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The 2012 Act: a bold step forward?

20 March 17

Is the new land registration regime really a more coherent, workable system? This article argues that it is driven by motives unconnected with the primary purpose of the system, and is no improvement

by Donald Reid

More than two years since the Land Registration (Scotland) Act 2012 came into force, I am struck by the general dislike of it that practitioners regularly express. This contrasts sharply with my recollection of the 1979 Act, which was received nervously but with general enthusiasm. There may be some rose-tinting, but my memories are of good-natured grappling with its requirements, careful and confident submission of applications, sympathetic corrections where required by the Keeper, and a genuine pleasure when the new land certificate came in. None of that happens with the 2012 Act.

The question mark in my title is my personal response to an article (Journal, March 2012, 32), “A bold step forward”, published during the bill’s passage. I did not think so, and apart from one feature, my experience, shared by many colleagues, is that everything is worse. A rising tone of academic attack on the 1979 Act had fostered a kind of consensus among the great and good that it was “not fit for purpose”. Professor Gretton pithily described it as having “all the intellectual sharpness of mashed potato”. Amusing, but although I don’t have statistics, I am confident that in practice the Act was providing an accurate, indemnified, unchallengeable and demonstrable title in the vast majority of applications presented under it. I don’t particularly care whether, in theory, the Scottish system was “positive” or “negative”. The statistically demonstrable fact is that the Act was not broken, even if it needed a bit of maintenance.

True, there were anomalies and some hard cases, but an insignificant number against the huge majority of satisfied registered proprietors. No system is perfect, and the 2012 Act is bringing its own anomalies, for example the Keeper’s inability to take a pragmatic view on misplaced slivers of ground thrown up by a builder having moved a fence on a plot at some point many years ago. Under 2012 the Keeper demands conveyancing to sort this (impossible), or else compliance with the byzantine s 43 a non domino conditions (again impossible).

I admit: the vast majority of 2012 Act transactions also result in satisfied registered proprietors, but that is not the point. For the expense, transitional uncertainty and new learning required to make 2012 work, the end product ought to be demonstrably better. It’s not.

What is better?

The improvement mentioned is the advance notice procedure. At last as a profession we are relieved from having to provide personal letters of obligation. However, this essentially has nothing to do with the new Act. It could have been enacted otherwise just as easily. As it happens there is a whopping drafting solecism in s 57, but everyone just pretends it isn’t there. This would not have happened if the draftsman had been giving advance notices the careful attention they deserved, instead of being diverted by the rest of the Act.

What is worse?

I offer at least the following:

1. The end of the Midas touch

The validity of the registered proprietor’s title even if, as a matter of underlying property law, someone else was the true owner, was if anything the most reviled feature of the 1979 Act within academia. The criticism was that this “Midas touch” could unfairly deprive an innocent owner, comprising a form of statutory land theft. In fact such cases were very rare, and in some the “innocent” proprietor was so indifferent to or cavalier about their ownership that they had not even noticed that the usurping proprietor had taken possession.

In my experience the Midas touch was one of the welcome features of the 1979 Act to practitioners and clients alike. Yet now it is bruited about that the 2012 Act has ended this pernicious feature, as if we had all been pining under its monstrous oppression. More curious still, the 2012 Act has not actually got rid of the Midas touch at all – just deferred its effect for one year. A bona fide third party who purchases registered land one year on from first registration gets an unchallengeable title: s 86. Except this time it is not called land theft, but realignment, and everybody approves. I don’t see much difference myself.

2. Tell me, don’t show me

Under the 2012 Act the Keeper no longer examines the title offered for registration, other than to check that the right deeds are produced to enable text to be transcribed onto the register. The Keeper is not concerned with whether these deeds actually validly comprise or convey the title, but will register in accordance with what the applicant (actually their solicitor) says the deeds mean, even if they don’t.

If rubbish is offered, rubbish will be registered. This surely carries grave risks for the accuracy of the Land Register. I find it astonishing that the Government should be content, indeed proud, that the Keeper of this most important and valuable public register exercises no substantive quality control.

3. The one shot rule

As practitioners we have to acknowledge that our own mistakes and laziness may have prompted this grossly unfriendly provision. Many of our applications contained simple errors which should never have occurred. The Keeper got fed up holding applications in standover because of this, and lobbied for, and got, the one shot rule. This has had a salutary effect on our performance, but the rule is unfair for at least five reasons:

(i) It over-punishes obvious and trivial errors and typos. For example, my firm referred to a 1730 burdens writ as “1713”. Back came the whole application. The scrutineer could not possibly, taking the application as a whole, have been in any doubt as to what was correct.

(ii) It under-punishes culpable errors. If you are stupid enough to fail to sign the form, why shouldn’t you suffer a larger hit than the current £30? The additional funds generated might assist a more lenient treatment in other cases.

