Updating Landlord's (Ownership) Title Sheet after the Conversion to Ownership of the Tenant's Interest in a Registered Lease

When processing an application affecting a tenant's interest in a registered lease where the Keeper has been informed that the lease is a qualifying long lease as set out in the Long Leases (Scotland) Act 2012 and conversion has taken place, the former landlord's ownership title must be checked to ascertain whether it is registered.

Where the landlord's title is also registered, the following steps should be taken in order to update the landlord's title to show the conversion to ownership of the tenant's interest - these instructions are only for use where there is no other live application against the landlord's title. Where there is an existing live application against the landlord's title, the applications should be referred to a senior officer as careful consideration should be given to how the live application against the landlord's title is processed.

If there is a Notice or Agreement under the Long Leases (Scotland) Act 2012 shown in the title sheet, the application should be referred to a senior caseworker.

Useful Links

Conversion of Tenant's Right to Ownership under the Long Leases (Scotland) Act 2012 - DW Settle

Notices under Long Leases (Scotland) Act 2012 - Example Deeds

Minerals

The position relating to any residual ownership right to minerals contained in a registered former landlord's title must be considered when dealing with an application affecting a converted lease title.

Unless specifically provided for, a lease of land does not include those minerals beneath it - the lack of an express inclusion of minerals therefore has the effect of separating entitlement to the surface of the land from entitlement to the minerals beneath it. In practice, rather than an express inclusion, an express reservation of minerals is almost always contained in ultra-long leases of land.

This has an important impact on the conversion process as conversion cannot bestow on the former tenant a greater interest than that which was contained in the lease itself. Accordingly, where minerals were excluded from a lease, then they are also excluded from the property acquired by the former tenant on conversion.

Where conversion of a lease takes place and the minerals beneath the subjects of the lease have not already been created as a separate tenement (either by being expressly reserved by a previous proprietor or by being expressly conveyed to a third party in an earlier deed), such minerals became a separate tenement.

An express reservation of minerals in a lease is not, however, a firm indicator that minerals were ever included in a former landlord's title itself. Sometimes the minerals will, in fact, already be a separate tenement, in which case the purpose of the minerals reservation itself is to make it clear that the minerals do not pass to the tenant - rather than operating as a statement that the former landlord has expressly retained the minerals.

Further complicating the situation is that such minerals reservation clauses usually contain conditions relating to rights to work and payment of compensation. Where minerals are already separated, such conditions merely serve to repeat the terms of the earlier separation. Where the minerals remain in the ownership of the former landlord, however, such conditions serve to regulate the landlord/tenant relationship for the purposes of the lease and continue to do so after conversion of the lease into ownership when the minerals became a separate tenement.

The potential for a former landlord to retain a residual ownership right to minerals therefore requires to be carefully considered when updating a former landlord's title following the conversion of a long lease title.

Before closing or updating an existing ownership title sheet the settler should give careful consideration as to whether the lease includes an express inclusion of minerals, or whether the interest in the minerals was reserved to or retained by the former landlord or his predecessors, or conveyed to a third party. All instances where a ultra-long lease contains an express inclusion of minerals and purports to qualify for conversion should be referred to a senior caseworker.

Subordinate real rights affecting the former landlord's interest

Under section 6(4) of the Long Leases (Scotland) Act 2012, any heritable security or proper liferent that burdened the former landlord's interest immediately before the appointed day was extinguished on the appointed day, to the extent of the converted lease subjects.

The guidance below relates to the situation where the immediate landlord's interest in the subjects of lease is ownership. In the situation where the qualifying lease is a sub-lease and both the immediate landlord's and the ownership interests are registered consideration will need to be given to updating both titles. In some circumstances the immediate landlord's title could be closed and the subjects of lease removed from the ownership title (or vice versa), in other circumstances both titles could be closed or the subjects of lease removed from each title. In other situations, either only the immediate landlord's interest (head lease) or only the head landlord's interest (ownership) may be registered.

Former landlord's title sheet

The qualifying lease contains no express inclusion of minerals

In this case, the minerals beneath the subjects of lease are excluded from the property acquired by the former tenant on conversion. Where the minerals have not already been created as a separate tenement (either by being expressly reserved by a previous proprietor or by being expressly conveyed to a third party in an earlier deed), such minerals become a separate tenement.

