to enforce them. If he wants a minute of waiver he will not know where to turn.

Finally, there is the issue of longevity. Some real burdens are unaffected by the passage of time and remain as useful today as when first created. Others rapidly become obsolete or inconvenient or, in changed circumstances, unduly restrictive. For the system to work properly, therefore, it is necessary to have adequate means of removing burdens from titles. And the sheer scale on which burdens are used in Scotland – far greater than in other European countries – makes the need all the more pressing. Here the present law falls down. Every conveyancer is familiar with the unauthorised alteration which comes to light the day before settlement. Often the alteration is of a trivial nature. It was not objected to at the time, and has not been objected to since. Probably it is an alteration to which no reasonable person would object. Yet the transaction cannot go ahead unless someone can be found to sign a minute of waiver. Here the expense and trouble are out of all proportion to the nature of the breach.  

A statutory re-statement

Part 1 of the Title Conditions Bill (ss 1 to 22) comprises a statutory re-statement of the common law of real burdens. In future a person seeking to discover the law will at least know where to begin. The language used is quasi-codal in character, and is as simple as is possible consistent with legal certainty. The emphasis is on continuity. While the law is changed – improved, one hopes – in places, much of the work of the Bill is clarification and not innovation. Some of the more important changes are mentioned later. The statutory restatement covers all the main stages in the life cycle of real burdens. There are rules on creation (ss 2 to 5), title and interest to enforce (ss 7 to 10), division of the benefited or burdened properties (ss 11 and 12), interpretation (s 13), and extinction (ss 14 to 22). And the Bill begins (s 1(1)) with a definition: in the post-feudal world ‘a real burden is an encumbrance on land constituted in favour of the owner of other land in his capacity as owner of that other land’.

Creation of real burdens

The Bill alters the rules of creation of burdens in a number of respects. At present real burdens can be created only in a conveyance of the burdened property or in a deed of conditions. That restriction is removed by s 4(2). In future a real burden can be created in a deed of any kind. Further (and by contrast with the current rule for deeds of conditions), the granter’s title need not have been completed by registration, and deduction of title is permitted. But in other ways the new law is more demanding than the old. The term ‘real burden’ must be used (or the name of some type of real burden, such as a ‘community burden’, mentioned below). The deed must nominate and identify the benefited property or properties. It will no longer be possible for enforcement rights to arise by implication. And the deed must be registered not only against the burdened property, as at present, but against the benefited property as well.

Division of benefited properties

Superiorities cannot be divided. Benefited properties can. Where this occurs there is often an unwelcome proliferation of enforcement rights. If, for example, 100 houses come to be built on the plot of ground which is the benefited property in a real burden, the burden is suddenly enforceable by 100 different people, and minutes of waiver cease to be a practical proposition. Section 11 responds to this (post-feudal) problem by providing that, except where the deed says otherwise, any land split off from the original benefited property will lose the status of a benefited property.

Extinction of real burdens

A number of provisions in the Bill have the object of making extinction of burdens an easier and more flexible process than under the present law. The period of negative prescription is reduced from 20 years to 5 (s 16). Acquiescence is given statutory status, and it is made clear that it is properly extinctive of burdens, to the extent of the breach acquiesced in (s 15). Further, acquiescence is presumed once the breach is completed. So in the case of an unauthorised alteration, there will be a presumption that the person with enforcement rights did not object at the time and that a challenge is now barred. Part 9 of the Bill reformulates the grounds for variation and discharge of real burdens (and other title conditions) by the Lands Tribunal. If a Tribunal application is unopposed, the application is granted as of right (s 92). A person who opposes an application must pay a fee (s 91) and, if unsuccessful, may be liable for the applicant’s costs (s 95). The Tribunal is given a new jurisdiction to pronounce on the validity and effect of real burdens.

An important innovation is the introduction of a termination procedure for burdens more than 100 years old (ss 18 to 22). Instead of seeking a minute of waiver, the burdened owner can discharge the burdens by service and registration of a simple notice, known as a notice of termination. The consent of the benefited owner is not required. But the notice of termination cannot be registered if, within a period of eight weeks of service, the benefited owner applies to the Lands Tribunal for the burdens to be renewed. In that event the future of the burdens is determined by the Tribunal in the usual way. A number of burden types are excluded from the notice of termination procedure, the most important being ‘facility burdens’, that is to say, burdens concerned with the maintenance and regulation of facilities such as the common parts of a tenement or housing estate, or a private road, or a boundary fence.  Facility burdens are already familiar (although not by name) from s 23 of the Feudal Act. The importance of such burdens is self-evident, and this is one of a number of occasions in which they are singled out for special treatment.

