Securities Section Information

Table of Contents

Table of Contents

1 General
2 Standard Securities
3 Ranking of Standard Securities
4 Discount Standard Securities - Local Authority, Scottish Ministers and Scottish Prison Service Securities
5 Assignation of Standard Securities
6 Variation of Standard Securities
7 Discharge of Standard Securities
8 Power of Sale under Standard Securities
9 Notices of Grant
10 Statutory Charges
11 Floating Charges and Debentures
12 Outstanding Securities, Grants and Statutory Charges
13 Pecuniary Real Burdens
14 Servitudes and Real Burdens in Standard Securities

Useful Links

General

In terms of Section 8 of the Land Registration etc. (Scotland) Act 2012, the Keeper must enter in the title sheet any heritable security over the right in land to which the title sheet relates (subject to exceptions for shared plot or shared leases title sheets), including any outstanding securities in either the Sasine or Land Registers.

Section 69 of the Abolition of Feudal Tenure etc. (Scotland) Act 2000 provides that the provisions of sections 14 to 30 of the Conveyancing and Feudal Reform (Scotland) Act 1970 shall apply to heritable securities granted prior to 29 November 1970. However, this amendment does not apply to ex facie absolute dispositions. Sections 14 to 30 relate to assignation, variation, discharge and calling up etc. of securities, and procedures relating to these matters as they apply to standard securities can now also be applied to earlier heritable securities.

In terms of section 8(1) of the 2012 Act, the securities section must include:

the particulars of any heritable security over the right in land to which the title sheet relates;
the name and designation of the creditor in the security - see Designations

Other matters which may be entered in the securities section in terms of section 10(2) of the 2012 Act are:

ranking notes, if there are ranking provisions in a security deed itself, or a ranking agreement, or if ranking has been affected by an advance notice;
any special destination in the heritable security in respect of the creditor's right;
a limitation or exclusion of warranty to be entered in the securities section (to be authorised by a senior caseworker).

For the avoidance of doubt, a certificate of registration of charge is no longer required in respect of limited company standard securities registered under the 2012 Act as the deed is valid (and not void) at the date of registration. Consequently, warranty will not be excluded or limited in respect of the non-submission of said certificate when registering a limited company standard security. If a registration officer encounters a title sheet with a prior exclusion of indemnity see Failure to Register Limited Company Security - Existing Exclusion of Indemnity.

Deeds registered or given effect to in the securities section

Deeds that fall to be registered or given effect to in the securities section can usually be categorised as either heritable securities, statutory charges or notices of grant, although other types of deeds may be shown.

Other registrable deeds that affect entries in the securities section, but which do not generate a new entry, include discharges and deeds of restriction/disburdenment, assignations and deeds of variation of standard securities.

An entry in the securities section will normally contain the following particulars:

the entry number;

the name of the deed creating/affecting the security or charge;

the name(s) and designation(s) of the granter(s) of the security;

the name(s) and designation(s) of the creditor(s) taking account of guidelines on company designations.
Note that no attempt should be made to update creditors names in existing entries unless application is made to register a deed which affects that interest (e.g. ranking agreement or variation);

the capacity of the creditor(s) (where appropriate);

the effect of the deed on the interest (where appropriate e.g. assignations or variations, or where only part of the subjects in the title are affected by the security);

the debt or obligation (e.g. the amount or ‘in respect of discount’);

ranking provisions;

the date of registration, or the date of recording in the sasine register if the charge has not been registered in the land register (see Variation of Security below for guidance on securities which have been recorded and are subsequently registered):

any authorised limitation or exclusion of warranty.

Standard Securities

Since the passing of the Conveyancing and Feudal Reform (Scotland) Act 1970, heritable securities over land may only be created by way of a Standard Security, which must conform as closely as may be with either Form A or Form B of Schedule 2 to that Act.

Form A is used where the personal obligation (usually the repayment of a monetary loan but not necessarily) is included in the deed and Form B is used where the personal obligation (the undertaking) is contained in a separate document (back letter) which is not recorded or registered. See examples of both forms of security at Standard Security - Example Deeds.

Both forms of security require the following:

the debtor and creditor must be named and designed;
an operative clause (i.e. "grant a standard security");
The secured property must be fully described;
The deed must be executed (and witnessed as necessary).

In addition to the most frequently encountered situation, where the standard security secures money loaned by the creditor to the debtor, standard securities may also be used where the purchaser does not pay the full market value for the property if the seller has sold at a discounted price (see Discount securities below). Further, a standard security may be used to secure a non-monetary obligation (e.g. option to purchase land).

If a standard security is granted subject to the terms of a particular Act, e.g. the Crofting Reform (Scotland) Act 1976 or the Crofters (Scotland) Act 1993, reference will be made in the entry to the Act and the relevant section if narrated in the deed, e.g.:

Standard Security [for £ … ] by said AB to …. in terms of [section … of] the Crofting Act 1976.

For further examples see table in the link below.

