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.

Contents of the securities section summary

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.

Styles for security entries in the securities section

Deed	Entry
1. Deed is granted for a loan of a fixed amount (desig)	Standard Security for £ … by said AB to CD (desig)
2. for a maximum sum	Standard Security for maximum sum of £ …by said AB to CD (desig)
3. for a loan of a fixed amount and for further or future advances	Standard Security for £ … and further sums 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), for £ … and (2) EF (desig) for £…
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 for <VL> {state currency} and further sums 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 [for £ …] 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 [for £ .… ] 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.

Standard security granted by additional parties

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.

Standard security granted by some, but not all, of the registered proprietors and there is a survivorship destination

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

Standard security granted by party who is not registered proprietor

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.

Deed not granted by last registered proprietor - form does not state validity dependent on another deed

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.

Survivorship destination in registered title - granter(s) of security are one/some of registered proprietors

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.

Form states granter not last registered proprietor and validity dependent upon registration of a disposition

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.

Form states granter is last registered proprietor but also that validity dependent upon registration of a disposition

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.

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.

Property description in standard securities - current guidance

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.

When is a postal address sufficient?

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

Dealings with whole

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.

First registration, transfers of part and dealings with part

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.

Previous exclusions of indemnity

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 [for £x] 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.

Securities section example

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.

Prior ranking:

"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.

Pari passu ranking:

"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.

Postponed ranking:

"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.

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.

Effect of advance notices

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.

Where advance notice recorded in Land Register

Entry No

Specification

Date of Registration

Standard Security by said A to B (design)

Note: The ranking of the above standard security is affected by an advance notice entered on the application record on 12 Dec. 2014 by A to C. By virtue of section 59(3)(b) of the Land Registration etc. (Scotland) Act 2012 the above standard security ranks postponed to the standard security in entry 2.

17 Dec. 2014

Standard Security by said A to C (design)

7 Jan. 2015

Where advance notice recorded in Sasine Register for one standard security prior to FR application

Entry No

Specification

Date of Registration

Standard Security by said A to B (design)

Note: The ranking of the above standard security is affected by an advance notice recorded G.R.S. (county) 12 Dec. 2014 by A to C. By virtue of section 60(3)(b) of the Land Registration etc. (Scotland) Act 2012 the above standard security ranks postponed to the standard security in entry 2.

7 Jan. 2015

Standard Security by said A to C (design)

7 Jan. 2015

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.

1. Securities contain straightforward reciprocal ranking provisions

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 for £40,000 by said AB to CD (desig)
Note: The above standard security ranks prior to the standard security in entry 2.

Entry 2 Standard Security for £5,000 by said AB to EF (desig)
Note: The above standard security ranks postponed to the standard security in entry 1.

2. Securities contain reciprocal ranking provisions as above, but are not registered simultaneously

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.

3. First standard security contains a straightforward ranking clause

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 for £40,000 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 for £5,000 by said AB to EF (desig)
Note: The above standard security is affected by ranking provisions contained in the standard security in Entry 1.

4. Second standard security contains straightforward ranking clause

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 for £40,000 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 for £5,000 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.

5. Securities contain complex ranking provisions

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.

Ranking Agreement

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 for £40,000 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

Deed of Postponement

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 for £40,000 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.

Local authority discount securities

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:

Example securites section entry

Entry Number	Specification	Date of Registration
1	Standard Security by said James Smith to Wild Thyme Bank plc	23 Mar 2014
2	Standard Security in respect of discount under Section 72 of the Housing (Scotland) Act 1987 containing undertaking for 3 years from 12 Mar 2007 by said James Smith to Fife Council	23 Mar 2014

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.

Standard security declares in gremio that it is granted in respect of discount

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’.

Commencement date of the discount period is declared in gremio of a standard security

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’.

Standard security does not reveal in gremio that it is in respect of a discount, but this information is revealed elsewhere in the application

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.

Application with no discount security

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.

Security to local authority for both discount and loan

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).

Scottish Ministers and Scottish Prison Service discount securities

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.

Standard security to secure a grant subsidy

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.

Local authority discount standard securities

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.

Scottish Ministers discount standard securities

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.

Partial assignation

Where the creditor only assigns part of the security or charge the footnote should follow the form set out below:

‘Note: The above Standard Security was assigned to (New Creditor) (designation) to the extent of £XXXX conform to Partial Assignation registered (date)’

The original creditor’s designation should not be removed from the entry in the securities section as they retain an interest in the security.

Partial assignation and discharge

A security can be partially assigned and partially discharged by the same deed. The note made against the relevant entry in the securities section in these circumstances would be:

‘Note: The above Standard Security was (a) assigned to (New Creditor) (designation) to the extent of £XXXX and (b) discharged to the extent of £YYYY, all conform to Assignation and Discharge registered (date)’

Variation of Standard Securities

The details of a standard security can be varied after it has been granted. The only conditions that cannot be varied are the ones relating to powers of sale, foreclosure and procedure on redemption. Section 16 of the 1970 Act provides for securities to be varied by way of a deed of variation unless that variation could appropriately be effected by way of an assignation, discharge or restriction, or if the alteration involves an addition to or extension of the interest in land contained in the security.

