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Putting the squeeze on rejections

16 July 18

Property briefing: ongoing efforts by Registers of Scotland, working with the profession, to cut the number of rejected applications are having results, and the new application form should also help

by Frances Rooney

We all know the feeling of dread when a rejection letter hits our desks. Which file was it for, how much non-chargeable time will it take to fix, and how much of a liability problem will this be, are all questions that immediately cross the unfortunate fee earner’s mind. 

Registers of Scotland (“RoS”) also dislikes rejections. The nominal rejection sum does not fully cover the time it spends analysing the application and writing the rejection letter. So overall RoS loses money on rejections, and compounding that, dealing with incorrect applications only slows down the process of completing the register. RoS, like the profession, would rather bring the rejection rate down to zero if it could. 

To this end, RoS has been working with stakeholders since the 2012 Act came into force in an effort to ease the process, so far as the Act allows. 

Statistics

Over the year ending 31 March 2018, the proportion of applications that were rejected fell steadily from 7.69% to 5.31%. The most drastic improvement was in first registrations, which in April 2017 was at 16-17% and by March 2018 was 5.27%. The average over the year for first registrations was 11.53%.

Transfers of part of registered titles have their own complexities, both for solicitors drafting and submitting and for RoS. The published target for turning these around is nine months, as opposed to six months for a first registration, albeit as the Keeper has publicly stated, there is currently a backlog in competing registrations. With this complex case type, RoS has seen a more or less steady fall in rejections, averaging 15.46% over the year. Given the larger drop in first registration rejections, transfers of part are now more likely to result in a rejection than first registrations. 

For the simplest registration type, dealings of whole of a registered title, around 6.05% were rejected over the year, with a slight fall towards the end to 4.64% but overall steady throughout the year. 

Interestingly, the main reasons for rejection in that year were: 

(1) witness has not signed or been named/designed: 9.1% of total rejections;

(2) application form not signed: 5.7% of rejections;

(3) application created in error: 5.4% of rejections;

(4) signatory/attorney not named/capacity not designed: 5.3% of rejections;

(5) information in form different from that in deed: 4.8% of rejections;

(6) LBTT requirements not met: 4.7% of rejections;

(7) links in title question answered inappropriately – granter not recorded owner etc: 4.6% of rejections.

RoS continues to work with the profession and stakeholders to find ways to decrease rejection rates further while still complying with the 2012 Act. The following are a few of its recent policy shifts and pragmatic solutions, which together should improve matters further.

New application form

The new registration application form is now completely live and the transition period from the old form has ended. All new applications must use the new form. 

It contains a few tweaks from the old version, all designed to make registration easier and with less chance of rejection. Early indications are that rejections have already fallen as a direct result.

Other than IT usability improvements and changes to the small print declarations on the form, the main changes to content are as follows. 

(1) Signatures. The form no longer needs to be signed. As can be seen above, 5.7% of total rejections over the year to 31 March 2018 were for lack of a signature, so this change should significantly reduce the number of rejections that are happening for administrative reasons.

Firms may want to consider how best to keep an internal track of the fee earner approving a form if there is no longer a signature on it, but so far as registration goes, the application form no longer has a box to sign. 

A sasine application form still needs a signature in the usual way.

(2) Links in title. As 4.6% of rejections were due to this question being answered inappropriately on the form, it was another key area for RoS to focus on and the changes should have a positive impact. Previously, applicants were asked: is the granter the last recorded/registered owner? If the answer “no” was selected, the next question was whether the application was a s 43 (a non domino) application. If the reason that the deed granter was not the last recorded owner was because of unrecorded or statutory links in title, the applicant would often state that in the further information box on the form just to be on the safe side.

The form now merges the title examination question (“Has there been any limitation or restriction on the examination of title?”) in one section with the a non domino question. So under Title Information, the title examination question is followed by a question as to whether this is a prescriptive claimant (a non domino) case and if so, whether the statutory procedure for that has been followed. This should be more intuitive for applicants to complete.

