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The Keeper is coming

14 March 16

Keeper-induced registration will be essential to Land Register completion. We provide a Q&A on how it will work

by Frances Rooney, Sarah Duncan

Keeper-induced registration (KIR) is a new power for Registers of Scotland (RoS), brought in as part of the Land Registration etc (Scotland) Act 2012. It allows the Keeper of the Registers to move property titles from the General Register of Sasines onto the Land Register without an application from the owner. The primary purpose of KIR is to accelerate completion of the Land Register.

In May 2014, Scottish ministers invited the Keeper to complete the Land Register by 2024 for all private land and by 2019 for all publicly owned titles. RoS has set up a programme team to work on the routes to the register that will lead to completion, and KIR is key to achieving that goal.

The initial pilot and the consultation

To prove the concept and give illustrations on how KIR could be carried out, RoS carried out a number of pilots over the summer of 2015. Details of these pilots and their outcomes can be found in the consultation paper.

The results showed that the types of property that best lend themselves to KIR are those within “research areas”. There are over 35,000 research areas, which are areas where RoS has identified the rights and burdens common to a group of properties. Typically these are residential housing developments that contain high volumes of properties of a similar nature. The Keeper set out her findings from the pilot and sought views from the public in the consultation.

The consultation closed in January and a summary of the responses has now been published on the RoS website. The majority of respondents were favourable towards KIR in principle, and the majority agreed with the planned approach for KIR to begin in RoS research areas. A dedicated project team has now been established to work on the KIR programme. They are currently looking at the processes and systems required to undertake KIR, and the first live test areas are planned to begin in the autumn. The results of the consultation were incredibly helpful in forming RoS policy and practice; however, certain areas are yet to be decided at the time of writing. RoS will continue to communicate and refine its policies on KIR before, during and after the next pilot.

The consultation noted that registering residential dwellinghouses in research areas would enable up to 700,000 property addresses to be added to the Land Register by using KIR, a significant portion of the estimated 1.2 million titles which remain on the General Register of Sasines.

Putting it into practice

What are the costs to homeowners of KIR?

The Keeper will bear the costs of registration and so there will be no additional cost to a homeowner. The owner will benefit from a state-backed guaranteed title. There will be no erosion of rights for homeowners whose titles are brought onto the Land Register by the KIR process itself.

When will the Keeper start KIR and with what?

The consultation response offered strong support for starting in urban research areas, so the next stage of KIR aims to register some 20,000 properties across a number of such research areas. RoS intend for this to start in autumn 2016. The research areas have not yet been selected and we will communicate these as soon as they have been finalised. The aim of the pilot is to learn as much about KIR as possible, and so the selection of research areas will be made with that in mind.

What about land that isn’t residential in a research area?

There is a separate commitment from Scottish Government to voluntarily register public land. The KIR project is starting with residential titles in research areas held in private ownership, so titles outwith research areas and non-residential titles are out of scope for now, but of course this may be revisited in the future.

What plans do RoS have to let people know about KIR?

RoS will engage with stakeholders such as the legal profession, local authorities and agencies such as citizens advice bureaux in a particular area before KIR happens for that area. Individual landowners will be notified once their title has been brought onto the Land Register.

Will the owner have to provide titles or assistance to RoS?

No. RoS will obtain the relevant title deeds from their records and create the title sheet from those.

Can the owner object to KIR of their title?

The 2012 Act does not provide owners with a mechanism to object to the KIR of their title.

How will RoS be able to deal with unwritten rights such as servitudes constituted by prescription?

A normal application is accompanied by an application form which tells the keeper information that might otherwise not be currently identifiable, such as new or unwritten title conditions. Without an application form, as in KIR, there will inevitably be some title aspects that RoS cannot know, so any unwritten title conditions will not show in the title sheet. Where such rights are not included but a landowner wishes these included, the owner can apply for rectification free of charge in the usual way.

How will RoS deal with competing titles?

Where there are competing titles, determining which competing title will prevail is a more complex legal question under the 2012 Act than under the 1979 Act, when a registered title would almost always be preferred to a sasine one.

For urban dwellinghouses in research areas, which will be the initial focus of KIR, overlaps between titles will be rare. Policy will develop in dealing with such cases, and it may be that the Keeper elects not to KIR such titles.

Owners can of course apply to rectify if they believe registered boundaries are incorrect.

What will RoS do about unmappable common areas?

RoS will generally take the same approach for common areas as they do for non-KIR titles.

RoS published guidance in 2015 to the effect that where existing common areas cannot be identified easily from an owner’s title deeds, RoS will not include those on the title sheet but will nevertheless register the rest of the property. An owner can apply for rectification as per the 2015 guidance.

What will happen after a KIR title has been registered on the Land Register?

RoS will notify the owner by writing to the registered address. A copy of the title sheet will be made available free to the owner if they request it.

Will a KIR title sheet look different from other title sheets?

Yes. There will be a note in the property section making it clear that it is a KIR title.

