Voluntary becomes Compulsory

Introduction

For many years, having your title deeds registered under the modern plan-based Land Register system has been a nice-to-have, but not a need-to-have, for landowners in general, and for public organisations in particular.

The old-fashioned Register of Sasines has continued to operate in tandem with the Land Register, and the traditional handwritten deeds which often feature in the Sasines system are still pored over by generations of conveyancing lawyers whenever examination of title is required. Until now, only certain transactions would trigger titles moving from the Sasines system to the Land Register system. Organisations which tend to hold title deeds for a long number of years frequently still have the bulk of their assets held under the old Sasines system.

But that is set to change, as Scotland moves towards compulsory registration of title in the Land Register. Following completion of this exercise, every property in Scotland will have its own title sheet – a modern, typed document which shows the property on an Ordnance Survey-based plan and which lists the title conditions all in one place.

One key element in this relates to publicly-owned land. Ask yourself the following questions:

Do you own land or buildings in Scotland ?

Are you a public body or a quasi-public body?

Do you have a full up-to-date record of all of your property?

Do you know the extent of each property and the terms and conditions benefiting and burdening that property ?

Is your legal title to this property registered in the historic deeds-based Sasine Register or in the newer map based Land Register of Scotland?

These are all now very important points to consider, in light of an initiative by the Scottish Government and the Land Register of Scotland to achieve registration of all property in Scotland in the Land Register by either 2019 ( public bodies) or 2024 ( all other landowners).

Why is this important ?

The Land Register has been asked by the Scottish Ministers to take steps to complete this register, so that it contains all legal titles to all land in Scotland, by 2024. (At present only 58% of legal titles to property in Scotland, covering 26% of the land mass in Scotland, are registered in the Land Register 36 years after it was opened for registration. The remaining legal titles are still held on the Sasine Register).

As part of this exercise, the Scottish Ministers have asked all public bodies to voluntarily register their land in the Register by 2019.

The Land Register has made it clear that it is intending to ensure that all publicly owned land is registered within this timescale, and that the remaining land in Scotland is registered by 2024.

The Land Registration etc (Scotland) Act 2012 came into force with effect from 8 December 2014. This contains new provisions for any landowner to voluntarily register their legal title in the Land Register. It also grants the Land Register compulsory powers to register the legal title of any landowner in the Land Register without first notifying that party.

The intention is that if voluntary registrations by landowners are not completed by a critical date within the above time periods (this cut-off date will be decided by the Land Register in due course) then the Land Register will then proceed to carry out registrations of title itself, using the powers it has under the Act.

What will this achieve?

The Land Register has explained that completion of the Register will provide “a clear and unambiguous knowledge of who owns land in Scotland” and thereby “ make it simpler to work out who owns a property, the extent of that property and what restrictions, burdens and servitudes apply”.

There is also a view from economists that an efficient, effective and indemnified land registration system is an important factor for a country or an economy in achieving economic development and growth.

What is publicly owned land?

There is no precise definition of public land.

The indications are that this includes land owned by the Crown, the Scottish Government/the Scottish Ministers (including areas owned by them but managed by parts of the Scottish Government e.g. Historic Scotland, Transport Scotland and others). It also includes land held by Scottish non departmental public bodies (e.g. Scottish Natural Heritage, Scottish Water , Highlands and Islands Enterprise and others), land owned by Scotland’s 32 Local Authorities and land in Scotland owned by the UK Government (e.g. the Ministry of Defence).

It is possible that the Land Register would look at other public leaning bodies to register their legal titles within the initial 5 year period up to 2019, but even if not, these bodies would certainly be included in the impetus to register all other Scottish legal titles within the 10 year period up to 2024.
What do landowners need to do?

What do you need to do to complete voluntary registration of your title?

You require to do the following, with the assistance and guidance of your legal advisers and other property advisers:

• Identify all title deeds to all of the Scottish land which you own.

(Are they organised, inventoried and readily identifiable – or are they languishing in a bundle, in a cupboard somewhere, gathering dust? )

• Check the deeds and confirm the extent of the land and the rights and obligations relating to that land.

