While most people probably think that if they own a property, they can do what they like with it (within reason), that is not the case.
In fact, most titles to property in Scotland contain title conditions that regulate how the property may be used or managed (called “real burdens”) or provide for access and services (known as “servitudes”).
However, sometimes the terms of a real burden can be unclear or ambiguous, as recent case The Royal London Mutual Insurance Society Limited v Chisholm Hunter Limited and others demonstrates.
What is a real burden?
A real burden is a legal obligation affecting land or buildings, that requires the owner of the land or buildings to do or not to do something, for the benefit of another piece of land or building.
Some examples of real burdens include a restriction on the use of property for a particular purpose (e.g. residential or retail) or, as in the Royal London case, an obligation to contribute towards the maintenance and repair of certain structures or features which the property uses in common with other properties.
How is a real burden created?
A burden is created in a deed which must clearly identify:
- the property which is subject to the burden (the “burdened property”);
- the property which benefits from the burden (the “benefited property”); and
- the terms of the burden.
The owners of the burdened property and the benefited property must sign the deed, which must then be registered against the title to both the burdened property and the benefited property to be effective.
Provided these steps are satisfactorily completed, the burden will then bind the burdened property and benefited property, and be enforceable by the benefited property (as opposed to just the current owners) moving forward.
The Royal London case
In situations where there are multiple owners – for example, in a shopping centre, retail park, or tenement building – it is common for a real burden to provide how the owners are to be responsible for payment of maintenance in common areas.
Royal London owned the shop at 28 Buchanan Street, Glasgow, which is part of the larger building known as Argyll Chambers. Chisholm Hunter and various other parties also owned other properties within Argyll Chambers.
A burden imposing liability on No.28 (as well as multiple other properties which were conveyed by the deed) was created in 1954 for maintenance of “all the common parts of Argyll Chambers”.
Each owner’s liability was to be calculated based on the rateable value of each property as a proportion of the total assessed rental value of Argyll Chambers. This method of allocating responsibility for the cost of common repairs had been used without issue among the owners since 1954.
Royal London had recently acquired 28 Buchanan Street. According to the rateable value method of calculation of liability, they had to pay up to 45% of the total repair liability (which was significantly more than their liability if it had been calculated on the basis of floor area). They raised an action challenging the burden on the basis that:
- the burdened and the benefited properties were not identifiable because, firstly, the descriptions in the 1954 Deed included references to the then property numbers and occupiers of the respective units, and secondly, several units had changed in extent and numbering since then; and
- the liability of each party could not be determined due to the ambiguous wording of the burden.
It is usually the case that a burdened owner must be able to identify from the terms of their title what it is they are obliged to do. Royal London maintained that this burden was unclear and therefore not enforceable.
What was the outcome?
The court did not agree with Royal London’s arguments and dismissed their appeal. Their observations, and reasons for their decision, were:
- The wider Argyll Chambers building was clearly ascertainable on the ground. The properties within it were described by reference to their number and level, which was sufficient to enable the properties to be identified.
- The descriptions in the 1954 Deed were sufficient for conveyancing purposes and the Land Register had had no difficulty in identifying the properties when creating a Title Sheet for each one.
- Changes to the original layout were not unusual in a city centre commercial building of over 100 years old. These changes do not prevent the continued operation of the burden but may necessitate some adjustments to take into account any changes to the extent of each property, which can be carried out by a suitably qualified professional.
- Each owner can confirm their own rateable value (despite the numbering/extent changes), and so the allocation of costs remains determinable. Indeed, the method of calculation had been workable since 1954.
Conclusion
The interpretation of real burdens several decades after they were created can be a complicated matter. In creating real burdens, careful consideration should be given in drafting of the property descriptions and burden, in order to mitigate any pitfalls which may arise in years to come.
If you need any legal support with the creation or interpretation of real burdens, please contact Shepherd and Wedderburn’s real estate team.