A standard security can also be varied at the time it is granted, e.g. to depart from some of the standard conditions set out in the 1970 Act. If this is the case there is no need for an application form to be submitted for the variation and no mention of it should be made on the title sheet.

Most creditors state in their terms and conditions that they must be a party to any variations of their securities but many variations are presented to the Keeper without any evidence of the involvement of the creditor e.g. subscription. The Keeper will accept that the applicant has ascertained that the deed has been appropriately executed.

When two or more individuals hold title in joint names (common ownership) and there is an existing standard security granted by both parties, in the situation where title is transferred to only one of these parties it is likely that the creditor will want the person acquiring the whole property to undertake the whole obligations contained in the standard security. This is normally done by a deed of variation.

Where a deed of variation is presented for registration after the security it is varying has been registered, it will be the subject of a separate application and have to be accompanied by an application form and the appropriate fee. The deed should be checked to see that the parties are correctly named and designed and that the subjects are correctly referred to; the description of the subjects must include the title number.

If the deed is acceptable, a note should be entered under the appropriate entry in the securities section as follows:

Style of entry in the securities section

The entry in the securities section for the standard security will narrate the original party/ies to the security, and if the deed was originally recorded this should also be reflected in the entry. Any party/ies not named in the proprietorship section will have to be designed. The variation is given effect to by adding a note after the existing entry for the standard security, e.g.:

Standard Security … by said A and B (desig) ….

Note: The personal obligations in the above Standard Security have been undertaken by said A in terms of Deed of Variation registered …

Variation relates to a matter referred to in the title sheet entry

If the variation relates to a matter referred to in the title sheet entry then the note will give short particulars of the variation e.g.:

‘Note: The amount secured by the above Standard Security was increased by £5000 to a total sum of £45000 conform to Variation registered (date)’

variation relates to a matter not referred to in the title sheet entry

If the variation relates to a matter not referred to in the entry in the securities section e.g. the rate of interest or personal obligation, then the note will merely record the fact that a variation has been registered:

‘Note: Variation of the above Standard Security was registered (date)’

Standard security being varied recorded in sasine register

Where the plot of land is registered, the effect is that all subsidiary interests are also deemed registered, including the standard security. The deed of variation must comply with the usual requirements for registration and be accompanied by an application form and fee.

Disposition incorporating variation

If the variation is encompassed within the deed transferring title then the title sheet should be updated in terms of section 30(2)(b) of the 2012 Act when registering the disposition. In such an instance, the application should be referred to a senior officer for advice on how to enter details of the variation.

Discharge of Standard Securities

A discharge of an outstanding heritable security submitted along with an application for registration should be accompanied by an application form and will be liable to the relevant fee. If a standard security recorded in the sasine register has not been discharged by the time the subjects are first registered, then the discharge should be submitted for registration. Recording in the sasine register would no longer be competent unless the security also affected additional subjects that remained in the sasine register.

The discharge does not have to contain full details of the security being discharged provided that (a) the registration officer is satisfied that the discharge relates to the only security by the debtors to the creditors over the title and (b) the title number is shown on the discharge (if submitted with a first registration application then the title number is not required). The officer should ensure that the debtors have not taken out another security to the same creditor or that another security over the title has not been assigned to the creditor granting the discharge. A check of prior applications or retained entries should be sufficient to satisfy the officer of this.

If the security being discharged is only over part of the registered subjects, then there will probably have been a tint provided to identify the secured subjects on the cadastral map. When the security is discharged, the registration officer should check to see if this tint is still required (e.g. for clarification of a burden entry) and, if not, arrange with a plans officer to have it removed.

In order for creditors to obtain a real right a Standard Security must be registered. There are instances when securities may not have been registered and the charges section contains only a ranking note. In such instances, when a property is being disponed, and the securities referred to within the ranking note have not been registered, the ranking note can be deleted without the need for a Discharge.

A discharge is given effect to by the removal of the entry relating to the security from the title sheet (and any related notes). As the Land Register is not a historical register, there will be no reference on a title sheet to a discharged security or to the discharge itself.

As the examples below show, a security may be discharged in a number of ways:

DIscharge confusione

A standard security will be extinguished if the debtor and the creditor are the same person, acting in the same capacity. If such a situation comes to the Keeper’s attention then the security should be removed from the securities section as if it had been formally discharged.

Discharge previously registered and noted on title sheet

If a title sheet being worked on includes a standard security with the following note:

‘Note: The above Standard Security was discharged conform to Discharge registered (date)’

then both the entry and the note should be removed, along with any associated next application note.