(In order to do so , if their content is not already known and captured in your records, your legal advisers will require to obtain certain updated searches and reports and then to check and report on the title deeds for you).

• Consider the time and cost implications for you of proceeding with voluntary registration, and decide if it is something you want to go ahead with.

(It is recognised that this exercise will be time consuming and potentially expensive for landowners. The Land Register has a team available to assist landowners and their legal advisers in the process. For any clients considering a voluntary registration CMS would contact and liaise with this team to ascertain exactly what benefits they can offer for landowners in terms of time and cost savings).;

• Consider whether there are benefits for you. There are some benefits for a landowner going ahead with a voluntary registration. The process involved , although enforced, will allow a landowner to have a comprehensive and accurate record of exactly what it owns. This is a valuable management and business tool. This will identify what are often major assets of a business or organisation. It will also assist in the more minor aspects of day to day business or work and the management of property (e.g. carrying out maintenance work or development on land, granting or operating servitudes, or wayleaves for access and services to the land, leasing or allowing occupation or sharing of the land and buildings), and also in larger transactions for the sale or transfer of assets. One advantage of the Land Register system is that everything affecting a title is summarised in a nice neat title sheet, which is effectively a clear, concise booklet summarising the title, with an Ordnance Survey-based plan attached showing the title boundaries. The title conditions are typed and there is not a piece of parchment or a deeds box in sight.

• If you decide to voluntarily register, arrange for your legal advisers to prepare an application for registration in the Land Register, with all relevant details and title deeds.

• Make payment of registration dues.

(Registration dues are calculated on a scale according to property values, from a £45 fee for values up to £50,000 to a £5,625 fee for properties over £5 million. These figures include the 25% reduction on normal fees, a concession by the Land Register to encourage voluntary registrations).

What happens if a landowner does not voluntarily register its title within the 5 or 10 year period, (or by a critical date - still to be decided - within the 5 or 10 year period, after which the Land Register may proceed to register that landowner’s interest?)

• There is currently no financial or other sanction for any failure to register.

• It is not entirely clear if the Land Register has the resources to actually step in and carry out Land Register induced registrations within the 5 or 10 year period. The current advice on the Land Register of Scotland website is that it does have these resources if it achieves close co-operation from landowners in both the public and private sectors.

• If the Land Register does carry out and complete registration of a legal title, it may not have all the relevant title deeds, or clear enough copies of these, to allow it to do so. Where the title deeds it can access are incomplete, it will have the choice either to complete a registration which is potentially flawed (which statutorily it should not do, and which we do not believe it will wish to do) or to liaise with the landowner to clarify and sort out issues).

• If the Land Register does carry out and complete a registration, it requires to notify the landowner once that is complete. The landowner will then want to check that the registration is correct and accurately reflects the extent of its land and the rights and obligations attached to that land, and to be satisfied that there is no flaw in that registration which is detrimental to the landowner. (If it identifies a flaw, it will wish to ensure that the Land Register corrects this).

• The process here for the landowner to check the position following a Land Register induced registration is similar to the process which the landowner requires to carry out in order to complete a voluntary registration of its title, as outlined above. There may therefore be little or no time or cost saving where the landowner decides not to complete a voluntary registration and to wait for the Land Register to register the title instead.

• Title insurance may be available in place of the landowner carrying out a full title check either in advance of its voluntary registration or following a Land Register induced registration. This may be attractive in the short term in terms of cost, time and resources which the landowner has to invest. However, it would mean at the end of the day, at the end of the registration process, the landowner will not have acquired the full title information which it would otherwise have. (There are also potential technical legal issues which arise when a party wishes to make an application for voluntary registration without having actually carried out a title check).

Summary

It is clear that there are various aspects of this push to complete the Land Register which have still to be decided or which need clarified. However, this is already an issue which has major implications for all landowners in Scotland in terms of costs and resources. We recommend that your business or organisation should begin considering this straight away.

The CMS Real Estate team are on hand to answer any queries, and to help you start assessing what ‘Voluntary to Compulsory’ may mean for you. Our team have already worked with many clients to achieve the conversion of Sasines titles to Land Register title sheets, including cases involving complex site assembly.

For further information please contact Darina Kerr or Lorri Pollock.