(iii) It offers no redress (other than refund of the £30) for improper rejection. Registration date is lost with possible horrendous consequences, expiry of advance notice periods and so forth. The original date should be restored. Perhaps the Keeper owes the profession a duty of care in this regard, but I don’t see any reverse s 111.

(iv) It ignores the fact that many cases in standover were due to legitimate difficulty in formulating and processing the application and the precise terms of the registration to follow. Standover provided a useful and constructive dialogue with the Keeper, enabling registration without ultimate loss of priority.

(v) It is customer-unfriendly. Registers make much of their concern for their “customers”. But we are not customers: we have no choice of provider. If there were two equally authoritative registers competing for customers, neither would dare to have a one shot rule. So this is customer disservice. It’s exploiting a monopoly.

4. Prescriptive claimants

Read s 1 of the 1973 Prescription Act. Fairly clear and straightforward. Now read s 43 of the 2012 Act. Fairly tortuous and, in practice, impossible. It replicates and intensifies the practice the Keeper had imposed without statutory authority on the historically straightforward and legally effective practice of recording/registering an a non domino disposition.

The Keeper reasoned that bad people were abusing the practice to help themselves to land without payment. Yes, this was happening. But why did the Keeper think fit to impose a policing regime? In the Sasine Register the Keeper was simply recording deeds; determining their effect was someone else’s job. In the Land Register indemnity was excluded, and the public purse was not exposed. As usual, policing the rogue minority disproportionately penalised the well behaved majority.

The a non domino solution, plus a 10-year title indemnity, was a hugely valuable means of clearing up minor defects and anomalies. The Keeper’s unauthorised policing made the task much more difficult for the innocent applicant. The additional features of s 43 have rendered it, for all practical purposes, impossible. In particular, the requirement to approach the putative actual owner is completely destructive. The general view now is that the a non domino door is firmly closed. This, more than anything, is the death knell to the 2024 completion ambition.

I offer a solution. Revert to 20 years for positive prescription. That’s too long for the bad guys. Since most titles (in number) are now on the Land Register, the pragmatic purpose of reducing from 20 to 10 is less relevant. And I suspect that most titles still unregistered will not have to worry about showing 20 years of possessing ownership. Flawless – but no one is listening.

5. Cadastralism

We are all adherents of a new religion: Cadastralism. No one has seen the cadastral map and lived. We make our sacrifices, praying that the gods will smile. Mystery and mysticism surround us: we hope our offerings are good enough; we gain confidence from our successes; but we are never certain. A rejection can come of the most apparently unblemished lamb. We long for certainty. We beg for second chances. We crave a guide who can see more clearly what will be the true, acceptable and worthy submission. In short, we need a cadastrologer.

Well, it’s good news. The Keeper has provided a team of cadastrologers: they are called voluntary registration advisers (VRAs), and their magic number is 2024.

Yes, I know I am being smart. After I offered sentiments like this at a conference, the Keeper’s Head of Register Completion came to see me. He assured me that concerns I had expressed were all groundless. In particular:

  • There is no two-tier privilege whereby the VRAs are available only to “important” landowners and the rest of us have to get by on our own.
  • Hence the cost of VRAs is not, as I suggested, being cross-subsidised by the registration fees of ordinary applicants who gain no benefit themselves.
  • There is no truth in speculation that big ticket voluntary applicants were getting supportive “take a view” decisions by the Keeper on doubtful or trivial slivers of ground. Such applicants, like the rest of us, must now suffer from the institutional unhelpfulness of the Act which prevents the Keeper’s staff from providing the support most of them want to give, and used to offer in the pre-registration unit.

I emphasise that my complaint is not about the Keeper’s staff. Without exception I find them courteous, helpful and approachable, and keen to assist where they can to make the Act work. My complaint is at the Government, and its smug demand that the register be completed by 2024. VRAs may have been appointed to assist applicants, but their real function is to appease the Government.

Why is completion of the register a “Good Thing”? The purpose of a system of land registration is to provide real rights. The only effective way to overcome the risks of a defective or competing title is registration. And registration can only work if it is public and publicly accessible. But note, its primary purpose is to protect private interests, not to provide a public database of landownership for paternalistic governments to exploit. That database facility is incidental. Such a resource was a feature of the sasine system. The 1979 Act undoubtedly enhanced it. But in introducing the Land Register it focused on the primary function of protecting private interests.

This present Government has turned the function of land registration on its head. It clearly regards the database resource as the primary one. It has bought into the current view, epitomised by prominent lobbyists like Andy Wightman, that all land belongs to “the people” and private ownerships should not just be discoverable for transactional requirements, but publicly exposed for tabloid censure.

Now Mr Wightman makes a good case, but distorting the primary function and operations of the Land Register in the interests of its secondary database function is misguided. Actually it is simply wrong. But that is what the Government is doing in demanding completion by 2024. It is not interested in the quality of the titles. It wants to colour in the map of Scotland to show it as all registered by 2024, and take it to the teacher to get a prize for colouring in.