Discharge of security over multiple subjects

If the secured subjects have been sub-divided, or are in multiple title sheets (and possibly also sasine titles), then any application to register a discharge must be made against all of the affected title numbers (and also joint recorded in sasines if necessary). If this is not done then separate applications will consequently have to be made to clear the security from other titles.

Discharge of part of secured subjects

A standard security can be partially discharged, or part of the secured subjects released from the security, so that part can be sold unburdened by the security. The deed effecting this can be:

a partial discharge,
a deed of restriction, or
a deed of disburdenment.

Where a security is partially discharged, the details of this must be entered on the title sheet. The note under the entry in the securities section should contain the appropriate details, e.g.:

‘Note: The above Standard Security was discharged to the extent of £XXX conform to Partial Discharge registered (date)’

The deed should be accompanied by an application form and fee.

Deeds of restriction/disburdenment lodged with TP (or subsequently)

The part transferred and released from the security will be removed from the parent title sheet to the TP title sheet and no mention of the standard security or of the deed of restriction/disburdenment will be made on the new title sheet. If the standard security is already disclosed on the title sheet for the smaller part that is being disburdened, then the entry should be removed from the title sheet.

As the subjects no longer remain in the parent title, no note relating to the partial discharge is necessary on the parent title sheet.

The deed of restriction/disburdenment will be archived only under the TP title number.

Deeds of restriction/disburdenment lodged prior to TP application

In principle, a separate plans reference or verbal description is required for identification of the part disburdened and a footnote added to the relevant entry of the standard security on the parent title sheet. This will thus maintain the up to date position of that title sheet by showing that the security no longer affects the whole subjects in the title viz.

‘Note: The part tinted pink on the cadastral map [or the north house on the top flat X] was disburdened of the Standard Security conform to Deed of Restriction registered ...’

In practice the TP application is usually lodged soon after the deed of restriction, so making the foregoing procedure unnecessary.

The application for registration of the deed of restriction/disburdenment should be accompanied by an application form and the appropriate fee.

If the procedure in the first paragraph above has been carried out and, subsequently, the disburdened subjects are transferred to a new title sheet, the footnote should be removed as it is no longer appropriate to the parent title sheet. Any plans references provided solely for the purpose of identifying the disburdened area should be removed from the cadastral map.

Partial discharge and deed of restriction

When a registered security over the parent title is partially discharged as well as restricted, and the application is being processed at the same time as or after the application to register the area disburdened of the security, then the note appended to the security entry in the parent title sheet should only refer to the partial discharge, viz.:

'Note: The above Standard Security was discharged to extent of £... conform to Partial Discharge registered ...’

A note will always be entered in the above form, whether the partial discharge forms part of a combined partial discharge and deed of restriction lodged in connection with a TP, or whether it is a simple partial discharge.

A combined discharge and deed of restriction submitted with the application to register the area being disburdened of the security will require an application to be created against both the TP (for the disburdenment element of the application) and also the parent title (for the partial discharge element).

A similar situation exists for first registration applications. When the FR application is accompanied by a discharge covering other (unregistered) subjects, the deed should also be recorded in the sasine register.

If an application to register a combined partial discharge and deed of restriction is lodged after the TP application relating to the subjects being disburdened, the application for registration should be against both the parent and TP title sheets.

If the TP application has not yet been submitted, the application is only against the parent title sheet. The effect of both elements of the deed on the security will be entered on the title sheet in the form of footnotes to the relevant entry as follows:

‘Note: (1) The above Standard Security was discharged to the extent of £xxx and (2) the part tinted pink on the cadastral map [or the north house on the top flat X] was disburdened of the Standard Security conform to partial Discharge and Deed of Restriction registered ...’

When the registration of the TP eventually takes place, the footnote should be amended so that it refers only to the partial discharge as the deed of restriction element relates to subjects no longer in the parent title sheet.

Discharge by operation of negative prescription

It is possible for a debt to be discharged by the operation of negative prescription; i.e. if no steps have been taken by the debtor to pay interest on the money owed, nor has the creditor sought to recover the debt for a period of more than 20 years. It will be unusual for a creditor not to take action to enforce the obligation in the security to recover the debt. Accordingly, the discharge of a security (including a bond in security) by the operation of prescription will be rare.

If the applicant considers that a security deed that would otherwise be disclosed on their title sheet has been discharged by the operation of prescription, then it is for them to advise the Keeper that this is the case.

Discharge submitted where security does not appear on the title sheet

Officers may from time to time encounter a situation where correspondence received by the Keeper, or discharges submitted to the Keeper for registration, refer to a standard security that does not appear in the securities section of the title sheet. All applications for registration of a discharge of a standard security that does not appear in the title sheet should be referred to your referral officer. The referral officer will consider the information available and determine the reason for this.

The procedure to be followed will depend on whether the absence of the standard security has resulted from the Keeper's error or the Agent's error.

Keeper's error

Registration officers should proceed to register the discharge. The following note should be added to the application workdesk notes and instructions:

"Standard security being discharged was missing from title sheet in error. Rectification undertaken by this application."