The former landlord's title should be examined to establish whether that title contains a minerals reservation in a burdens section deed that relates to the subjects of lease or an indication that the minerals below the lease subjects have been expressly conveyed to a third party.

Minerals reserved from former landlord's title or expressly conveyed to a third party - Converted lease subjects are co-extensive with former landlord's title

Where there is a minerals reservation in a burdens section deed that relates to the subjects of lease or an indication that the minerals below the lease subjects have been expressly conveyed to a third party, the surface extent of the former landlord's title is exhausted and it would appear that no residual ownership rights to minerals can remain.

The former landlord's title sheet should therefore be closed.

1. Legal Settler:

1.1 Create TU application against former landlord's title on the LRS

1.2 Add LRS Application Note:

"TU created to close this title due to the conversion to ownership under the Long Leases (Scotland) Act 2012 of the tenant's interest held under [title number of tenant's title sheet]".

1.3 Refer application to Plans on the LRS with instructions to close the title on the DMS

2. Plans Settler:

2.1. Close the title on the DMS and add the following DMS title note:

"The tenant's interest registered under [title number of tenant's title sheet] has converted to ownership under the terms of the Long Leases (Scotland) Act 2012. That tenant's interest was over the whole of the subjects in this title. This title sheet has been closed and the plot registration continues under [title number of tenant's title sheet]."

2.2 Release application to Legal Settle on the LRS

3. Legal Settler:

3.1. Complete the following steps in order to update and close the former landlord's title sheet.

3.1.1 Amend the "TS Update" in the property section to date of the TU application

3.1.2 Add title workdesk note:

"The tenant's interest registered under [title number of tenant's title sheet] has converted to ownership under the terms of the Long Leases (Scotland) Act 2012. That tenant's interest was over the whole of the subjects in this title. This title sheet has been closed and the plot registration continues under [title number of tenant's title sheet]. See application [application number of tenant's application] for the confirmation that the relevant lease was a qualifying lease"

3.2 Close title by doing the following:

3.2.1 Click on the "Edit" tab in the Title Work desk and select "close/cancel"

3.2.2 In the dialogue box which appears add the following details:

(i) "Date of Closure" = the date of the TU application

(ii) "Title for Continuation of Registration" = the title number of the tenant's title which has converted to ownership

3.3 Confirm TU application on LRS then release to "Despatch Complete"

3.4 Change LRS "Current Group" to "Despatch Complete", take on TU application then complete.

3.5 Consider who should be notified of the update to the former landlord's title and draft letter(s) as appropriate - this could be the submitting Agent for the last title transfer which involved the landlord.

3.6 Add any correspondence or referral material to the archive record for the TU application by way of an L202C

Minerals reserved from former landlord's title or expressly conveyed to a third party - Converted lease subjects form part of former landlord's title

Where there is a minerals reservation in a burdens section deed specifically relating to the subjects of lease or to subjects of which the subjects of lease form part, or an indication that the minerals below the lease subjects have been expressly conveyed to a third party, it would appear that no residual ownership rights to minerals below the subjects of lease can remain.

The converted lease subjects should therefore be removed from the former landlord's title.

The removal of the converted lease subjects from the former landlord's title sheet is comparable to updating a parent title as a result of a Transfer of Part application; as such similar consideration should be given as to how to remove the subjects from the former landlord's title. Further reading on Transfer of Part applications can be found at the following page in the Registration Manual: Transfers of Part.

1. Legal Settler:

1.1 Create TU application against former landlord's title on the LRS

1.2 Add LRS Application Note:

"TU created to amend this title due to the conversion to ownership under the Long Leases (Scotland) Act 2012 of the tenant's interest held under [title number of tenant's title sheet]".

1.3. Refer application to Plans on the LRS with instructions that the converted tenant's subjects are to be removed from the former landlord's title.

