The COVID-19 pandemic and the unprecedented in living memory UK public health measures that have followed in its wake have caused ripples in a variety of regulatory areas. I have already blogged about two such areas, namely landlord and tenant law (in the private rental sector) and access to land. If I was so inclined, I could say yet more about those areas: for landlord and tenant law, I could scrutinise the reform to the commercial letting sector (see paragraph 6 of Schedule 7 of the Coronavirus (Scotland) Act 2020 and one firm’s analysis of this) and the possible reform of the amnesty for tenant improvements in the agricultural sector; for outdoor access, I could highlight that the situation has been further developed by way of a useful statement by the Scottish Government on what responsible access means in the current situation and acknowledge that statement has the backing of a wide range of interest groups. It is time to move on to another topic though. This blog post is about land registration.
How to become an owner of land: registration
As everyone who has studied Scots property law knows (I hope), title to land in Scotland is predicated on registration of relevant paperwork in a public register. This means that the person who is the owner is able to substantiate that status through documents that other people can check. I mentioned “paperwork” there, and a certain emphasis might have been put on the first five letters of “paperwork…“. I will come back to that. On the general principle though, should you wish to become owner of a parcel of land and you do not register yourself as owner of that land by lodging a document called a disposition with Registers of Scotland, you will not become the owner of that land. This has been the law for a few years, but it is now embodied in section 50 of the Land Registration etc. (Scotland) Act 2012.
Some of you may recall land registration was a hot topic on this blog a few years ago, when it was discussed in the context of souvenir plots. That was an idiosyncratic legal issue which led to a “debate” that all got a bit out of hand, although it does serve to illustrate that no registration means no real right of ownership. “Real right” in this context has a specific meaning, namely a right that the world at large has to recognise and respect; real rights can be contrasted with “personal rights” that exist between individuals (such as a debt). Generally speaking, a personal right can be created without the same publicity requirements as a real right requires. To acquire ownership of land in Scotland, the publicity that is needed is registration. That registration gives the right of ownership “real” effect. As a reminder, the issue in that context was a specific bit of Scots law that said teeny plots of land with no practical utility cannot be registered; no registration, no real right.
In more standard land transactions – so buying an actual dwellinghouse rather than a square foot of land – there will be a process when the land is marketed, an offer (or offers) will be made by a prospective buyer (or prospective buyers), then the seller and the (successful) buyer will conclude a contract for the sale of that land. In Scotland this contractual stage is called “concluding missives”. Title to the land does not transfer at this stage, and money does not normally change hands. The parties will agree a mutually suitable date of entry, and it is on this day that money will change hands, in exchange for a disposition. Even at this stage – and perhaps surprisingly – the buyer does not become the owner. This can be explained and rationalised somewhat by thinking about the position of third parties – they would not know about this private arrangement before some kind of publicity is effected. It does seem to put the buyer in a dangerous position though – you are not in law the owner, even though you have paid the price. What Scottish land law does to protect a buyer though is provide a device called the “advance notice“. This gives the buyer 35 days of priority to allow them more than a fair crack of the whip to register their disposition and become owner, restricting the potential pitfall of a devious seller re-selling the property to anyone else.
The transition from the (old) Sasine Register to the (new) Land Register
One other bit of background might be useful at this stage. In 1979 Scotland legislated for a new register of interests in land, called the Land Register. The introduction of the Land Register did not change the need to register a land transaction as a necessary step to make that arrangement “real”. The new Land Register was itself reformed in 2012. It is not necessary to go into all the details of that introduction and subsequent reform here, but essentially the main thrust for the creation of the Land Register was to introduce a modern, map-based register backed by a “state guarantee” regarding the information that was on the register in many circumstances. The Land Register has incrementally been replacing the older register that served as a repository of deeds relating to land from the 17th century onwards, that older register being known as the General Register of Sasines.
The incremental nature of the introduction of the new Land Register means land information in the Sasine Register did not immediately flip to the newer register. Rather, it happened on the next eligible dealing that affected a plot of land.
A dealing with a property that has not yet migrated to the new register from the old register (such as a sale, the grant of a lease over twenty years in duration, or the grant of a security right) will trigger registration in the new register. The transition to this new Land Register continues on an ongoing basis. The 2018/19 Registers of Scotland Annual Report (published September 2019) showed that 34% of Scotland’s land area and 67% of its “title units” (~1.8 million) were on the new Land Register. (The smaller percentage as relates to land area is a result of bigger, rural estates tending not to churn as much as smaller urban properties.) On either of those measures, there is still a fair amount of Scotland that is yet to migrate to the new Land Register. There is a target that migration to the new register will be complete by 2024. This 2024 target has seemed a bit optimistic for a little while now, and with COVID-19 it suddenly seems very optimistic. That is a matter for another piece. For present purposes though, all that needs to be noted is that the moment when a non-Land Registered property migrates to the new register – a so-called “first registration” – necessitates a bit more in the way of legwork done by the team at Registers of Scotland, especially in terms of capturing the boundaries of the property on the Ordnance Survey map.
COVID-19 and Land Registration
That’s enough property law theory and stuff for now. How does this relate to COVID-19?
