Land registration: KIR title sheets
Property briefing: the fact that a property has undergone Keeper-induced registration may not come to light until its sale is proposed, at which point a number of issues may arise for solicitors
KIR: the background
Section 29 of the Land Registration etc (Scotland) Act 2012 is one of that statute’s most important, and radical, provisions. It makes possible Keeper-induced registration (KIR), whereby the Keeper can register any property that is still unregistered. No consent from the proprietor or any other party is required; nor do they have to give any advance warning. One day a property title is rooted in the Sasine Register; the next day, without any transaction, without any application process, and without any involvement from the proprietor or any solicitor to inform what is being registered, KIR can shift title to the Land Register.
It is an innovative idea. For example, there is nothing comparable in the English legislation on land registration. The underlying reason was that the ordinary registration triggers will still leave a great many properties unregistered for a long time, and, indeed, indefinitely. Four hundred years after the establishment of the Register of Sasines, there are still some properties that have yet to undergo their first registration in that register, examples including Crown property, local authority property and university property.
It was thought undesirable that 400 years from now there would still be unregistered properties. So while the 2012 Act extended the triggers for first registration, it also made provision for KIR, so that eventually even the most laggard titles could be brought into the modern register.
We say “eventually”, because KIR was envisaged as being primarily an endgame device, a mopping-up device, a device whose use would be only very limited until many years into the future. But that is not how it turned out. In 2014, it was announced that all properties were to be in the Land Register by 2024. That target could not possibly be met without the early and aggressive use of KIR – and, even then, its achievability is open to question.
The use of KIR began late in 2016. Figures from Registers of Scotland (correct at 31 December 2018) show that around 35,000 new titles have been brought on to the Land Register through KIR. Some of these titles belong to landlords, such as social landlords, with several properties within each title unit. The figures when set out in terms of “addressable properties” are about 90,000. And the intention remains potentially to bring another 600,000, mainly urban, properties on over the coming years.
Dealing with a KIR title
As a result, practitioners will increasingly find themselves in transactions involving a KIR title. This article looks at some of the practical and legal issues they need to be aware of when transacting with such a title; for a KIR title has, at least initially, some significant differences from titles entering the Land Register through the traditional application routes.
The solicitor acting in the sale of a property registered through KIR may initially not even be aware that the client’s property is now on the Land Register. The Keeper’s original approach did not involve notifying the proprietor that KIR had taken place. That policy is under review, with the Keeper piloting an approach to notification, but the point is that the client may have no indication there has been registration. The first time the solicitors acting for a seller may realise that the property is no longer in the Sasine Register is when they request a report over unregistered land, expecting this to be a transaction triggering first registration, and are advised it is already registered.
If KIR has taken place, the property section of the title sheet contains a note in the following terms: “The title was created by Keeper-induced registration.”
This note is not permanent. It is removed after the first transfer that takes place thereafter. The note is helpful simply as information, but it is also a warning: a KIR title is not an ordinary title. A KIR is based on the Keeper’s interpretation of the deeds recording in the Register of Sasines, and in making that interpretation the Keeper does not have the benefit of input from the owner, or the owner’s solicitors.
While in most cases a KIR title sheet will be acceptable, there can be exceptions. The selling solicitors should be aware of some of the issues that can arise, such as the following:
- Keeper error. The Keeper may simply have erred. Mistakes happen, and there is, in theory at least, greater scope for that with KIR because, unlike transactional or voluntary first registration, nobody is helping the Keeper with the essential details to be inserted in the four parts of the title sheet, namely the A section, concerning the property, its extent and its pertinents; the B section, concerning the proprietor; the C section, setting out any securities over the property, of which there could be several; and the D section, detailing the real burdens etc encumbering the property.
- Keeper interpretation. There can be scope for differing interpretations of the recorded deeds, and the Keeper’s may not match that of the owner. The area where the scope for differing interpretations is greatest is typically the extent of the property, and other related cadastral map elements. There can also be differing interpretations as to what should be included in the burdens section. Sasine deeds vary enormously in the quality of the description of the property, which of course is why a new plan is often needed on a transactional or voluntary first registration. The Keeper’s interpretation of an extent may not match the owner’s. A cursory glance at the way the property is mapped in the cadastral map will not always reveal problems. Sometimes discrepancies are small, which is not to say unimportant, and as with ordinary transactional registrations, issues are often only identified through a plans report.
- Information missing from sasine title. Deeds recorded in the Sasine Register do not always meet current registration standards. Subordinate rights, rights in common and so on may not have been sufficiently described to enable the Keeper to plot them on to the cadastral map.
If that is the case the Keeper will either include a verbal reference along with, we understand, a note explaining that these rights could not be identified, or may just omit them altogether, as can happen with common areas that cannot be mapped. Similarly, the Keeper will normally be unaware of any relevant off-register events. For instance, the route of a servitude could have changed, or a title condition might no longer be valid, or a survivorship destination might have been invoked.
What can be done?
Thus there are many reasons why a KIR title might be less satisfactory than a title sheet arising by transactional registration or by voluntary registration. Hence the advisory note entered by the Keeper. So as soon as the fact of KIR comes to light, the owner’s solicitors should check the title sheet. In some cases, an application for rectification may be appropriate. But not every defect in a KIR title sheet may be a rectifiable inaccuracy.
In particular, suppose that the extent of the property as shown on the cadastral map is less than the actual extent owned by the client – under-registration. Strictly speaking the title sheet is not inaccurate, for it says nothing that is untrue. It says that the client owns the area in the plan, and that is correct. The extra, unregistered, area still belongs to the client, on the basis of the original sasine title. So the way forward would be a voluntary registration in respect of the omitted area.
By contrast, over-registration is indeed an inaccuracy, for the Land Register is saying something untrue: that the client owns some land that is, in fact, not so owned. An over-registration is in a sense favourable – “bank error in your favour”, as it says in Monopoly, but there are downsides. If missives are concluded by reference to the title number, the seller will be contracting to convey more than is in fact owned. That could cause headaches. Though if the extra area is possessed by the seller, the headache is likely to go away because of the “good faith purchase” rule in s 86 of the 2012 Act.
One thing that the solicitors acting for the KIR seller can do is obtain reports that are tailored to KIR. As the property is now, albeit perhaps unexpectedly, in the Land Register, the standard legal report (report over registered land) may not, on its own, be sufficient. So the report may need to be enhanced, for instance by obtaining a copy of the search sheet, so that a bird’s-eye view is obtained of all entries in the Sasine Register. This can be obtained from firms of searchers.
On the plans side, had the property not been subject to KIR, and so still on the Sasine Register, and there was a transaction first registration, a plans report would likely have been requested. To ensure the cadastral map entry and associated details are accurate and complete, solicitors may wish to order a KIR plans report, offered by some searchers.
This will compare the KIR entry with the split-off deed and the OS map to establish whether the entry accurately reflects legal extent and also the physical boundaries as depicted on the OS map, and will check whether other elements of the title that ought to have been reflected on the cadastral map (subordinate rights, rights in common, burdens of part) have been so mapped, and where mapping has taken place will check that their depiction reflects the title deed.
Although we have necessarily focused on what can go wrong with a KIR title, it would be remiss not to acknowledge that there is much that is positive around the use of KIR. The properties currently being registered under the KIR programme are what the Keeper refers to as “research area” properties. These are on the whole fairly straightforward titles, and the KIR title sheet generally comes with full warranty. (In future, less straightforward titles will have to be tackled.) Nevertheless, KIR titles have their own specialities, and in some respects should be approached as one would approach a new registration of unregistered land.
Professor George Gretton and John King, principal consultant, Millar & Bryce