A trio of Scottish Property Acts radically altered the property law landscape six months ago. How is the property sector coping with the fallout, and what are the issues that it is having to deal with in the first months of the Post-Feudal era?
The Acts in question are:
- the Abolition of Feudal Tenure etc (Scotland) Act 2000
- the Title Conditions (Scotland) Act 2003, and
- the Tenements (Scotland) Act 2004
A summary of the main provisions of all three Acts was provided in Open Door of 26 November 2004.
How can I be sure that effective conditions are being set up?
First of all it is important to be clear what type of title condition you are trying to create. A real burden, which is an encumbrance imposed on one piece of land or property for the benefit of another piece of land or property, usually consists of an obligation to do something, such as building a block of flats or maintaining a wall, or an obligation to refrain from doing something such as a prohibition against using the property for residential purposes, or it may be supplementary to those types of burden, such as a right to enter or in some other way make use of property or make provision for the management or administration of the property, like the appointment of a factor or manager to administer or implement the performance of these other obligations.
Servitudes, on the other hand, while also being conditions that affect land or buildings, for the benefit of other land or buildings, are conditions which consist of permitting the intrusion of another person or thing into your property, such as allowing a pipe to run through your property or allowing others to take access over it.
The Title Conditions (Scotland) Act 2003 contains detailed rules for the form that real burdens must take and what they can contain. Although the 2003 Act makes some important changes to the law relating to servitudes, for the most part the pre-abolition law relating to servitudes remains in place.
There are 10 Golden Rules to bear in mind when creating effective real burdens.
Some of these rules were introduced by the 2003 Act, while others survive from the previous law:
1 The words "real burden" or one of the permitted equivalents must be used in the deed creating the burdens. If you are creating a type of burden which is a nameable type of burden in terms of the 2003 Act, such as a community burden then you can use that expression instead.
If the burdens are personal real burdens such as conservation burdens, for example, then it would be prudent to name that type of real burden because each different type of personal real burden has its own particular characteristics.
2 There must be both a benefited property (i.e. the property entitled to the benefit of the obligations) and a burdened property (i.e. the property subject to the obligations) identified in the deed in which the burdens are created. This is quite a significant change in the law, as previously it was only necessary to identify the burdened property in the deed. Providing a full conveyancing description of the benefited property (see Rule 3) as well, makes it clear who will have rights of enforcement.
There is one exception to this rule and that is in relation to the category of personal real burdens – which as their name suggests are for the benefit of a person rather than a property. No benefited property is required.
3 The deed must be registered against both the benefited property and the burdened property, which is also a change in the law. This requirement necessitates the inclusion of a full conveyancing description of the benefited property so that it can be identified by the Keeper of the Registers of Scotland for registration purposes.
In the case of community burdens – the type often created in a Deed of Conditions and affecting a number of units or plots in a development, each unit or plot is invariably both a burdened and a benefited property in relation to the other units or plots. Use of the expression "community burdens" in the deed will automatically endow this reciprocity upon burdens of this type.
4 A real burden must burden one property for the benefit of another property (unless, of course, it is one of the personal real burdens). This is known as the praedial rule (i.e. relating to land). This is not a change in the law, but it is an aspect of enforcement of burdens which is often overlooked. The benefit cannot apply to the benefited proprietor only, it must relate in some way to the burdened property and that relationship may be direct or indirect but must not merely be that the obligated person is the owner of the burdened property.
5 Another significant change to the previous law is that real burdens can be created in any kind of deed. Previously it was only possible to use a conveyance, such as a Disposition or a Deed of Conditions, but the 2003 Act now allows burdens to be created in any kind of constitutive deed. In practice, Dispositions and Deeds of Conditions will still be the main types of deeds in which real burdens are created. Stand-alone Deeds of Real Burdens are also likely.
6 The deed creating the real burdens must be granted by the person who owns the burdened property. This has always been the case but the 2003 Act now provides that the granter does not have to have completed title to the burdened property. Note however that if a servitude is being granted, then unless this is done in a Disposition, a competed title is necessary.
7 The burden must be set out in full in the "four corners" of the deed, in other words, it must be clear from the words in the deed the full nature of the burden. What this means is that references to extrinsic information such as "Class 1 of the Schedule to the Town and Country Planning Use Classes Order" are ineffective. This has always been the case. However an exception is made in the case of allocation the share of maintenance and other costs. Reference to calculation according to the valuation roll or relative proportion of feuduty is now permitted provided the basis referred are either public documents, or some record which the public readily has access to. This particular provision is retrospective so it will effectively cure all such references in titles whenever they were constituted.
8 A real burden must contain either an obligation to do something, or an obligation not to do something, or be supplementary to one of those obligations. These types of burdens are defined in the 2003 Act as affirmative, negative and ancillary burdens.
9 The actual content of the real burden must not be contrary to public policy, for example, as an unreasonable restraint of trade, or repugnant with ownership, which restates the existing law. So unreasonable restrictions on freedom to use the property such as prohibitions against selling or leasing would not be enforceable real burdens.
10 The content of personal real burdens are subject to additional restrictions, so must conform to the scope of the burden in question. There are a number of personal real burdens and each one is very narrow in scope which is clearly stated in the Act. A conservation burden, for example, must be for preservation or protection for the benefit of the public of architectural or historical or other special characteristics of the land. Economic development burdens have to promote economic development and healthcare burdens have to relate to the provision of healthcare.
The feudal system has now been abolished, so that means I no longer need to be concerned about any title conditions imposed in a Feu Disposition or Feu Contract. Correct?