Deed	Entry
1. Deed is granted for a loan of a fixed amount (desig)	Standard Security by said AB to CD (desig)
2. for a maximum sum	Standard Security by said AB to CD (desig)
3. for a loan of a fixed amount and for further or future advances	Standard Security by said AB to CD (desig)
4. for a loan of a fixed amount and for all sums due and to become due	as 3 above
5. for certain advances of which the initial amount is £ …	as 3 above
6. deed is granted to two different creditors for separate amounts	Standard Security by said AB to (1) CD (desig) and (2) EF (desig)
7. under Housing (Scotland) Act 1987	Standard Security in respect of discount* under Section 72 of the Housing (Scotland) Act 1987 by said AB to XY Council
8. in respect of an obligation for a specific sum	as in 1 above
9. in respect of an obligation for a specific sum and further advance	as in 3 above
10. for unspecified advances	Standard Security by said AB to CD (desig)
11. granted in respect of an obligation of a non-monetary nature	as in 10
12. Amount expressed as foreign currency	Standard Security by said <DB> to <CR>.
13. Where the security subjects are more extensive than the subjects in the title sheet (i.e. the security is also over other subjects)	Standard Security by said AB to CD (desig) over the subjects in this title and other subjects
14. Where only part of the registered subjects are affected by the standard security the entry should make this clear - where necessary a plans reference should be added	Standard Security by AB to CD (desig) over the part tinted pink on the cadastral map [or over the north house on the top flat …]

* For more information on discount securities, see Discount Standard Securities below.

Who is granting the standard security?

In order for the standard security to be valid, the party granting the standard security must have title to the subjects being secured, but it is possible to grant a standard security if the granter holds on midcouples. See Requirements of Registrable Deeds for general information about title (power) to grant standard securities.

Where a standard security contains a personal obligation by someone other than the registered proprietor (e.g. Standard Security by A containing a personal obligation to repay by A and B), this is not reflected in the entry in the securities section. The entry will be: ‘Standard Security … by A’. This is distinct from where a standard security is granted by the registered proprietor and an additional party, as explained below.

A standard security may be granted by the registered proprietor and also by another borrower, who is not the proprietor but is undertaking to repay the loan. While this is incorrect and the proprietor(s) alone should grant the security, provided that all of the registered proprietors grant the security the Keeper will accept it for registration. All parties granting the security should be reflected in the securities section.

The Keeper’s former practice in such situations was to exclude indemnity. If an application is submitted affecting a title sheet bearing an exclusion of indemnity in this respect, the exclusion note should be removed.

Where the registered title is in the name of two or more persons with a survivorship destination in the proprietorship section, and the standard security received for registration is granted by less than all of the registered proprietors, the registration officer can assume that the survivorship destination has operated provided the application form does not indicate that the validity of the security is dependent upon another deed being submitted for registration

An update to the proprietorship section is required to remove the deceased proprietor(s), see Names and Changes of Name in the Proprietorship and Securities Sections.

It is acceptable in situations where title is held equally by A and B for A to grant a standard security in favour of B over A's 1/2 share as it is A's share being burdened by the security. In the event of a transfer by A to B of their 1/2 share this security would be extinguished confusione. Any variation on this should be referred to a senior caseworker who will consider whether the form of undertaking is sufficiently clear to enable registration of the security and a decision to be made on the appropriate level of warranty

Applications for registration of a standard security not granted by the registered proprietor of the property affected may take a range of forms and should be processed according to the guidance below.

The application should proceed. It can be assumed that the applicant is certifying that the granter has title to grant the deed by virtue of links in title. The granter should be fully designed in the securities section, however the proprietorship section remains unchanged.

The form or the deed may explain that a survivorship destination has operated but if not, this assumption can be made and the application can be processed. An update to the proprietorship section is necessary - see Names and Changes of Name in the Proprietorship and Securities Sections.

In this case, the applicant has indicated that the granter is not the last registered proprietor, but also that, rather than the granter having title to grant the security through a midcouple(s) (a midcouple being an unregistrable conveyance) or via some other legal or court authority, the granter's title to grant the standard security is dependent upon a disposition which will also be presented for registration.

If the registration officer is not also settling the application for registration of the disposition, which must be prior to, or of even date with, the application relating to the standard security, then they should identify whether the disposition has been submitted, either on the date of application of the standard security or prior to the date of application of the standard security.

If the disposition has not been submitted for registration or has been submitted with a later date than that of the application for the standard security, the application for registration of the standard security should be rejected. The standard security is not valid as at its date of registration.

In this case, the applicant for registration of the standard security has indicated that the granter is the last registered proprietor, but that the standard security is nonetheless dependent for its validity on a disposition in favour of the granter. This is most commonly encountered where the standard security is being granted over a greater pro indiviso share than the registered proprietor currently has title to.

If the registration officer is not also settling the application for registration of the disposition, which must be prior to or of even date with, the application relating to the standard security, then they should identify whether the disposition has been submitted, either on the date of application of the standard security or prior to the date of application for the standard security.

If the disposition has not been submitted for registration or has been submitted with a later date than that of the application for the standard security, the application for registration of the standard security should be rejected. The standard security is not valid as at its date of registration.

Where the granter of a previously recorded or registered heritable security or charge is no longer the current registered proprietor as disclosed in the proprietorship section then they must be designed in the securities section entry, e.g.:

Standard Security for £40,000 and further sums by John Smith, 23 Acacia Avenue, Anytown to Big Bank plc (desig) …

If the security had been recorded in the Sasine Register then details of the original recording date should be added to the entry, e.g.:

Standard Security for £40,000 and further sums by John Smith, 23 Acacia Avenue, Anytown to Big Bank plc (desig) …, recorded G.R.S (county) dd mmm yyyy.

Registration Policy

If the application form indicates the validity of a standard security is dependent upon the registration of even date of a disposition in favour of the granter of the security then the Keeper will treat the deed as valid in respect of the granter's title to grant the deed and proceed with registration only if the date of application for the disposition as so presented is earlier than or the same as that for the standard security.

Omissions in pro forma standard securities

Major lending institutions such as Banks and Building Societies commonly use pro forma standard securities which contain a number of pre-printed clauses and a series of boxes for insertion of the details of the debtors, amount of loan, property description etc.