See those public health measures I mentioned above, and the whole social distancing that ensued? In simplistic terms, the public health measures played havoc with the processes that Registers of Scotland had been following before the music stopped. This presented a problem. Remember: no registration, no real right.
Now, some changes relating to registered property in Scotland can be effected electronically – notably digital discharges of obsolete security rights (i.e. mortgages that have been paid off). This is a relatively easy process to capture without screeds of documentation: it can only operate in relation to a landholding that is already on the Land Register and a related ownership interest that is already embodied in the register, so removing a security right is a simple process. Presumably “DDS” can be effected by those “WFH” without much gnashing off teeth, or certainly no more gnashing of teeth than other work”places” throughout the UK are facing as they move to working from home.
It has been envisaged that other transactions relating to land might be captured electronically as well. For better or for worse, the processes for those transactions have not fully developed. Also, where a particular piece of land is either a) migrating from the old register to the new register, or b) a transfer of a part of property that is already on the Land Register, more care and attention is needed to effect that transaction; that is to say, you cannot simply replace the old owner’s name with the new owner’s name on an existing title sheet, you need to create a new title sheet for this new title unit.
When Registers of Scotland closed its doors on 24 March 2020, as was first highlighted to me via this tweet by the journalist and writer Gabriella Bennett, people were scrabbling for a solution that might allow transactions to be finalised and allow purchasers a pathway to becoming the legal owner of land. Those transactions that were (through no fault of the buyer or the seller) just a little bit more complicated (owing to the dealing not involving an existing title unit) were a particular issue. A flavour of this can be seen in the Twitter brainstorming I had with some other legal academics on 24 March following on from that tweet, and you can also see some reaction from Scottish Legal News and a comprehensive (and updated as the situation unravelled) post at The Time Blawg.
The Time Blawg post has a flavour of just how exasperated people felt about how this situation came to pass. I am not here to add to the pile-on but, with due respect to the team at Registers of Scotland who were no doubt caught by an unprecedented situation, some of the exasperation seems understandable. The Law Society of Scotland – the professional body for Scottish solicitors – was worried that its members could be caught up in the crossfire, and its initial advice was basically to tell solicitors not to “settle” any transactions. More developed guidance was made available by the Law Society of Scotland on 26 March (one commenter on my earlier Coronavirus blog post on a different issue was not enamoured with that guidance). All of this and more is explained in an excellent piece for the Scottish Parliament Information Centre. I suppose the one thing that might be added to that SPICe Spotlight piece is that in a domestic setting a solicitor often acts for the buyer and the buyer’s mortgage lender, meaning that solicitors and the Law Society of Scotland would have been worried about a two pronged attack if it was impossible to establish either ownership or a security right.
The SPICe Spotlight piece also shines a light on one potential workaround, namely extending an advance notice to try to give a wider time period of protection. The Time Blawg details an instance of that happening. Such a workaround though was very much trying to make the best of a bad situation (as was my own suggestion on Twitter of trying to fall back on the dubious protection of a trust clause whereby the seller would declare that the property was being held in trust for the buyer until ownership was transferred, these trust clauses being dubious for reasons highlighted by Scott Wortley).
Moving on from this world of workarounds, we now have some legislation on the matter. This is found in the hyper-miscellaneous schedule at the very end of the Coronavirus (Scotland) Act 2020. The land registration provisions are nestled between reforms to planning permissions and the Anatomy Act 1984.
The first set of reforms – spanning paragraphs 11-14 – provide for electronic delivery of a copy of a deed rather than the original itself as part of the registration process. This reform is made by way of (temporary) amendment to Section 21 of the 2012 Act. Incidentally, props to the team at legislation.gov.uk for capturing this change so quickly. The change means that a document can now be sent as an attachment to an email or by some other recognised electronic means.
The second set of reforms – found in paragraphs 15-19 – relate to advance notices. Any advance notice that was in play the day the music stopped – 24 March 2020 – will now subsist for an indefinite period. The notice will now subsist until ten days after the application record of the Land Register reopens, rather than stopping after the usual 35 days. Meanwhile, any new – digital – advance notice will now subsist for one of two periods, depending on which is most favourable to the person seeking the advance notice’s protection. Such a notice will last until the later of: a) the date the application record of the Land Register reopens, plus ten days; or b) the usual 35 days.
What now? Registers of Scotland is continuing to try to make this new and temporary world work, and credit is due for that. Digital advance notices were the immediate priority, and the system for them went live on 7 April. This was one day later than was indicated in an earlier blog post by the Keeper, but I think we can forgive that. An update posted on this Bank Holiday Monday informs us that 20 digital submissions were made over the weekend.
One suspects this initial phase will be the most important hurdle to clear, given the inevitable slow down of the property market the lock down will entail (in line with recent Scottish Government guidance). At least we now have a situation that seems to cater for those who were caught in a logjam at what would be a stressful moment even in a non-pandemic world.
As principled as Scots land law is – and I will stick up for it till I am blue (and white) in the face – it would have been equal parts ridiculous and ludicrous to not allow people to become owners of land in a situation where everything was ready to roll and a socially distant flit was possible. We now have a solution though, it is just a case of trying to make it work. To end on an optimistic note, perhaps the systems that emerge from this crisis, not to mention a more tech-savvy profession, may even bring about a framework that is a little better for this upheaval when we can return to some kind of normality.