Unfortunately, it is not as simple as that. Real burdens which were created in a feudal writ –such as a Feu Disposition or Feu Contract may have survived the abolition of the feudal system for a variety of reasons.
Before the date set for feudal abolition – 28 November 2004, it was possible, through preservation procedures set out in the Abolition of Feudal Tenure etc (Scotland) Act 2000, for a feudal superior to serve and register a preservation notice, provided certain criteria applied, nominated some other land owned by him to be the property entitled to benefit from the burden.
Typically, the criteria to be satisfied would be that the land nominated had on it a building which was in use as a place of human habitation or resort and within one hundred metres of the burdened property, although the 2000 Act also set out other criteria which would qualify. To be capable of effectively preserving the real burden, the notice had to be registered against the title of the burdened property before 28 November, so a search of the Property Register should show if such a notice was effected, although registration of such a notice is not a guarantee that the necessary criteria were fulfilled. In fact comparatively few of the various types of preservation notice were registered before the cut-off date – only a few thousand.
Occasionally the feudal writ may refer to express enforcement rights, linked to ownership of other lands. Such rights may well survive feudal abolition when the rights of enforcement as superior do not.
Servitudes created in a feudal writ were not affected by the abolition of the feudal system, so conditions of this type will still apply.
Burdens which are facility or service burdens will also survive feudal abolition. A facility burden is a type that regulates the maintenance, management, reinstatement or use of property which constitutes a facility or benefit to other land, such as common parts of a tenement, a common area for recreation, a private road, private sewerage or a boundary wall. Even if they are created by a Feu Charter or Feu Disposition, these burdens will survive abolition of the feudal system, because they are not only feudal burdens but also either neighbour burdens or community burdens. However, a former feudal superior will not be able to enforce a facility burden in his capacity as superior but is only be able to do so if he retained other land, which takes benefit from the facility, and then his entitlement to enforce is in his capacity as owner of that land, not in a feudal capacity.
There may also be third parties who have enforcement rights in respect of a burden created feudally, so that even although the former superior no longer has any entitlement to enforce, other parties, such as co-feuars subject to the same kind of burdens under a common scheme will have enforcement rights. These rights may be expressly stated or may arise by implication. Implied rights of enforcement could arise before feudal abolition, but Part 4 of the 2003 Act sets out new provisions for establishing whether such rights apply.
Where the original feuar still owns the property subject to feudal burdens, it may still be possible for the original superior to enforce such burdens, not as title conditions, but as a matter of personal contract between the original parties to the feudal deed.
My land is subject to a servitude right that allows pipes to be led through it – is that still applicable?
There have often been difficulties in formulating pipeline servitude – i.e. the right to lead a pipe cable wire or other such enclosed unit over or under land, principally due to the difficulties in identifying the benefited property, and in the past doubts have been expressed as to the validity of this type of servitude. The 2003 Act cured the second part of the problem, by providing that this type of servitude is now valid and is deemed always to have been valid. There must still be a benefited property, but it is still not necessary to register the deed containing such a servitude, although often it will be or will need to be for other reasons (if contained in a disposition for example), but if it is registered it need only be registered against the burdened property.
We are about to sell land which is subject to a right of first refusal or pre-emption. Is there anything we can do to find out if the pre-emption holder is likely to exercise that right, before we market the land?
The 2003 Act provides a new procedure which lets the owner of the burdened property obtain, in advance of a sale, a binding pre-sale undertaking, using the form of words provided in the 2003 Act, from the pre-emption holder, that the right of pre-emption will not be exercised for a specified period and (if appropriate) subject to specified conditions. If the property is then sold within the specified period and the other conditions are met, the pre-emption is extinguished on registration of the conveyance in implement of the sale (which must be registered before the end of the period stated in the notice). However, if the sale does not take place then the pre-emption would revive after the specified period.
It is also still possible for the old method of dealing with a pre-emption right, by making an offer to sell the property to the pre-emption holder, to be used but the 2003 Act, and if there are no specific requirements as the the offer in the pre-emption provision, then the offer need only be in terms that are reasonable in the circumstances.
There remains a category of pre-emption right that is not extinguished on the event of a sale but applies on each successive sale, namely those created in a non feudal deed before 1 September 1974.
Our property is in a tenement building where the titles to the various flats contain inconsistent provisions regarding maintenance and no arrangements for making decisions about repairs. Do the changes to tenement law help us?
The Tenements (Scotland) Act introduced a model Tenement Management Scheme, which provides for the management and maintenance of common property and common parts of a tenement. It will apply automatically to all tenements except to the extent that the title deeds make provision on the matters covered by the scheme, where the title provisions will prevail, and is likely to apply only partially to many tenements, because most of the rules which it caters for will be addressed in the title deeds, and only those rules which are not will be regulated by the provisions of the Tenement Management Scheme. Effectively it will fill in any gaps in the provision made by the titles in connection with common property covered by the 2004 Act.
The Tenement Management Scheme will apply to common property and common parts of a tenement, described as "scheme property" which includes any common property (owned by two or more owners) or property which falls to be maintained by two or more of the owners, or generally, the solum, the foundations, external walls and roof, gable walls and load bearing walls beams or columns.
Windows, doors, vents, skylights and other openings which serve only one flat and chimneystacks or flues are excluded from scheme property.
Maintenance includes repairs, replacement, cleaning, painting, gardening and other routine works but excludes works constituting improvements, demolition and alteration.
Default rules are provided for making decisions on maintenance and management of scheme property, including carrying out maintenance to scheme property and arranging for inspections, and common insurance and a manager can be appointed to deal with these matters, and these will apply to the extent that there is no provision in the titles.