Registration officers should ensure that such deeds are properly completed, particularly where the operative clause contains terms which are defined only by means of what has been inserted in the boxes. If any of the ‘boxes’ in such a Standard Security have not been completed correctly, and the omission results in the deed not complying with the requirements noted above, the application for registration of the security must be rejected.

However, if the omission relates to a matter which does not affect the intrinsic validity of the deed, registration should be completed. It will not be possible for the omission to be amended at a later date. If amendment is required then the security would have to be discharged and a fresh deed prepared and submitted for registration.

Property description in standard securities

Note 1 of Schedule 2 to the Conveyancing and Feudal Reform (Scotland) 1970 Act made provision regarding the description of the subjects of the security. It provided that:

The security subjects shall be described by means of a particular description or by reference to a description thereof as in Schedule D to the Conveyancing (Scotland) Act 1924 or as in Schedule G to the Titles to Land Consolidation (Scotland) Act 1868

The courts gave consideration to that note in the cases of Bennett v Beneficial Bank 1995 SCLR 284 and Beneficial Bank v McConnachie 1996 SLT 413. The courts ruled that although a general property description was valid for conveyances and other deeds, standard securities had higher requirements because of Note 1 to Schedule 2. This caused a great deal of confusion for a few years until the matter was put beyond doubt by a section added to the Abolition of Feudal Tenure etc (Scotland) Act 2000 which amended the note in the 1970 Act retrospectively.

Section 77(3) of the Abolition of Feudal Tenure etc. (Scotland) Act 2000 amended the wording of Note 1 to Schedule 2 to the 1970 Act. This came into effect on 9 June 2000 and it now reads:

The security subjects shall be described sufficiently to identify them; but this note is without prejudice to any additional requirement imposed as respects any register.

The 2000 Act brings the standard of description into line with the standard of description required in other deeds, such as a disposition. A standard security will no longer be deemed void because of the absence of a particular description or a description by reference to an earlier deed that contained a particular description. This is a considerable relaxation of the pre-Abolition of Feudal Tenure Act position. While it is not possible to offer hard and fast rules for what will and will not be acceptable to the Keeper, the following offers a general guide to acceptable methods of description:

Particular description – this is essentially a bounding description where the subjects are identified by reference to actual physical features on the ground. A deed plan may or may not be included.
Description by reference – the subjects are identified by reference to a previous recorded deed which contains either a particular or a general description (note that reference to a deed being registered of even date with the security is not acceptable and one of the other forms of description must be adopted).
Description by exception – this is where the subjects are described by reference to the whole area under exception of the subjects conveyed in earlier deeds.
General description – in essence this comprises a simple postal address.

It is emphasised that whilst the Keeper will now accept security deeds which contain solely a general description (i.e. a postal address), there may be occasions when such a description will not be sufficient. The postal address given must always be adequate to identify the property being secured and this will be dependent on the particular circumstances of the deed.

An example of where a postal address would not be adequate is where the subjects are described as, for instance, ‘a flat at 53 Marchmont Road …’. Clearly this is not sufficient to identify the particular flat in question.

If, on the other hand, the subjects were described as ‘the northmost flat on the first floor above the ground floor entering by the common passage at 53 Marchmont Road…’, this would be acceptable.

In cases of doubt, guidance on whether the description of the security subjects is adequate should be sought from a senior caseworker.

Implications for the Land Register

For dealings with whole, the title number of the subjects, with or without further verbal description, is an adequate description of the subjects in terms of section 26 of the Land Registration etc. (Scotland) Act 2012.

For first registrations, transfers of part and dealings with part (e.g. a standard security over part of registered subjects), the registration officer should ensure that the description of the security subjects conforms with one or more of the methods of description outlined in current guidance above.

Standard securities registered prior to the change to Note 1 may have been registered with an exclusion of indemnity, in respect of the description having not met the standard required following the Beneficial Bank cases.

Section 77(3) of the Abolition of Feudal Tenure Act provides that the revised Note 1 to Schedule 2 to the 1970 Act has retrospective effect. In other words, Note 1 is to be deemed as having always been in such terms. The consequence of this is that descriptions in standard securities recorded or registered prior to the passing of the Feudal Abolition Act and which fell foul of the rules which emerged from the Beneficial Bank cases will be deemed to be valid so long as the description of the security subjects meets the new criterion (i.e. ‘described sufficiently to identify them’). This would, of course, include standard securities executed prior to 9 June 2000 but not presented for recording or registration until after that date which will similarly be acceptable for recording or registration, provided the description of the subjects meets the new criteria.

Accordingly, standard securities registered prior to the change to Note 1 with an exclusion of indemnity in respect of the description having not met the standard required following the Beneficial Bank cases may now have the exclusion removed provided the description meets the new standard.

Points to note:

Registration officers should ensure that the description is now acceptable before removing the exclusion note.
An application form and the appropriate fee should accompany any request by an agent for the removal of the exclusion note from the title sheet (unless the request is made at the same time as an application for registration in respect of some other matter regarding the title).
In cases of doubt, the matter should be referred to a senior caseworker.

Standard securities and credit agreements

Some creditors, normally those specialising in second mortgages, may apply for registration of a postponed credit agreement incorporating a standard security.

Such deeds are acceptable where:

the standard security is the primary deed, with the consumer credit agreement annexed to it; or
the standard security is in gremio of an agreement.

Such deeds are not acceptable where the standard security is contained in a schedule annexed to the credit agreement and should be rejected; the standard security would have to be submitted as a deed on its own.

