Although the Land Registration (Scotland) Act 2012 brought fairly extensive changes to the registration process in Scotland, it's fair to say that with one or two notable exceptions, those changes are now accepted and part of day to day life for the Scottish solicitor.
However, there are still a few areas where the effects of the Act need to be borne in mind, particularly when dealing in cross border transactions.
One of the main drivers behind the Act was the completion of the Land Register of Scotland. Unlike in England, Scotland still has a significant number of properties which remain in the older, Sasine Register, (roughly the equivalent of unregistered property). Under the previous regime, it took the transfer of a property for value to induce first registration, however, under the new Act, dealings which induce registration have been extended to the grant of a new lease and the grant of a new fixed charge.
In itself, the additional registration requirements add a little to the time, effort and cost that goes in to an individual registration, but no more so than the time and effort that would have gone into an old fashioned first registration as a result of a sale. Registers have even tried to make the process less off-putting by either reducing or waiving the registration dues when registration is being induced because of a new fixed charge.
However, ultimately, it is another layer of diligence that needs to be dealt with in transactions, particularly portfolio refinancing transactions. No longer will it be possible to simply insert title details into a suite of broken out documents and send them to registers. Instead, if any of the secured properties are still registered in the Sasine Register, steps need to be taken to obtain the underlying titles and an application for automatic registration will need to be made. This is likely to involve obtaining a land registrable plan of the property, a plans report and the usual suite of searches.
The problem is doubled if the borrower is unfortunate enough to be securing a Sasine registered long lease, in which case not only will they need to register the leasehold interest, but also the landlord's freehold interest as well.
Automatic registration may not always be a straightforward matter of filling in the form. One of the questions which must be answered is whether or not there has been any restriction on the title investigation carried out by the submitting solicitor. For a commercial building, it will be in both the owner and the lender's interests to ensure that an investigation is carried out and that no restriction of the investigation is noted on the title. This is not an insurmountable problem, but it will take time and needs to be built into the transaction timetable.
In any event, in order for the bank to be properly secured at completion, the bank's solicitors will need to be careful to ensure that the correct registration forms, (and underlying deeds) are all correctly submitted at completion.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