Agent's error

(a) Error has arisen because the submitting agent certified on the FR application form that a search for outstanding securities had been completed, but the standard security in respect of which the discharge has been submitted was not noted

Registration officers should proceed to register the discharge. The following note should be added to the application workdesk notes and instructions:

"Standard security being discharged was missing from the title sheet as a consequence of agent's responses to questions on the application form at first registration. Rectification undertaken by this application."

(b) Standard security correctly no longer appears in the title because it has already been discharged

Registration officers should reject the application. The following text should be included in the rejection letter:

"The standard security referred to in the discharge does not appear in the securities section of the title sheet as it was discharged on ... (date)."

Where discharge cannot be obtained - Certificate of consignation or declarator

If a discharge of a heritable or standard security in respect of a monetary obligation cannot be obtained because of the absence or death of the creditor or for any other cause, the debtor may (in terms of section 18(2)(a) of the 1970 Act) consign the whole amount due in a bank in Scotland on behalf of the person who appears to have the best right to it. Once this has taken place, a certificate of consignation can be drawn up by a solicitor in the form prescribed by Form D, No. 1 of schedule 5 to the 1970 Act and be registered on behalf of the debtor. The effect of registration of such a certificate in terms of s.18(3) of the 1970 Act is to disburden the security subjects of the security, so the security should be removed (or omitted) from the securities section as if it had been formally discharged.

In the case of a standard security for a non-monetary obligation, section 18(2)(b) of the 1970 Act provides that the debtor may apply to the court for a declarator that the whole obligations under the contract to which the security relates have been performed. If the declarator is granted by the court, a solicitor can draw up a certificate of declarator in the form prescribed by Form D, No. 2 of schedule 5 to the 1970 Act. This can be registered with the same effect as a certificate of consignation.

Discharge consequential to power of sale procedures - Extract decree (on forfeiture of right of redemption)

Where a debtor in a standard security has defaulted in repayment of the sum borrowed, the creditor, if they have exposed the security subjects for sale and failed to find a purchaser, may apply to the court for a decree of foreclosure. If the decree is granted it can be registered. Registering the decree has the effect of (1) extinguishing the debtor’s right to redeem the security and giving the creditor a right to the security subjects as if they had received a disposition from the proprietor at the date of registration of the decree, and (2) disburdening the subjects of the creditor’s security and any other securities or charges that rank postponed to it. When processing an application for registration of such a decree, the registration officer should remove the creditor’s charge and any postponed charges from the securities section as if they had been formally discharged. Any prior or pari passu charges should still be shown on the title sheet and will remain enforceable until redeemed.

Power of Sale under Standard Securities

The Conveyancing and Feudal Reform (Scotland) Act 1970 (the "1970 Act"), at Schedule 3 (standard condition 10), provides four remedies to the heritable creditor when the debtor under a standard security is in default. By far the most important and most frequently used remedy is the power to sell the security subjects, whereby the creditor has the power of sale but only if the debtor does not comply with a calling-up notice or notice of default, or if the court has granted warrant to sell.

Although unlikely to be encountered, these procedures are also applicable in relation to both bonds and dispositions in security granted prior to 29 Nov. 1970.

Application Form

In an application for registration under the 2012 Act the Keeper will rely on the answers given to the questions on the application form regarding links in title. The following section on Background Information on Statutory Power of Sale Procedures is included for information purposes only.

Background Information on Statutory Power of Sale Procedures

Calling-up notice and notice of default

When a debtor is in default, the Conveyancing and Feudal Reform (Scotland) Act 1970 (the "1970 Act") allows the creditor options on how to proceed, depending on the circumstances. The calling-up notice and notice of default represent two of these options. They involve different procedures. A notable point of difference is that the calling-up notice requires 2 months' notice, but the notice of default only 1 month's. However, very broadly speaking, the similarities between the procedures outweigh the differences, from a registration viewpoint.

The calling-up notice and the notice of default are not mutually exclusive. There will be situations in which both options are available to the creditor. In some cases a notice of each type will be served on the debtor.

Statutory form of Calling Up Notice

A calling-up notice should conform with the statutory format of Form A of Schedule 6 to the 1970 Act as amended by the Home Owner and Debtor Protection (Scotland) Act 2010 (the "2010 Act"). The form is as follows:

‘To A.B. (address)

TAKE NOTICE that C.D. (designation) requires payment of the principal sum of £….. with interest thereon at the rate of .................. per centum per annum from the .................. day of ........................ (adding if necessary, subject to such adjustment of the principal sum and the amount of interest as may subsequently be determined) secured by a standard security by you (or by E.F.) over (insert address) (“the property”) in favour of C.D. (or of G.H. to which C.D. has now right) recorded in the Division of the General Register of Sasines for the County of.(insert county)................. on ...(insert date)............. (or as the case may be, registered in the Land Register for Scotland on ...(insert date)............. ……. under title number (insert title number)……) And that failing full payment of the said sum and interest thereon (adding if necessary, subject to any adjustment as aforesaid), and expenses within two months after the date of service of this demand.