Schedule of conditions of loan

Some standard securities are accompanied by a schedule giving conditions of the loan. Such schedules will normally be referred to in the standard security, but may or may not be described as ‘annexed to’ the deed and may or may not be physically attached to the standard security. If the schedule is described as ‘annexed to’ and/or is physically attached to the standard security it will require to be subscribed. Any clause which is required by statute to be included in the standard security must form part of the subscribed deed.

Standard securities over leases and subleases

The right of a tenant or subtenant in a long lease or sublease is a real right over which a standard security can be granted; accordingly such securities are registrable. The registration requirements for such securities will depend on a number of factors, including whether the lease or sublease is itself registered, and whether the plot of land is registered. The page Leases page contains further guidance.

Standard securities over standard securities

The right of a creditor in a standard security is itself a real right over which a further standard security can be granted; accordingly such securities are registrable. In such instances the entry for the second security in the securities section should be in the following style:

Standard Security by said (creditor in prior standard security) to AB financial institution (designed) over the Standard Security in entry y.

In the event of part of the secured subjects being sold and disburdened of the primary security then the secondary security will not affect the disburdened subjects.

If the primary standard security is discharged or extinguished by some other means (e.g. exercise of power of sale), the secondary security will fall and the entry relating to it will be removed from the title sheet.

Any problems with such applications should be referred to a senior caseworker for further guidance.

Where a standard security is granted over the right of a creditor in a recorded standard security, this must be registered in the land register, and the application will induce automatic plot registration of the underlying plot of land by virtue of section 24(7). Such applications should be referred to a senior adviser in the first instance.

Syndicated (mezzanine) loans

Syndicated loans are a means whereby a number of banks combine to lend to a borrower under a single loan agreement. These are usually encountered in connection with international companies where a single financial institution is either unable or unwilling to lend large sums of high risk money on its own.

Syndicated loans are usually arranged by one financial institution which generally is, but need not be, also the principal lender. Such an institution is usually referred to as the arranger and agent for the syndicate. Given the fluctuating nature of the syndicate membership, individual members are not usually disclosed in any documents other than the unregistered loan agreement itself and any subsequent variations. In standard securities it is therefore usual for the arranger and agent to be named and designed, with the only reference to the syndicate members being as those who were a party to the loan agreement and any variation thereof. On the face of the standard security therefore what is disclosed is a named agent for principals whose identity is undisclosed.

Standard securities in respect of syndicated loans are acceptable in the Land Register and may take different forms. One such form is for the deed to state that the arranger is holding the security as trustee for the undisclosed members of the syndicate; another is that the arranger is acting as agent for the syndicate. If the relationship between the arranger and the syndicate is a trust one, this would provide for trust law to apply. The position differs in an agent-principal relationship, which affects third parties differently. The Keeper does not generally disclose relationships of the latter type in the Register.

Syndicated loans - creditor acting as security trustee

Where the arranger is designed as being the trustee for the syndicate this will be reflected in the entry in the securities section; when the arranger is designed as being agent for the syndicate the entry should only name the arranger and not reflect that they are acting as an agent. An arranger may also be designed as trustee and agent; in such cases only the trustee capacity should be reflected in the securities section.

Standard Security by said ACME COURIERS LIMITED to ANYLOANS UK PLC incorporated under the Companies Acts (Company Number nnnnnnnn), Registered Office 14 High Street, London E21 1AA as Security Trustee.

The law of agency does not supersede s.11 of the Conveyancing and Feudal Reform (Scotland) Act 1970 in that the real right in security vests in the grantee; any contractual or personal rights between an agent and principal exist off-register and should not be disclosed.

Ranking of Standard Securities

In the absence of explicit ranking provisions, the basic rule is that standard securities granted over the same interest will rank according to their dates of recording or registration. Section 13 of the Conveyancing and Feudal reform (Scotland) Act 1970 regulates the provisions where there is more than one security.

Ranking is of considerable importance to creditors because it regulates the order in which their loans are paid off in the event of the debtor failing to meet his obligations. If the debtor defaults, the first-ranking creditors will be in a better position to recover their debt, or part of their debt, than later creditors.

The ranking of standard securities therefore may achieve one of the following;

Prior ranking	Having priority over any other charge.
Parri passu ranking	Having equal and rateable status with any other charge
Postponed ranking	Coming last in relation to any other charge

All of the above types of ranking are achieved by either:

Date order of registration in the land register with no express ranking provisions in the deeds (this will take account of the effect of any period protected by an advance notice), or
Agreement amongst the creditors to the order of ranking, using clauses contained either within the standard securities or in a separate deed known as a ranking agreement. See examples below for further details, the text of the security deed is shown in red.

"But the security hereby effected shall be ranked and preferred on the subjects prior to all sums secured by the Standard Security granted by the said AB and CD in favour of Big Bank PLC registered in the Land Register of Scotland over the said subjects hereby secured on fourth of May two thousand and fourteen, and the said Big Bank PLC hereby consent to said provisions as regards ranking as is evidenced by their subscription hereto"

Resulting entries and notes:

Standard Security by said AB and CD to BIG BANK PLC, incorporated under the Companies Act (Number 12345) and having their registered office at 123 High Street, Auchterarder
Note: The above Standard Security is affected by ranking provisions contained in the Standard Security in Entry 2

Standard Security by said AB and CD to BIGGER BUILDING SOCIETY, incorporated under the Building Societies Act and having their registered office at Bigger House, Park Avenue, London
Note: The above Standard Security ranks prior to the Standard Security in Entry 1.

"But the security hereby effected shall be ranked equally and rateably with all sums secured by the Standard Security granted by us, the said AB and CD, in favour of Big Bank PLC, dated first registered in the Land Register of Scotland over the said subjects hereby secured on fourth of May two thousand and fourteen, with the consent of the said Big Bank PLC as is evidenced by their subscription hereto."