Community burdens

Real burdens can be used to regulate discrete communities, such as housing estates or tenements or sheltered housing developments. If, as often, the burdens are mutually enforceable by the owners of individual units, they are classified by the Bill as ‘community burdens’. Part 2 of the Bill makes special provision for such burdens. A rudimentary management scheme is introduced which applies where the titles do not otherwise provide. This allows the owners of a majority of units to appoint (or dismiss) a manager/factor (s 26), and to instruct common maintenance (s 27). In place of the current rule that all owners must concur in a minute of waiver, the rule becomes that burdens can be discharged by the owners of a majority of units or, where authorised to do so, by the manager (s 30). At least one close neighbour must also sign.

Burdens without a benefited property

Normally a real burden must have a benefited property. But, following the Feudal Act (ss 26 to 32 and 60), the Bill makes an exception for conservation burdens and maritime burdens. These are enforceable, respectively, by conservation bodies or the Crown. The relevant provisions are in part 3. Further, s 53 of the Bill allows a developer to reserve the power to appoint a manager for as long as he retains units in the development which he is selling, but subject to a maximum period of 10 years (30 years in the case of a local authority selling under the right-to-buy legislation). Such ‘manager burdens’ are held directly by the developer, without a benefited property. Unusually, the relevant provisions of the Bill come into force immediately on royal assent, thus allowing new conservation, maritime and manager burdens to be created in advance of feudal abolition.

Transitional: implied rights of enforcement

Mention has been made already of the rules, barely workable in practice, by which a right to enforce real burdens may arise by implication. With one exception (for rights created by the rule in J A Mactaggart & Co v Harrower (1906) 8 F 1101), all such rights currently in existence are swept away by part 4 of the Bill. In their place come new statutory rights. By a provision modelled on s 23 of the Feudal Act, facility burdens are in future to be enforceable by the owners of those properties which take benefit from the facility in question (s 47). Real burdens imposed under a common scheme on all the flats in a tenement are to be enforceable by the owners of each flat (s 45). A similar rule is applied to sheltered housing (s 46). In other cases of burdens imposed under a common scheme – in housing estates, for example – enforcement rights are restricted to close neighbours, defined as those owning property within four metres, discounting roads (s 44). However, as under the rules being replaced, enforcement rights arise only if the existence of the common scheme is clear from the deed imposing the burdens, and if there is nothing in that deed which is inconsistent with the idea of enforcement rights being held by neighbours. The standard example of inconsistency is the provision, often found in deeds of conditions, by which the granter reserves the right to vary the burdens. The provisions just described are transitional in nature. They have no application to real burdens created after the Bill comes into force. In the case of new burdens, as already mentioned, the benefited properties must be identified in the deed.

Servitudes

While most of the Bill is about real burdens, part 7 contains a number of provisions about servitudes. On the basis that negative servitudes are merely real burdens by another name, all existing negative servitudes are converted into real burdens, and it will cease to be possible to create such servitudes (ss 75 and 76). Where, in future, positive servitudes are created by deed, the servitude will not be effective unless the deed is registered against both the benefited and the burdened properties (s 71). But on the other hand a servitude which is so registered will no longer be subject to the restriction that it must be of a type known to law (s 72). Thus in future any right of use – car-parking, for example – can be created as a servitude provided only that it conforms to the general characteristics of servitudes.

Other topics

Other topics touched on by the Bill include rights of pre-emption and redemption, the School Sites Act 1841, and the effect of compulsory purchase on real burdens and servitudes. The rules of ranking of standard securities are adjusted to accommodate deeds which secure clawback arrangements (s 102). Finally, part 6 of the Bill introduces an off-the-peg management scheme which can be used, if desired, for new housing estates and other developments.

Kenneth Reid is Professor of Property Law at the University of Edinburgh and a Law Commissioner. The Report is available from The Stationery Office or on the Commission’s website www.scotlawcom.gov.uk