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Conditions countdown

14 July 14

The 10-year transitional period preserving real burdens not automatically protected by the Title Conditions (Scotland) Act 2003 will soon expire

by Frances Rooney

The 10 year deadline will shortly expire for title conditions not automatically protected by the property law legislative reforms.

Over the past 10 years, property solicitors have had to get to grips with the implications of the 2003-04 overhaul of property law, which involved the simultaneous abolition of feudal tenure and partial codification of common law surrounding title conditions and tenements. With practice now relatively settled, it is easy to forget that we are still in a transitional phase under the Title Conditions (Scotland) Act 2003, and that more changes are yet to come.

The transitional period will end in a few months’ time. On 28 November 2014, enforcement rights of certain conditions will automatically end. As with the abolition of superiorities, due to human rights concerns the Act gives an opportunity for owners to preserve their rights before then. However, it is not without its difficulties and with time running out, practitioners need to act fast in order to advise clients in time to preserve any rights.

Title conditions affected

Not all title conditions are affected by the deadline.

Any created under the Act, that is, on or after 28 November 2004, are unaffected. Positive servitudes and servitude conditions are not affected either. However, real burdens and negative servitudes created before the appointed day may be at risk.

Categorisation of a title condition is, therefore, crucial. In many cases, however, it may not be straightforward. This is because until 2004 there was no legal requirement to state in a title deed which category any specific condition fell into. The lack of identification in older deeds is exacerbated by the fact that the categories and definitions themselves have developed and evolved over time, and until the Act came into force there were overlaps and inconsistencies between the categories. That is one issue the Act addressed. However, it leaves a practical problem. Before 2004, the distinction would have been largely academic day to day. Now, though, it is necessary to decide for any title conditions potentially at risk of being lost whether they are preserved by the Act automatically or not.

Negative servitudes

Negative servitudes are not always easy to spot. Some, such as right to light, are simpler than others. However, certain building restrictions also fall within the category. This may be the case whether or not the word “servitude” was employed in the relevant deed: indeed, pre-2004 styles tended to state that all conditions were “real burdens, servitudes and others” without any real distinction. In at least one case, the court treated a condition as a negative servitude, regardless of the fact that the deed stated it was a real burden in the usual “catch-all” fashion.

The Act temporarily converted negative servitudes into real burdens for the 10-year transitional period. When that ends, many (though not all) negative servitudes will be swept away entirely unless the relevant notices have been lodged to preserve them.

Real burdens

Real burdens have always required a benefited property and a burdened property. Until the Act came into force, however, it was not necessary to specify the benefited property in a deed constituting a burden. Various common law rules therefore evolved to determine which parties had implied enforcement rights.

Under the Act, all implied rights at common law will end on 28 November 2014. The Act does include certain statutory replacements for some of the old rules and creates new statutory enforcement rights. However, there are still gaps between the common law and the statute, and this means that many rights to enforce real burdens will end this year.

Again, there is a chance to preserve these rights before 28 November 2014.

Registration process

The procedure for preserving rights is set out in the 2003 Act. Generally, the following steps will be required:

  1. Identify the relevant title conditions to be preserved.
  2. Identify the benefited and burdened property owners.
  3. Prepare the notice using the form in the 2003 Act.
  4. Send an unsigned copy of the notice (and annexures) to every burdened owner, if reasonably practicable.
  5. Have the benefited owner sign the notice and swear an oath as to its accuracy before a notary public.
  6. Dual register the notice against the benefited and burdened properties no later than the deadline of 27 November 2014.

The ramifications of this deadline will continue to be felt long afterwards. While registering a notice under the Act will not resurrect an otherwise unenforceable condition, the risk of not preserving rights is self evident. Many title conditions which are enforceable now, may not be in a few months’ time – whether or not they appear on a land certificate.

Moreover, once the Land Registration etc (Scotland) Act 2012 comes into force in December, the Keeper will have a duty to rectify where there is a manifest error in the Land Register. This may well provide a chance for solicitors to request that some title conditions are cleared from the register where the relevant notice was not lodged in time.

Opportunities

Law firms should act now to advise clients of the risk. It has been easy to overlook the issue for the past nine years, with the myriad other changes which have been more pressing in the short term. However, clients need to be advised in sufficient time ahead of November that this change is looming.

Of course, there is still scope to turn the deadline into an opportunity to impress clients and potentially generate a stream of work over the coming months. The practical issue facing solicitors in the next few months is one of time.

Identification of the specific title conditions at risk of being lost is likely to be one of the biggest time stealers. The situation is more complex than for preservation of superiors’ rights in 2004, because superiorities were self evident. For 2014 notices, the complexity of the common law rules and their interaction with the new statutory rules mean that it is not as straightforward an exercise to identify title conditions at risk.

Frances Rooney, associate, Harper Macleod LLP

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