IF THE PROPERTY IS A RESIDENTIAL PROPERTY, C.D. may apply to the sheriff court for warrant to exercise the remedies available to a creditor on default including the rights to enter into possession of and sell the property.
IF THE PROPERTY IS A NON-RESIDENTIAL PROPERTY, it may be sold without the need for a court warrant.

Dated this day of……………………………………………………………..

(To be signed by the creditor, or by his agent, who will add his designation and the words Agent of the said C.D.)

In the case of a standard security for a non-monetary obligation this Form shall be adapted accordingly.’

IT IS STRONGLY RECOMMENDED THAT YOU SEEK ADVICE:

You can get advice about this Notice and what it means for you from a solicitor, Citizens Advice Bureau or other advice agency or, in the case of a residential property, a lay representative. A Citizens Advice Bureau or other advice agency may also be able to give you advice about how to manage debt. Take this Notice with you when seeking advice. You may be eligible for legal aid depending on your circumstances. You can get information about legal aid from a solicitor.

A solicitor or lay representative may represent you in any court proceedings in relation to an application by C.D for possession and sale of your home. You can find out more about lay representatives from the housing department of your local authority or from a Citizens Advice Bureau or other advice agency.

YOUR RIGHTS IN RELATION TO RESIDENTIAL PROPERTY ARE PROTECTED BY LAW:

In the case of a residential property, C.D. must comply with statutory pre-action requirements before being allowed to apply to the court. These requirements include providing you with specified information and contacting you to discuss alternatives to repossession. C.D. may also be prevented from applying to the court if you have made an application to a payment protection policy or mortgage support scheme. It is important to discuss with your solicitor or advisor any doubts you have about whether C.D. has complied with these requirements.

YOU MAY WISH TO VOLUNTARILY SURRENDER YOUR HOME:

In the case of a residential property it is open to you, in certain circumstances, to voluntarily surrender the property to C.D. if all entitled residents in it consent. If you wish to consider voluntary surrender you should discuss with your solicitor or advisor whether this option is right for you. You should not proceed with voluntary surrender unless you understand the consequences of doing so.

(In the case of a standard security for a non-monetary obligation this Form shall be adapted accordingly.)

Statutory form of Notice of Default

A notice of default should conform with the statutory format of Form B of Schedule 6 to the 1970 Act as amended by the 2010 Act. The form is as follows:

‘To A.B. (address)

TAKE NOTICE that C.D. (designation), the creditor in a standard security by you (or by E.F.) over (insert address) (“the property”) in favour of C.D. (or of G.H. to which C.D. has now right) recorded in the Division of the General Register of Sasines for the County of (insert county)................. on ...(insert date)............. ( or as the case may be, registered in the Land Register for Scotland on ...(insert date)............. ……. under title number (insert title number)……) requires fulfilment of the obligation(s) specified in the Schedule hereto in respect of which there is default; And that failing such fulfilment within one month after the date of service of this notice—

IF THE PROPERTY IS A RESIDENTIAL PROPERTY, C.D. may apply to the sheriff court for warrant to exercise the remedies available to a creditor on default including the rights to enter into possession of and sell the property.
IF THE PROPERTY IS A NON-RESIDENTIAL PROPERTY, it may be sold without the need for a court warrant.

Dated this day of……………………………………………………………..

(To be signed by the creditor, or by his agent, who will add his designation and the words Agent of the said C.D.)

Schedule of Obligation(s) in respect of which there is default.

To (specify in detail the obligation(s) in respect of which there is default).’

IT IS STRONGLY RECOMMENDED THAT YOU SEEK ADVICE:
You can get advice about this Notice and what it means for you from a solicitor, Citizens Advice Bureau or other advice agency or, in the case of a residential property, a lay representative. A Citizens Advice Bureau or other advice agency may also be able to give you advice about how to manage debt. Take this Notice with you when seeking advice. You may be eligible for legal aid depending on your circumstances. You can get information about legal aid from a solicitor.

A solicitor or a lay representative may represent you in any court proceedings in relation to an application by C.D for possession and sale of your home. You can find out more about lay representatives from the housing department of your local authority or from a Citizens Advice Bureau or other advice agency.

YOUR RIGHTS IN RELATION TO RESIDENTIAL PROPERTY ARE PROTECTED BY LAW:

In the case of residential property, C.D. must comply with statutory pre-action requirements before being allowed to apply to the court. These requirements include providing you with specified information and contacting you to discuss alternatives to repossession. C.D. may also be prevented from applying to the court if you have made an application to a payment protection policy or mortgage support scheme. It is important to discuss with your solicitor or advisor any doubts you have about whether C.D. has complied with these requirements.