The burdens section will also look different from non-KIR titles. Of all the questions in the consultation, this was the one that had the most divergent views. The consultation proposed that the Keeper utilise incorporation by reference by listing the burdens deeds rather than setting out their terms in full. The burdens writs will be listed in the burdens section and the links provided will display copies of the writs (without quick copy costs).

As for pertinents, such as servitudes benefiting the property, these will continue to appear in section A in the usual way. As happens for all registrations, RoS will map these out if they are clearly mappable from the relevant title deeds; and if they are not, RoS will provide a note to explain that RoS did not have sufficient information to map them.

What is the legal effect of a KIR title?

KIR titles are intended to be fully tradable. They will provide a state-backed guarantee, clarity of the legal extent and clarity on the burdens that affect the subjects, subject to the point above about unwritten title conditions. As the Keeper is unable to check operation of special destinations such as survivorships and trusts, those titles will have a note alerting the reader to this.

What about prescription?

As with all registrations under the 2012 Act, registration of itself has no effect to alter property law rights; that is, there is no automatic “Midas touch”. The first owner’s reliance is not on the Land Register but on the sasine deeds. Prescription does not run to cure defects in registered titles that are not founded on a deed, such as in KIR, but can continue to run on any underlying sasine writs. Therefore ownership is not changed per se by the creation of a KIR title sheet. See Journal, November 2015, 35

What extra considerations should a solicitor keep in mind when presented with a KIR title?

We anticipate that by far the majority of KIR titles in research areas will be fully warranted. The intention is that KIR titles can be relied on at face value and are fully tradable, but we expect solicitors to amend their practice from how they would ordinarily approach a registered title. 

A seller, and a purchaser acquiring the property, may both wish to check that the KIR title is representative of the underlying sasine title and provide the Keeper with additional information on certain aspects.

(1) Seller/owner

Depending on what is in the owner’s contemplation, some owners may wish to instruct their solicitors to check the KIR title in advance of a transaction because rectification (if needed) may be easier if an error is spotted sooner rather than later.

For example possession, and unwritten servitude rights, will not be in the keeper’s knowledge when creating the KIR title sheet but when taken into account by the owner examining title, may provide a case for rectification.

Assuming the owner does not instruct such a check before dealing with the title, they may wish to do so before granting warrandice in an onward deed. The first registered owner of a 2012 Act registered title relies on the sasine deeds rather than the title sheet (see Journal, November 2015, 35).

Subject to what will become acceptable in practice, a seller could seek to exclude warrandice, so that the transaction is more akin to “usual” sales whereby the purchaser takes the lead in examining title. However this would not be palatable to purchasers and could negatively impact on the sale or its price. In addition, it could lead to an exclusion of RoS’s warranty on the purchaser’s title sheet if the warrandice is unexplained after a requisition (see Journal, January 2016, online exclusives).

(2) Purchaser/grantee

Purchasers and other grantees will of course seek to examine title in the usual way. Again for a KIR title, it may be safest for them to examine the sasine title too.

A purchaser taking a registered title in good faith can, in certain circumstances, rely on the title sheet without looking behind it, and benefit from the realignment provisions of the 2012 Act (see Journal, November 2015, 35). This is not the case, for example, if the title sheet is marked as “proprietor unknown” (which can happen in KIR), or if there is an exclusion of the Keeper’s warranty; in such cases realignment is not possible so it is reasonable to expect a purchaser to conduct further investigations. An interesting question is whether a purchaser relying wholly on a title sheet marked as KIR can be taken to be in good faith in quite the same way as one relying on a title sheet created with the owner’s involvement. Courts of course have not been presented with that question yet.

What will a KIR title sheet look like?

1. The map

There will be no changes to the map to denote the title created through the KIR process.

2. The property section

This will contain a note alerting the reader that the title has been created through the KIR process.

3. The proprietorship section

Where the proprietors can be established with confidence from the titles, these will be displayed without accompanying notes. Where the proprietors are subject to a special destination or otherwise unclear, an accompanying note will be provided.

4. The securities section

The Keeper will display all undischarged securities in date order. As with all subordinate real rights, the date of registration of these securities will be the date of registration of the plot found in the property section.

5. The burdens section

As mentioned in the consultation, the Keeper envisages using a more digital solution for display of the burdens relating to the title, so the burdens section will appear differently in KIR titles than it does currently.

Why is RoS granting full warranty for KIR titles?

The Keeper is happy to offer full warranty in most straightforward KIR cases, which will be the focus of the pilot. This is in recognition of the huge benefit that warranty is to proprietors, lenders and the economy generally.

As with any registration, though, there will be times when warranty has to be excluded, and worked examples of such cases will be made available (should such situations arise) following the pilot.

Where the title is clearly a non domino and prescription has not fully run, then the Keeper will exclude warranty as she would on a triggered registration.

Can we rectify a KIR title?

If a manifest error is spotted and the Keeper agrees, rectification will be carried out. This may happen, for example, to add an unwritten servitude that RoS will not have known about.

Frances Rooney, Head of Land Registration, Harper Macleod, and Sarah Duncan, Head of Operational Policy, Registers of Scotland

 

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