It is almost two years since the feudal system of landholding in Scotland was abolished, taking with it feudal superiors and vassals, and extinguishing many feudal title conditions and, of course, the requirement to pay feuduty.  Many feuduties had already been redeemed before the abolition of the feudal system, but a number remained payable, and even although those remaining feuduties were extinguished on abolition, former superiors were given a two year period after the date of abolition within which to claim a compensatory payment from the person who was the owner of the property from which feuduty was payable on the date of abolition. That two year period will expire on 27 November 2006.

Why is compensation payable?

Since 1974, it had been compulsory for any feuduty allocated on a property to be redeemed, by making a payment to the feudal superior of anything up to around twenty times the amount of the annual feuduty as a one-off payment.  When the abolition of the feudal system extinguished all feuduties, the legislation had to provide for compensation to be available to former superiors for the loss of that potential redemption money, to be human rights compliant. The right to compensation does not apply if the feuduty has already been redeemed.

Notification procedure required 

Before the entitlement to claim compensation expires, a former Superior may serve notice on the former vassal requiring payment of a compensatory payment in respect of that former feuduty.  There are different forms of notice to be used depending upon whether the feuduty was payable just from one property or was spread over a number of properties (for example all the flats in a tenement), and these forms are set out in the Abolition of Feudal Tenure etc (Scotland) Act 2000. Notices may be served by personal delivery, registered post or recorded delivery post, with provision for service on the Extractor of the Court of Session if the notice is returned undelivered.
 
Who pays the compensation?

If there was still a feuduty payable from property on the date of feudal abolition, it became the personal obligation of the person who owned the property on that day and no longer attaches to the land.  Any arrears of feuduty due prior to that day will also be due. If the property has been sold since date of feudal abolition, the buyer of land will not be liable for the compensation payment – that remains with the person who was the owner at the time.

Amount of Compensation

The method of calculating the amount of  compensatory payment is based on the price of 2½% Consolidated Stock at the middle market price at close of business last preceding the date of feudal abolition, and results in a of  21.40.  The amount of feuduty is multiplied by this figure to determine the amount of compensation.

If the feuduty is a payable from several properties then the compensatory payment has to be allocated among the former vassals in reasonable proportions.

Payment of compensation

Having calculated the amount, if it does not exceed £50 it must be paid by the former vassal within 56 days of service of the notice.

If more than £50, then the former vassal has the option to pay by way of a series of instalments, but in that case an additional payment amounting to 10% must be paid in addition to the compensation payment. Instalments are to be paid in equal half yearly payments on Whitsunday (28 May) and Martinmas (28 November) in each year.  The number of instalments depends on the amount of the compensatory payment.

  • sums of £500 or less, then this can be paid in up to 5 instalments;
  • sums of between £501 and £1,000 can be spread over 10 payments;
  • fifteen instalments apply to amounts between £1,001 and £1,500; and
  • 20 instalments for amounts of more than £1,500.

The balance can, at the option of the former vassal, be paid up at any time.  Any obligation to make a compensatory payment will prescribe (i.e. fall) after it has subsisted for a period of 5 years without any relevant claim having been made.

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