YOU MAY WISH TO VOLUNTARILY SURRENDER YOUR HOME:

Minor deviations from the statutory wording which make no material difference to the substance of the calling-up notice or notice of default would not be critical; however, major defects can nullify the notice and the whole procedure following on from the notice. Examples of major defects are the omission of significant text such as ‘Take notice that C.D. requires payment…’, or an error in the name of the debtor, or failure to date or sign the notice.

Objections to Notices of Default

A person on whom a notice of default has been served can object to it if he or she is aggrieved by any requirement in it. The court may set aside the notice of default, in whole or in part, or vary or uphold it. If the court had intervened in this way, the registration officer would have had to examine the court order, identify the action taken by the court, and check that the creditor had complied in full.

A calling-up notice is not open to objection.

The period of notice

A person on whom a calling-up notice or notice of default has been served can choose to dispense with or shorten the period of the notice. The person does so by writing or endorsing a minute on the notice or a copy of it.

Dispensing with or shortening the period of notice

Where someone has dispensed with or shortened the period of notice, the minute should conform with the statutory format of Form C of Schedule 6 to the 1970 Act. In particular, the minute must be signed and dated. The form is as follows:

‘I, A.B., above named, hereby acknowledge receipt of the foregoing Notice of (Calling-up), (Default) of which the foregoing is a copy of the notice and I agree to the period of the notice being dispensed with (or shortened to ..... )

Dated this day of……………………………………………………………..

(To be signed by the person on whom notice is served, or by his agent, who will add his designation and the words Agent of the said A.B.)’

There are, however, four important qualifications to this:

1. The agreement to dispense with or shorten the period by one recipient of a calling-up notice will not bind any other persons on whom the notice has been served. If the notice has been served on more than one person, the consent of all should be obtained to any restriction of the period;
2. The consent of creditors who hold securities which rank pari passu with, or postponed to, the security held by the creditor who served the notice is required to an agreement to dispense with or shorten the period of notice;
3. If the Standard Security is over a matrimonial home, as defined in the Matrimonial Homes (Family Protection) (Scotland) Act 1981 as amended by the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985, the spouse on whom the notice has been served may not dispense with, or shorten, the period without the consent in writing of the other spouse; and
4. If the property is used to any extent for residential purposes, the 2010 Act provides that the period of notice may be shortened only with the consent in writing of any entitled resident in terms of the new section 24C (1) paragraphs (d) (e) or (f) of the 1970 Act and where the debtor is not the proprietor , the debtor and if the security is over a matrimonial or family home in terms of section 23A(3) of the 1970 Act, the debtor's spouse or civil partner.

Frequently in cases where one person has reduced or dispensed with the period of notice, without the necessary consent of another person, the original period specified in the notice will have elapsed before the property was first advertised for sale and accordingly no problems arise.

If, on the other hand, the creditor did not obtain a necessary consent and advertised the property before the end of the original period of notice, then the whole power of sale procedure is at serious risk of challenge by the person(s) whose consent was needed.

Life of notices

A calling-up notice ceases to have effect (for the purpose of the power of sale) 5 years after (a) the date of the notice, if there has been no offer or exposure to sale of the security subjects (or a part of them), or (b) the date of the last offer or exposure.

A notice of default will cease to be authority for the power of sale on the expiration of 5 years from the date of the notice, even if the debtor has failed to comply with the requirements in it.

Service of notices

Evidence of the service of a calling-up notice or notice of default can be either:

- an acknowledgement of receipt by the person on whom service was made, per Form C of Schedule 6 to the 1970 Act;
  Form of acknowledgement
  The acknowledgement must be signed and dated. The form is as follows:
  ‘I, A.B., above named, hereby acknowledge receipt of the foregoing Notice of (Calling-up), (Default) of which the foregoing is a copy of the notice.
  Dated this day of……………………………………………………………..
  (To be signed by the person on whom notice is served, or by his agent, who will add his designation and the words Agent of the said A.B.)’
  or
- a certificate by the person making the service as per Form D of Schedule 6 to the 1970 Act.
  Form of certificate
  The certificate must be signed and, if the notice was served by post, a postal receipt provided. The form is as follows:
  ‘Notice of (Calling-up), (Default), of which the foregoing is a copy, was posted (or otherwise, as the case may be) to A.B. on the ……………………..day of …………………..
  (To be signed by the creditor, or by his agent, who will add his designation and the words Agent of the said A.B. and if posted the postal receipt to be provided.)’