Resulting entries and notes:

Standard Security by said AB and CD to BIG BANK PLC, incorporated under the Companies Act (Number 12345) and having their registered office at 123 High Street, Auchterarder
Note: The above Standard Security is affected by ranking provisions contained in the Standard Security in Entry 2
Standard Security by said AB and CD to ANOTHER BANK PLC, incorporated under the Companies Act (Number 54321) and having their registered office at 321 High Street, Port Seton
Note: The above Standard Security ranks pari passu with the Standard Security in Entry 1.

"But the security hereby effected shall be ranked and preferred on the subjects after and postponed to all sums secured by the Standard Security granted by us, the said AB and CD, in favour of Big Bank PLC, dated tenth of December two thousand and fourteen and to be registered in the Land Register of Scotland of even date with the registration of this deed"

Styles of entries and notes:

Standard Security by said AB and CD to BIG BANK PLC, incorporated under the Companies Act (Number 12345) and having their registered office at 123 High Street, Auchterarder
Note: The above Standard Security is affected by ranking provisions contained in the Standard Security in Entry 2
Standard Security by said AB and CD to ANOTHER BANK PLC, incorporated under the Companies Act (Number 54321) and having their registered office at 321 High Street, Port Seton
Note: The above Standard Security ranks postponed to the Standard Security in Entry 1.

A standard security granted in favour of a statutory body may affect the conventional ranking of existing securities. Therefore, where a security is granted under any Act, other than the Housing (Scotland) Act 1987 (see Discount Standard Securities below) a senior caseworker must be consulted before any charge is registered. If the Act in question does provide for preferential ranking of the security then the senior caseworker will instruct which, if any, notes should be entered in the securities section.

There are also specific provisions relating to the ranking of standard securities when registering a croft being bought under right to buy legislation by the former tenant crofter, see Crofting.

Ranking by date order

Where there are no express ranking provisions contained in the security deeds, or in a separate agreement, the priority of ranking is governed by the date of registration (taking account of the impact of any advance notice protecting a deed as set out below).

By virtue of Section 142 of Titles to Land Consolidation (Scotland) Act 1868 (as amended), if two or more securities are received by the Keeper on the same day they are deemed to be registered simultaneously and therefore rank pari passu (i.e. equally). In terms of section 37 of the 2012 Act, the date of registration is the date of acceptance of the application and the time of registration within the date is the closing of the register on that date, therefore multiple deeds accepted for registration on the same date are all considered to have the same time of registration as well.

For example, suppose A had granted the following securities:

1. Standard Security to B, registered 17 December 2014

2. Standard Security to C, registered 7 February 2015

3. Standard Security to D, registered 7 February 2015

B ranks prior to C and D; C and D rank postponed to B; C and D rank pari passu with each other, i.e. they rank equally, the securities being registered on the same day. The ranking afforded to each security becomes of practical importance if A defaults on a loan; C and D would only be paid something after B’s loan has been repaid in full. If there was not enough to repay C and D in full, they would share what funds remained available pro rata, i.e. according to the amount of their loans. This applies regardless of which of the creditors exercises a power of sale.

These basic ranking provisions operate automatically, therefore no separate notes are required on the title sheet to explain the situation as the ranking is apparent from the dates of registration.

Effect of Advance Notices on ranking by date order

The effect of the entry of an advance notice on the application record or Sasine Register must also be considered in relation to the ranking of securities presented for registration.

The entry of an advance notice on the application record (or Sasine Register) has the effect of enabling a deed to be registered up to 35 days after the advance notice as if an intervening deed had not been registered, provided that the intervening deed was not itself protected by an advance notice that pre-dated that for the current deed being registered.

For example, suppose A had granted the following securities:

1. Standard Security to B, registered 17 December 2014

2. Standard Security to C, registered 7 January 2015

In this example, if an advance notice had been registered prior to 17 December as regards the standard security to C (and within 35 days of registration) then, in the event of a power of sale by either creditor, C's security would be considered to rank prior to the standard security in favour of B. However, if the standard security in favour of B was itself properly protected by an advance notice registered prior to that protecting the standard security to C then B's security would benefit from the prior ranking and no notes would be required.

The effect of advance notices altering the ranking order achieved by sequence of registration of the deeds is the only instance, in the absence of specific ranking provisions, when notes will be added to both entries in the securities section to explain the ranking position (see examples below).

Where one or both standard securities contains specific ranking provisions, this may affect how advance notices operate in terms of altering the ranking order. Specific agreement by the parties as to the prospective ranking position is not the type of scenario an advance notice is intended to guard against. In such circumstances the notes below may not be required, and the usual ranking note guidelines should be followed. However, any cases of this nature should be referred to a senior caseworker in the first instance.

See Advance Notices for additional information.

Two or more lenders

Normally, the personal obligation to repay is in favour of a single creditor but it is equally competent to incorporate several obligations to repay in favour of several creditors within one deed. If this is done and if the security is registered on behalf of all of them at the same time, they are all simultaneously infeft and all rank pari passu. Pari passu creditors share pro-rata in the proceeds of any sale (i.e. in proportion to the respective amounts of their loans). The ordinary rules of ranking may be varied by express ranking clauses in one or more of the securities. However, if a standard security to A has been registered and contains no express reference to ranking, a clause in a standard security in favour of B registered later purportedly ranking B’s security prior to A’s is ineffective unless A consents in the second security and subscribes the deed.

"Subject to" clauses - ranking and warrandice

A ‘subject to’ clause does not have the effect of a ranking clause and must be disregarded when priority of registration is being considered. However it is important to read the whole clause to ensure that a phrase including the word "subject to" does not go on to provide explicit ranking provisions.