2. Plans Settler:

2.1. Complete Plans work required to remove the converted tenant's subjects from the former landlord's title and inform legal of same. Add the following title note to the DMS:

"The tenant's interest registered under [title number of tenant's title sheet] has converted to ownership under the terms of the Long Leases (Scotland) Act 2012. The subjects over which this tenant's interest was registered has been removed from the subjects in this Title [add details of how the removal was made]"

2.2 Release application to Legal Settle on the LRS.

3. Legal Settler:

3.1 Complete the following steps in order to update the former landlord's title sheet.

3.1.1 Amend the "TS Update" in the property section to the date of the TU application.

3.1.2 The converted lease subjects should be removed from the title sheet by one of the following methods, depending on the extent of the converted subjects and how many leases are shown:

(One) If there is only one lease shown on the landlord's title sheet and the whole of the subjects leased have now converted to ownership:

(1) Remove schedule of leases and associated note from the property section

(2) Remove the tenant's rights note from the burdens section

(3) Check burdens section for entry/entries relating to converted lease and amend if/as appropriate

OR

(Two) If there are other leases shown on the landlord's title sheet in addition to the one where the whole of the subjects leased have now converted to ownership:

(1) Remove reference to the converted lease in the schedule of leases

(2) Retain the tenant's rights note in the burdens section

(3) Check burdens section for entry/entries relating to converted lease and amend if/as appropriate

OR

(Three) If only part of the subjects leased have converted to ownership:

(1) Retain schedule of leases

(2) Retain the tenant's rights note in the burdens section

(3) Check burdens section for entry/entries relating to converted lease and amend if/as appropriate

3.1.3 Add the appropriate information to the property section of the landlord's title sheet to show the removal of the converted leasehold subjects (this will depend on the method used by Plans - for example a note that the subjects edged green have been removed or a schedule of removals).

3.2 Add title workdesk note:

"The tenant's interest registered under [title number of tenant's title sheet] has converted to ownership under the terms of the Long Leases (Scotland) Act 2012. The subjects over which this tenant's interest was registered has been removed from this Title. See application [application number of tenant's application] for the confirmation that the lease was a qualifying lease"

3.3 Confirm TU application on LRS then release to "Despatch Complete"

3.4 Switch LRS "Current Group" to "Despatch Complete", take on TU application then complete

3.5 Consider who should be notified of the update to the former landlord's title and and draft letter(s) as appropriate - this could be the submitting agent for the last title transfer which involved the landlord.

3.6 Add any correspondence or referral material to the archive record for the TU application by way of an L202C

No minerals reservation in any burdens deed nor any indication that the minerals have been conveyed to a third party

Where there is no minerals reservation in any burdens section deed that relates to or includes the lease subjects, nor any indication that the minerals under the lease subjects have been expressly conveyed to a third party, the former landlord's title may be habile to include title to the minerals. In this situation, the former landlord's title sheet should not be closed, nor should the lease subjects be 'greened out' or the schedule of leases removed/amended. Instead the existing note referring to the schedule of leases should be amended as appropriate.

1. Legal Settler:

1.1 Create TU application against former landlord's title on the LRS

1.2 Add LRS Application Note:

"TU created to amend this title due to the conversion to ownership under the Long Leases (Scotland) Act 2012 of the tenant's interest held under [title number of tenant's title sheet]".

1.3. Refer application to Plans on the LRS with instructions that the converted tenant's subjects are to be removed from the former landlord's title.

2. Plans Settler:

2.1. Add the following title note on the DMS:

"The tenant's interest registered under [title number of tenant's title sheet] has converted to ownership under the terms of the Long Leases (Scotland) Act 2012. The subjects over which this tenant's interest was registered has been removed from the subjects in this Title [add details of how the removal was made (eg. property section note relating to the leased subjects amended, schedule of leases and yellow edges/numbers amended)]"

2.2 Release application to Legal Settle on the LRS.

3. Legal Settler:

3.1 Complete the following steps in order to update the former landlord's title sheet.

3.1.1 Amend the "TS Update" in the property section to the date of the TU application.

3.1.2 Add LRS title note:

"The tenant's interest registered under [title number of tenant's title sheet] has converted to ownership under the terms of the Long Leases (Scotland) Act 2012. The subjects over which this tenant's interest was registered has been removed from the subjects in this Title. See application [application number of tenant's application] for the confirmation that the relevant lease was a qualifying lease"

3.1.3 Amend the existing note referring to the schedule of leases, as appropriate:

For example,

Where the whole subjects in the former landlord's title were leased:

Note: The subjects in this Title were leased - for particulars see Schedule below. In so far as leased, these subjects ceased to be within this title upon the conversion of certain ultra-long leases into ownership on 28 Nov. 2015** in terms of the Long Leases (Scotland) Act 2012.