Persons by whom a notice is served

In the usual case, the creditor, or an agent acting for the creditor, serves the calling-up notice or notice of default. However, circumstances can arise in which the creditor's capacity or freedom of action is constrained by other factors. Some special cases are listed below:

Persons Serving	Proper Practice
A person who is incapax	The notice should be in the name of the ward (the incapax person) acting through the curator bonis and by the curator for his or her interest.
Attorney	The notice should be by the constituent (the person who granted the power of attorney) and signed by the attorney.
Liquidator	The notice should be by the company (in liquidation) and the liquidator.
Several creditors	1. If the creditors are joint owners of the security, they must all concur. The notice should be given by or on behalf of all. 2. If each of several creditors is entitled to a specified part of the secured sum, the notice should show that each creditor requires payment to him of his own share. Separate notices by each creditor may be used.
Trustee in sequestration	The notice should be by, or on behalf of, the trustee.
Administration	The notice should be by the company.
Trustees	The notice should be by, or on behalf of, all of the trustees or, if appropriate, an acting quorum.
Young person under 16	The notice should be by, or on behalf of, the legal representative acting for the young person. (The legal representative is a person with parental rights and responsibilities in relation to the young person.)

Persons on whom a notice is served

The general rule is that notice is given to the person(s) appearing on record as proprietor. If the creditor knows that the person appearing on the record is not the real owner of the subjects, notice should also be given to the true proprietor.

If there is an ex facie absolute disponee, service on that party is necessary since they will appear on the record as proprietor, but in addition service should be made on the true owner.

In relation to notices of default, if the debtor is not the proprietor, notice should be served on both the debtor and the proprietor.

Some other special cases are listed below:

Persons to be served	Proper Practice
Bankrupt	Notice should be served on the bankrupt and his or her trustee in sequestration (unless the trustee has been discharged).
Company removed from Register of Companies	Notice should be served on the Lord Advocate.
If not known whether the person is alive	Notice should be sent to the Extractor of the Court of Session.
Non-entitled spouse	Notice should be served on any non-entitled spouse who has occupancy rights.
Partnership	Notice probably need only be served on a majority of the infeft trustees, but in practice all are served. Notice should also be given to the firm itself, at the same time.
Person last infeft is deceased	Service should be made on the person's representative or the person entitled to the subjects in terms of the last recorded/registered title. Normally that means the executor or the person entitled to succeed under a special destination in the title. If the deceased left no representatives, the creditor should serve a notice on the Lord Advocate.
Trustee under trust deed for creditors	Notice should be served on the granter(s) of the trust deed and the trustee.
Trustees	Notice need only be served on a majority of the infeft trustees. (But see Partnership above, in the case of trustees of a firm.)

Advertising for sale

The creditor is under a duty to advertise the sale, but that is qualified by another duty to take all reasonable steps to ensure that the price is the best that can be reasonably obtained. That implies that the advertisement must be reasonably adequate, both as to the length of the period during which it is published and to the newspapers or other publications in which it appears. Consideration is given to the nature and location of the property and the market for it.

Forms of advertising

Acceptable forms of advertising would include:

advertising in the local papers
advertising in a solicitor's property centre; and/or
advertising in the office of an estate agent.

Failure by the creditor to advertise the property in a reasonably adequate way is a serious breach of duty and opens the power of sale to challenge.

Default through insolvency of the debtor

If the default arises because the debtor is insolvent (Standard Condition 9(1)(c)), a section 24 application to the court is necessary before any of the rights arising on default may be exercised.

Court decrees under section 24 of the 1970 Act as amended by the Home Owner and Debtor Protection (Scotland) Act 2010

In circumstances where the debtor is in default in terms of standard condition 9(1)(b) or 9(1)(c) of the standard conditions set out in Schedule 3 of the 1970 Act - which is to say, where there is a default other than a default in respect of which a calling-up notice is the only possible procedure - the creditor may apply to the Sheriff Court for a warrant to exercise any of the rights available to them upon failure to comply with a calling-up notice (Section 24 of the 1970 Act). These rights include the right of sale. If the default arises because the debtor is insolvent (Standard Condition 9(1)(c)), a section 24 application to the court is necessary before any of the rights arising on default may be exercised. What constitutes insolvency for this purpose is defined in detail in Standard Condition 9(2). If the subjects are used to any extent for residential purposes, the creditor has to make a summary application to the Sheriff court in terms of the new section 24 of the 1970 Act as amended by the 2010 Act, whereby the creditor must also comply with additional pre action requirement.

Problems can arise with such court decrees however. In particular, it is fairly common for title numbers and the recording/registration dates of standard securities to be given incorrectly in decrees. Such errors should be regarded as major defects and it would be inappropriate to issue a fully guaranteed title. Equally, such decrees are often issued in absentia; and are therefore potentially capable of being challenged for up to 20 years.

Where the decree in absentia relates to the remedies on default contained within section 24 of the 1970 Act, the Keeper envisages little risk of challenge. However, in instances where the decree in absentia relates to matters other than the remedies on default contained in section 24 of the 1970 Act, there may be a higher risk of challenge.

Creditors often take a 'belt and braces' approach and, as well as serving a calling-up notice or a notice of default (or both), they apply to the court for a decree. In such instances the correct procedures for both procedures should be complied with.