To assist in achieving this, the Government has passed the 2012 Act, giving the Keeper carte blanche to abandon quality control in favour of colouring in. It’s a “cadastrophe” waiting to happen. One prominent commentator said: “It is my view a fundamental and highly dubious change is now in train which should not be made solely to secure a political goal of completing the Land Register within 10 years. Indeed it should not be made at all.”

The commentator in question was Andy Wightman.

Then we have Keeper-induced registration (KIR). This was conceived in effect as a last resort to plug residual small gaps in the register. But if 2024 is to be achieved, KIR is going to have to be strewn like nuclear fallout. Essentially it is enforced registration by stealth. You will wake up one day to learn that your title has been registered behind your back with no opportunity to check the quality of the exercise, by a Keeper who openly admits to having jettisoned the valuable experience to be gained from legal appraisal of normal applications.

6. Section 111

In public talks I have castigated s 111 as “new, cynical, lazy, mean and conflicting”.

  • It is new in imposing a duty of care on the legal adviser. The 1969 Henry Report, precursor to the 1979 Act, expressly addresses, and declines to impose, agent liability. It states: “We do not see that the Keeper will in the normal way have any recourse against a solicitor who signs an application form as agent for the applicant. The responsibility of a solicitor... should be left to the general law of agency.”
    Defenders of s 111 claim that it simply replicates the common law. It does not, on my reading or, I submit, on Professor Henry’s. I have asked such defenders if they will call for a repeal of s 111 as unnecessary. They decline. I have heard it offered more than once that the celebrated McCoach case (LTS/LR/2006/03, 19 December 2008) is an example of the presenting solicitor’s breach of duty to the Keeper. This is rubbish, as a cursory glance at the case demonstrates.
  • It is cynical because it seeks to harness a benefit without paying for it. The legal adviser has a client to whom they owe a duty of care. That client pays a fee for the benefit of the adviser’s professional expertise and the insured redress available if the duty is breached. The Keeper under s 111 gets both these benefits without paying a penny.
  • It is lazy because it enables the Keeper to opt out of the role of guardian of the quality and integrity of the register, instead leaving it to applicants and their agents: if the Keeper’s warranty is called on, the legal adviser can be sued under s 111. The warranty is said to be “state backed”. It’s not: it is backed, buckshee, by the Law Society of Scotland Master Policy.
  • It is mean because it is driven by a refusal to provide proper funding. Indeed I think this is the reason for just about everything I am addressing here. The main cost to the Registers under 1979 was the obligation to check that titles being registered were valid and correct. That meant retaining a lot of trained staff at substantial salaries. It was becoming hard to balance the books. The Government could not allow itself the unpopularity from increased application fees. Instead it decided to dump title scrutiny altogether, leaving it free to continue to criticise the legal profession for excessive fees. On top of that, it requisitioned to itself without any consideration the benefit of the legal profession’s prudent funding of its indemnity insurance. Breathtaking. You have to admire it.
  • It is conflicting because it imposes on the legal adviser two “clients” with differing interests. The primary client, who pays the fee, wants a clear warranted title. The secondary client, the Keeper who pays nothing, wants to limit the warranty as much as possible. The legal adviser owes a duty of care to both. If a solicitor were to act for debtor and guarantor simultaneously they would be rightly chastised professionally. The Government would join enthusiastically in condemnation. Yet here it smoothly imposes just such a conflict without a second thought.

Worth the trouble?

I constantly remind myself, and encourage any reader, to keep a sense of perspective. The world is not falling apart because of the 2012 Act. Large numbers of successful transactions are registered daily. The worst features of the Act threaten first registrations and these are now statistically in the minority. To date there has been no actual claim against a solicitor under s 111. But it remains my view that the new Act is in practice inferior to its predecessor, and we should not have been forced to go through, and to continue
to go through, such upheaval for such scant reward.

My suggestions are as follows:

  • Repeal the 2012 Act and revert to 1979.
  • Bolt on the advance notice regime.
  • Tighten up on what the 1979 Act meant by “proprietor in possession”.
  • Restore the Keeper’s quality control.
  • Increase registration fees to cover the cost of a proper scrutinising function.
  • Restore the pre-registration enquiry service.
  • Overhaul the one shot rule to eliminate the blatant unfairness I have described.
  • Increase positive prescription to 20 years.
  • Get rid of the stifling a non domino rules.
  • Forget about 2024.

Oh, look up: it’s a flying pig!

Donald Reid, chairman, Mitchells Roberton 

 

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Your comment

PCS Registers of Scotland

Tuesday March 21, 2017, 15:53

We are so glad you mentioned the work our members carry out in a positive manner. We really do have the best interests of the Scottish people at heart and share a lot of the frustrations your article alludes to.

We may wish to get in touch with you when we produce our own Alternative Vision for Land Registration in Scotland in the near future.

Yours sincerely

PCS Trade Union - representing members of staff in Registers of Scotland