Where only part of the subjects in the landlord's title were leased and the whole of that lease has converted to ownership:

Note: The part edged and numbered X in yellow [the current reference for the long lease subjects on the title plan/cadastral map] on the title plan/cadastral map was leased - for particulars see Schedule below. In so far as leased, that part ceased to be within this title upon the conversion of certain ultra-long leases into ownership on 28 Nov. 2015** in terms of the Long Leases (Scotland) Act 2012.

Where parts of the subjects in the landlord's title were leased but only one part has converted to ownership:

Note: The parts edged and numbered X, Y, Z in yellow [the current references for the long lease subjects on the title plan/cadastral map] on the title plan/cadastral map were leased - for particulars see Schedule below. In so far as leased, that part edged and numbered Y ceased to be within this title upon the conversion of that lease into ownership on 28 Nov. 2015** in terms of the Long Leases (Scotland) Act 2012.

**The appointed day can be deferred in some cases (see Notice of Recall of exemption notice (without limit of time) at /wiki/spaces/DEV/pages/604504101); if so, one of the following notes, as appropriate, should be added instead of the appropriate default note referred to above:

Where the whole subjects in the former landlord's title were leased:

Note: The subjects in this Title were leased - for particulars see Schedule below. In so far as leased, these subjects ceased to be within this title upon the conversion of that lease into ownership on 28/MM/YYYY*** in terms of the Long Leases (Scotland) Act 2012.

Where only part of the subjects in the landlord's title were leased and the whole of that lease has converted to ownership:

Note: The part edged and numbered X in yellow [the current reference for the long lease subjects on the title plan/cadastral map] on the title plan/cadastral map was leased - for particulars see Schedule below. In so far as leased, that part ceased to be within this title upon the conversion of that lease into ownership on 28/MM/YYYY*** in terms of the Long Leases (Scotland) Act 2012.

Where parts of the subjects in the landlord's title were leased but only one part has converted to ownership:

Note: The parts edged and numbered X, Y, Z in yellow [the current references for the long lease subjects on the title plan/cadastral map] on the title plan/cadastral map were leased - for particulars see Schedule below. In so far as leased, that part edged and numbered Y ceased to be within this title upon the conversion of that lease into ownership on 28/MM/YYYY*** in terms of the Long Leases (Scotland) Act 2012.

Where parts of the subjects in the landlord's title were leased and a) at least one lease converted to ownership on 28 Nov. 2015, and b) at least one lease converted to ownership on a deferred appointed day:

Note: The parts edged and numbered X, Y, Z in yellow [the current references for the long lease subjects on the title plan/cadastral map] on the title plan/cadastral map were leased - for particulars see Schedule below. In so far as leased, a) the part edged and numbered Y in yellow ceased to be within this title upon the conversion of certain ultra-long leases into ownership on 28 Nov. 2015 in terms of the Long Leases (Scotland) Act 2012 and b) the part edged and numbered Z in yellow ceased to be within this title upon the conversion of that lease into ownership on 28/MM/YYYY.”***

***The appropriate date will either be 28 May or 28 November, depending on which date occurs first on or after the day which falls 6 months after the date of recording/registration of the Notice of Recall.

3.1.4 Where there is only the one lease shown in the schedule and that lease has wholly converted to ownership, then the tenant's rights note can be removed from the burdens section.

3.2 Confirm TU application on LRS then release to "Despatch Complete"

3.3 Switch LRS "Current Group" to "Despatch Complete", take on TU application then complete

3.4 Consider who should be notified of the update to the former landlord's title and and draft letter(s) as appropriate - this could be the submitting agent for the last title transfer which involved the landlord.

3.5 Add any correspondence or referral material to the archive record for the TU application by way of an L202C

The qualifying lease contains express inclusion of minerals

In this case, the minerals beneath the subjects of lease are included in the property acquired by the former tenant if the lease converts. Whether conversion can operate will depend on whether the lease includes details of a royalty or payment of rent determined by reference to the exploitation of those minerals being payable or not.

All instances where an ultra-long lease contains an express inclusion of minerals and purports to qualify for conversion should be referred to a senior caseworker.