When a prior heritable security is already registered (or recorded) and because of its earlier date of registration (or recording) will rank prior to a second security, the following clause should be inserted before the warrandice clause of the second security in terms of Note 5 to Schedule 2 of the Conveyancing and Feudal Reform (Scotland) Act 1970:

‘But the security hereby granted is subject to [the prior security]’.

These qualifications are in the nature of a warning to the creditor in the new security that a prior security exists. They are not regarded as affecting the ranking of the securities. Therefore, if two securities are received on the same date, one of which contains a ‘subject to’ clause, they shall be treated as pari passu securities.

Specific ranking provisions

If express ranking provisions are created in either a security deed or in a separate ranking agreement, a note must be added to the entries of the affected standard securities to reflect the terms of the ranking.

Ranking provisions will be entered in the form of a footnote to the security entry. The procedure and the style of the note will be determined by:

the date of registration of the other security(ies); and
which deed(s) contain(s) the ranking provisions.

The examples below set out the five most commonly encountered situations.

Where two (or more) securities are registered simultaneously and the deeds contain straightforward reciprocal ranking provisions, the securities section entry will be in the following terms:

Entry 1 Standard Security by said AB to CD (desig)
Note: The above standard security ranks prior to the standard security in entry 2.

Entry 2 Standard Security by said AB to EF (desig)
Note: The above standard security ranks postponed to the standard security in entry 1.

Where two (or more) securities contain reciprocal ranking provisions as above, but are not registered simultaneously, the entry in respect of the first registered security will remain silent as regards the ranking provisions until the registration of the other security(ies). The footnotes will then be added as above.

Where only the first standard security contains a straightforward ranking clause and the second one is silent, the notes will be as follows:

Entry 1 Standard Security by said AB to CD (desig)
Note: The above standard security ranks postponed to (or prior to or pari passu with) the standard security in Entry 2.

Entry 2 Standard Security by said AB to EF (desig)
Note: The above standard security is affected by ranking provisions contained in the standard security in Entry 1.

Where only the second standard security contains the ranking provisions and the first one is silent, the notes will be reversed:

Entry 1 Standard Security by said AB to CD (desig)
Note: The above standard security is affected by ranking provisions contained in the standard security in Entry 2.

Entry 2 Standard Security by said AB to EF (desig)
Note: The above standard security ranks postponed to (or prior to or pari passu with) the standard security in Entry 1.

More complex ranking clauses may provide that one security should rank prior to another but only to a certain extent, with advances above that amount then ranking pari passu with or postponed to the second security. No attempt should be made to reflect the exact terms of the ranking in the securities section. Notes in the following general terms will be added.

Where both standard securities contain complicated ranking clauses in reciprocal terms, each will have the following note added after the entry:

Note: The above standard security contains ranking provisions affecting the standard security in Entry ….

Where only one of the securities contains a ranking provision, then the note after that entry will be in the terms above, and the following note will be added after the other entry:

Note: The above standard security is affected by ranking provisions contained in the standard security in Entry ….

These notes will only be added when the second standard security is registered.

In examples 3 and 4 above, the notes will only be added on the registration of the second security. All of the above examples presuppose that the provisions of the ranking clause are simple and straightforward. In example 4 the consent of CD would be necessary for the second security to rank prior to the first.

Ranking agreements and deeds of postponement

Ranking provisions can also be contained in a separate document such as those set out below.

Such a deed should be granted by, and signed by, all of the affected creditors. A ranking agreement can be registered in advance of any of the standard securities which it purports to regulate the ranking of- it is not a reason to reject the application for registration that one or more of the securities is unregistered. Section 13(4) of the Conveyancing and Feudal Reform (Scotland) Act 1970 (inserted by clause 7(c) of Schedule 5 to the 2012 Act) permits the registration of such agreement but does not require that any or all of the securities are registered at the date of application for the ranking agreement.

Where all securities affected are registered, then the ranking agreement should be reflected in the securities section by simply referring to the document in a note after each of the affected securities:

Entry 1 Standard Security by said AB to CD (desig)

Note: The above Standard Security and the Standard Securities in Entries 2 and 4 are affected by ranking provisions contained in Ranking Agreement registered 24 Dec 1999.

Similar notes will be added after entries 2 and 4.

In the less common event that only one of the securities is registered, the note to the registered entry can be amended as follows:

Note: The above Standard Security and a Standard Security by said XY to CD (design) are affected by ranking provisions contained in Ranking Agreement registered 22 Dec 2015.

If a registration officer encounters a ranking agreement where none of the securities referred to is registered, the following note should be entered in the charges section of the title sheet:

Note: Standard Security by said XY to AB (design) and Standard Security by said XY to CD (design) are affected by ranking provisions contained in Ranking Agreement registered 22 Dec 2015.

To add this note to the LRS C Section, under "Entry" select "Add" and then under "Notes" select "Add", this will allow the ranking note to be inserted

A deed of postponement is a form of ranking agreement that need only be granted, and signed, by the creditor accepting the postponed ranking.

Where a deed of postponement affects the ranking of two standard securities a note is added after each of the two entries in the securities section, e.g.

Entry 1 Standard Security by said AB to CD (desig)

Note: The above Standard Security and the Standard Security in Entry 2 are affected by ranking provisions contained in Deed of Postponement registered 24 Dec 1999.

A similar note will be added after entry 2.

If any of the standard securities referred to are not registered, see above at Ranking Agreements.