(3) Burdens/encumbrances question. In the old form, solicitors had to list out or refer to all burden writs and other encumbrances, such as tree preservation orders or scheduled monument entries, under the burdens question. This could be time consuming, particularly for large estate or complex titles, and a discrepancy between the form and the underlying deed being registered – usually by omitting reference to one of the burden writs on the form, when it was referred to in the deed – could cause a rejection. 

RoS has introduced a more streamlined question so that there is an assumption that any of the burden writs listed in the deed being registered are included. Most dispositions written nowadays will have a clear “always with and under” section and/or a s 12 declaration (Title Conditions (Scotland) Act) clearly signposting the deeds. So by cutting out the need to replicate this information in the form, RoS now only requires any additional encumbrances to be listed on the form. For example, there may be encumbrances not listed in the deed being registered, such as scheduled monument entries or tree preservation orders. So there is still room to state that on the form, while avoiding the main area of duplication and inconsistency.  

Of course, the burden writs themselves will still form part of the application, so will still need to be submitted with the application pack. 

There is also a sub-question allowing the applicant to tell RoS of any encumbrances that no longer affect. Caution should be exercised before clearing a title of encumbrances, and the law is such that many title conditions might still have title to enforce by some neighbours, so it remains relatively rare for an applicant to state unequivocally that some should be omitted, but the box is there if needed.

(4) Servitudes question. Before, the form had asked whether there are any servitudes and if so, whether they were in a deed or created by prescription. This could be tricky to complete when a title had a mix of both. As with the burdens question, having to relist the deeds and make sure there were no discrepancies between a list in a deed and a list in a form, took a bit of resource.

Now, as with the burdens question, the servitudes question is predicated on the basis that any referred to in the deed being registered will be deemed included in the application as a matter of course. The question about prescriptive servitudes has been separated out. There is also a question asking if any of the servitudes no longer affect, i.e. if the applicant would like them removed from the title. As with burdens, caution is needed.

Illegible signatures

A previous article (Journal, December 2017, 34) mentioned that for a time there had been issues around illegible signatures and foreign signatures on documents. We have not recently heard of any such issues so far as illegibility of signatures goes, i.e. it appears that RoS will not reject for reason only of a signature being illegible (such as a squiggle-type signature). Foreign signatures with e.g. Chinese lettering still need to be treated more carefully to comply with the 1995 Act, so practitioners should be alert to ensure there are proper designations within the body of the deed and so on.  

Rejections for overlaps

One of the most difficult and frustrating rejections that the profession has had to deal with since the 2012 Act came into force is the rejection of an entire application because there is a registered overlap. We are all familiar with the myriad of practical problems around this. 

Often the area already registered is a sliver of ground on the edge of a large estate, which could not have been spotted by a solicitor. Sometimes plans reports do not flag the overlap either because of the timing of the report versus the competing application, or simply because of human error by the searchers. No matter the content or reasons behind a plans report, registration is a different matter so the application would still be rejected. Sometimes the competing title belongs to the same owner as the area submitted under the rejected application; again, this is irrelevant because of the strict approach to rejecting for all overlaps. Sometimes the rejection is not even for a competing registration but for a competing application, with or without an advance notice. 

Given that rejections can occur months or, while there is a backlog at RoS, even years down the line, this has been one of the rejections that has caused the most angst for the solicitor dealing. 

The good news is that RoS has recently indicated a move towards an approach that allows it to complete some voluntary registrations notwithstanding a registered overlap. This would mean that an applicant could ask RoS to register the area on its voluntary registration plan, but to carve out any competing registered areas. Final details of how this will operate are being considered, but if all goes well this looks likely to be a very positive policy change in the near future, and will of course have an impact on rejections.  

Digital discharges and securities

With RoS’s digital transformation and move towards digital documentation and signatures, it is safe to assume that many of the rejections for 1995 Act reasons will eventually subside too. In the meantime, tightening up of internal firm procedures for checking signed deeds, testing clauses and registration documentation may help solicitors to reduce some of the rejections for these reasons.

Frances Rooney, associate and head of Land Registration, Harper MacLeod; written with the Society’s Property Law Committee

 

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