If the effect of a ranking clause in a security deed or a ranking agreement, is to alter any prior ranking enjoyed by a heritable security as a consequence of its earlier registration, then the creditor in that heritable security must consent to the deed creating the revised ranking. If the creditor does not consent, the application may proceed if the deed has another effect (such as a standard security) and no ranking notes would be entered. However, where the deed is more complex and potentially the only effect is an alteration of legal ranking, it will be inappropriate to register the ranking agreement to any extent, and a referral should be made to ascertain if the deed is valid. If the deed is not valid, the application must be rejected.

Statutory ranking

A standard security granted in favour of a statutory body may affect the conventional ranking of existing securities. Therefore, where a security is granted under any Act, other than the Housing (Scotland) Act 1987 (see Discount Standard Securities below), a senior caseworker must be consulted before such a security is registered. If the Act in question does provide for preferential ranking of the security then the senior caseworker will instruct which notes, if any, should be entered in the securities section. There are specific provisions relating to the ranking of standard securities when registering a croft being bought under right to buy legislation by the former tenant crofter. For some additional information, see Crofting.

Removal of notes regarding ranking

Occasionally, a discharge is received for a first ranking charge where there also exists at least one second (or later) ranking charge. When this first ranking charge is removed from the securities section and the title sheet entries for subsequent securities include a ranking note referring the security being discharged, the ranking notes of the subsisting entries must be changed or deleted to reflect the new circumstances.

Discount Standard Securities - Local Authority, Scottish Ministers and Scottish Prison Service Securities

The manner in which these deeds are entered into the securities section of a title sheet depends on the Act or scheme under which they are constituted.

The Tenants Rights etc (Scotland) Act 1980 gave council tenants the right to purchase their homes from the council, normally at a discounted price. The amount of the discount depended on the length of the tenant’s tenure. The Act was consolidated and extended by the Housing (Scotland) Act 1987. Originally, only council tenants could apply to buy their houses. However, with the 1987 legislation that right was extended to include tenants of the development corporations, Scottish Homes and others. Section 1 of the 1980 Act and Section 61 and Section 62 of the 1987 Act made provision for tenants to purchase the houses they occupied at a discounted price.

Section 6 of the 1980 Act and Section 72 of the 1987 Act provided for the recovery of the discount (or a proportion of it) if the person who purchased their property under the previous sections sold off the property before the expiry of 3 years. As a form of protection, the council or authority may take out a heritable security for the amount of the discount. In terms of Section 6 of the 1980 Act and Section 72 of the 1987 Act, a security granted in respect of the discount ranks immediately after:

A standard security for a loan to purchase or improve the property;
If the landlord (i.e. the Council) consents, a security for any other loan.

In other words, by statutory provision, a discount standard security ranks prior to any security other than one which provides for the purchase or improvement of the property, regardless of whether the other security was registered before or after the discount security. It is important that a title sheet should, wherever possible, disclose the fact that a registered interest is subject to the effect of either of the above situations i.e. that the standard security is granted in respect of a discount.

As discount securities have statutory ranking, there is no need for a ranking clause. The following example shows how the most straightforward type of discount standard security is reflected in the securities section of the title sheet:

Entry 2 will be removed on the next application for registration following the date of expiry of the discount security.

However, Local authorities and housing associations have not followed a standard conveyancing procedure when it comes to securing the discount money, so there cannot be blanket instructions to cover all eventualities. The following examples cover the most common scenarios.

If it is declared in gremio of a standard security that it is granted in respect of discount in terms of the Act, that declaration will be reflected in the entry of the standard security in the securities section, e.g.:

'Standard security in respect of discount under section 72 of the Housing (Scotland) Act 1987 by said A to B Council’.

If the commencement date of the discount period is declared in gremio of a standard security that is granted in respect of the discount in terms of the Act, that declaration will be reflected in the entry of the standard security in the securities section, e.g.:

‘Standard security in respect of discount under section 72 of the Housing (Scotland) Act 1987, containing undertaking for 3 years from …………. by said A to B Council’.

If it is not revealed in gremio of the standard security that it secures the obligation to repay a discount, but this information is revealed elsewhere in the application (e.g. on the application form or back of the deed), a note in the following form will be added to the entry in the securities section:

‘The standard security in entry 2 was granted in respect of the discount under section 72 of the Housing (Scotland) Act 1987’.

If, however, a standard security granted in favour of a local authority following the sale of a house by the authority is not stated to be in security of a loan and it is not stated either in the deed or in the application that it is in security of the discount, no enquiry should be made of the applicant as to whether or not the security was granted in respect of the discount provisions under the 1980 Act or the 1987 Act.

If an application for registration of a sale by a local authority of a council house is not accompanied by a standard security for the discount, but it is stated in the application that the sale is under the Act, the following note should be inserted in the proprietorship section after the entry of the registered proprietor:

‘The subjects in this title were purchased under and in terms of the Housing (Scotland) Act 1987’.

The note is necessary to warn a prospective lender that a security in his favour will rank postponed to a standard security for the discount, even although the latter may be registered after his security.

If the subjects are resold, the note referred to in the previous paragraph will be deleted, even if the sale is within the 3 year period, without the production of evidence of repayment of the discount. If no security for the discount is registered before the resale, the discount cannot thereafter be secured over the subjects.

If a conveyance by a local authority of a council house is not accompanied by a standard security for the discount, but it appears to have attempted to set up the discount as a burden on the property, see Pecuniary Real Burdens below.

If a conveyance by a local authority of a council house is not stated anywhere in the application to have been granted under the Act, no enquiry should be made of the applicant as to whether or not the sale is under these Acts and no note should be added to the proprietorship section.

Where, in terms of section 72(5) of the Act, a council secures both the loan (to the purchaser) and the discount by a single standard security, both elements of the obligation will be entered in the securities section, e.g.:

Standard Security by said A to B Council for (1) £10,000 and further sums and (2) £5000 in respect of discount under section 72 of the Housing (Scotland) Act 1987.

The discount element will be removed from the entry in the securities section either on receipt of an application to register its discharge, or if the title sheet is operated on after the expiry of the discount period (3 years).

The Scottish Prison Service (SPS) has operated a staff discount scheme for the disposal of prison quarters since 1981. Prison officers do not have a statutory right to buy, but in certain circumstances officers may purchase official quarters at a discount. Under the 1981 scheme when a member of SPS staff purchases an official quarter, a standard security is granted in favour of the Scottish Ministers (formerly the Secretary of State for Scotland) for a discount over a three year period. In addition to the three year discount period a further discount period operates dependant on the anticipated length of service of the member of SPS staff purchasing the quarter. A proportion of the discount secured in respect of the second period becomes repayable if either the debtor sells or disposes of the property, or if the debtor ceases to be employed in the Scottish Prison Service.

The entry in the securities section of the title sheet should reflect the terms of the standard security, e.g.:

'Standard security by said A to the Scottish Ministers in respect of discount containing undertaking for 3 years from …..[ with further provisions to …….]

It should be noted that these securities are not granted in terms of section 72 of the Housing (Scotland) Act 1987. In view of this a formal discharge, or letter from Scottish Government Legal department to the effect that no sums remain due in terms of the security, is required to remove the charge from the title sheet.

There are provisions in place for subsidies to be made to individuals to cover part of the purchase price of a property; this is described as a grant subsidy and is secured by means of a standard security, granted by the purchaser of the property, in favour of the grant provider, frequently Scottish Ministers.

The deed makes no reference to it having been granted in terms of a relevant statute but does include ranking provisions similar in terms to those contained in section 72(5) of the Housing (Scotland) Act 1987. It also contains conditions regarding the debtors ownership and occupation of the subjects.

For registration purposes the standard security should be entered in the Title sheet as an "ordinary" standard security but the following note should be added:

Note: The amount secured by the above Standard Security shall be ranked after any standard security by the debtor granted in security of a loan either (a) for the purchase of the subjects in this Title or (b) the improvement of the subjects in this Title.

Any other standard security should be entered in the normal way with the following note added to that entry:

Note: The above Standard Security is affected by ranking provisions contained in the Standard Security in Entry xx.

Discharge of discount standard securities

The evidence required depends on the terms of the Act under which the discount security was constituted.

This situation should only be encountered when dealing with a subsequent sale of a property which was originally purchased in terms of the Act.

A registration officer does not require a discharge for the discount security if the charge was secured more than 3 years prior to the date of registration of the application.

If the charge was secured within 3 years prior to the date of the current application, the registration officer will require a discharge of the discount security. The usual procedure for outstanding standard securities or charges (set out below) should be applied, and details of the outstanding charge should be entered in the title sheet if the discharge is not submitted timeously. In place of a discharge (the Act makes no provision for a compulsory discharge), a receipt for the proportion of the discount repayable would be sufficient evidence for the registration officer to omit details of the charge from the title sheet.

If the property has been disposed of within the 3-year period, the discount (or a proportion thereof) is repayable at the time of disposal. The discount security will therefore remain in place until the relevant sum has been paid to the local authority. In terms of section 73 of the Act, there will be no repayment of the discount where disposal is (a) by an executor of the deceased owner, (b) as a result of a CPO or (c) to a member of the owner’s family who has lived with him for 12 months and disposal is for no consideration, in which last event, the discount provisions for the remaining period still apply.

When dealing with the first re-sale of a house after it has been purchased from the Scottish Ministers, consideration has to be given to any standard security to the Scottish Ministers that was to secure discount provisions. In the absence of a formal discharge, the Keeper will accept a letter from the Scottish Government Legal Directorate (SGLD) as sufficient in lieu of a discharge where there is an expired discount standard security to the Scottish Ministers (or Secretary of State for Scotland) which refers neither to the Tenants Rights etc (Scotland) Act 1980 or the Housing (Scotland) Act 1987. The registration officer should add the letter to the archive.

For discount standard securities in favour of Scottish Homes or Scottish Special Housing Association (SSHA), follow the instructions under Local Authority Discount Securities.

Assignation of Standard Securities

A creditor’s interest in a standard security can be a valuable asset of the creditor and, like any other asset, can be sold or transferred. The Keeper is given notice of this by application to register an assignation. In cases where a large number of securities are being assigned by one creditor to another, the assignation will need to be registered against every title affected.

If the transfer of the company’s assets affects securities recorded in the sasine register as well as registered securities, it is the Keeper’s practice to recommend the use of two assignations, one for subjects in the land register and one for recording in the sasine register. A multiple title number assignation application will be accepted by the Keeper if the application form lists all of the affected title numbers. However, if the opportunity arises, presenting agents should be encouraged to submit a separate application form for each title number. If there is only one application form presented it should be checked in intake and a photocopy of the first page included with each casebag. The deed should also be copied and included in the casebag. In instances where the deed contains a large schedule listing the particulars of the securities assigned, only a copy of the body of the assignation and the relevant page(s) of the schedule should be placed in the casebag.

The assignation is given effect to by adding a footnote to the relevant entry in the securities section such as:

‘Note: The above Standard Security was assigned to (New Creditor) (designation) conform to Assignation registered (date)’.

There is no bar to submitting the assignation to a new creditor at the same time as registering the original standard security, or even a partial assignation or discharge of the same. The original entry for the standard security in the securities section should not be amended to delete the creditor's designation.