It should also be noted that where the subjects are used to any extent for residential purposes and decree has been granted, section 6 of the 2010 Act provides for a right to seek recall of a decree for repossession but this is limited to just one application where the person seeking recall has made no previous representations to the court.

Failure to observe proper practice is a major defect which may nullify the power of sale procedure or at least open it to challenge.

In the event that an agent notes in the application for registration of a disposition granted by a heritable creditor in power of sale that there may be an issue or defect regarding the service of a calling up notice then the application should be referred to a senior caseworker.

In particular any application referring to either of the following two court cases should be referred.

Royal Bank of Scotland v Wilson [2010] UKSC 50
Royal Bank of Scotland v Jamieson ([2019] SAC (Civ) 29)

Keeper's responsibilities under the 2012 Act

The disposition will be granted by the creditor and should state that is being granted in exercise of power of sale procedures. The applicant's agent when drafting the deed, and before submission of the application, will have considered whether the statutory procedures have been complied with. See Disposition (Heritable Creditor in Power of Sale) - Example Deeds.

Registering title

Registration officers should consider the information contained in the application form. This is a scenario where the question relating to links in title may be answered either "yes" or "no", and the application should not be dependent on the registration of another deed. While the creditor granting the deed is not vest as the proprietor they are acting in place of that proprietor. Accordingly, provided there are no other contrary indicators to the validity of the application, the registration of the applicant's title can proceed.

Effect of power of sale on other securities

Registration of the disposition in exercise of power of sale automatically disburdens the subjects of the creditor's standard security and all other heritable securities and diligences that rank pari passu with, or postponed to, that standard security (see Ranking of Standard Securities above for more information on ranking), provided that all of the statutory procedures have been complied with.

First registration applications

The standard security under which the power of sale is being exercised is omitted from the title sheet; the information provided by the agent in response to whether there are any other outstanding heritable securities should be relied on.

Transfer of part and dealing with whole applications

The standard security under which the power of sale is being exercised is omitted from the title sheet. In these types of application the electronic version of the form does not require an answer to the question relating to outstanding securities and the existing securities section should be examined with consideration being given as to whether any security registered after the security being called up has prior ranking, either by statute or specific ranking agreement.

Any standard security that ranks prior to the one under which the power of sale procedures are being exercised, either in whole or in part, by date of registration or by specific ranking provisions, should continue to be disclosed on the title sheet - unless a discharge/deed of restriction is submitted for registration.

Effect of power of sale on inhibitions and other dilligences

Inhibitions recorded in the Register of Inhibitions ("the ROI") after the recording/registration date of the standard security under which the power of sale procedures are being exercised do not strike at the sale by the creditor. Any other diligence disclosed on the application form, or identified when undertaking a search of the ROI should be referred to a senior caseworker for further guidance.

If a registration officer encounters a title containing an existing exclusion of indemnity in relation to a failure to comply with the statutory procedures governing the exercise of the power of sale, see Failure to Comply with Statutory Procedures in Power of Sale - Existing Exclusion of Indemnity (part of Warranty).

Notices of Grant

Under various Acts of Parliament, the Scottish Ministers, local authorities and some other public bodies are empowered to make grants to owners/proprietors for a wide range of purposes including improvement, repairs etc. to their land and property. Every Act under which a grant is made states the conditions under which the grant is payable or recoverable and stipulates the period for which these conditions will subsist. In terms of s.8 of the 2012 Act, the Keeper is required to enter in the securities section particulars of any heritable security over the right in land to which the title sheet relates. This includes any other right in security over heritable property such as notices of grant.

The current legislation governing grants is the Housing (Scotland) Act 2006 and any grant after 1 April 2010 should be in terms of that Act, except for few limited circumstances when the grant application was in process prior to that date. For registration purposes, if a grant is received referring to earlier legislation the submitting agent must be asked to confirm that this is correct. The conditions relating to a grant under the 2006 Act apply for a period of 10 years.

In respect of local authorities, Section 193 of the Local Government (Scotland) Act 1973 allows for the execution of notices of grant by way of a stamp or facsimile of the signature of a proper officer. Attestation by one witness, or alternatively sealing with the seal of the local authority, is also required - see Authentication of Registrable Deeds.

Notice of grant registration instructions

When a notice of grant is submitted for registration, it will be entered in the securities section in a style similar to a standard security and the date of registration will need to be entered. The format of the grant is not prescribed but will need to conform to the following criteria:

Include reference to the appropriate section of the Housing (Scotland) Act 2006 containing the conditions that are to apply;
Subjects must be described by reference to the title number;
The deed should be self-proving;
If a second notice is registered in respect of the same grant that must refer to the registration date of the original notice.

If these criteria have not been met the application should be cancelled - see Notice of Payment of Grant or Loan - Housing (Scotland) Act 2006 - Example Deeds.

Registration officers should be aware that the person to whom the grant may have been made need not be the registered proprietor of the subjects in question. Where the person who received the grant is not named in the proprietorship section, they must be designed in the securities section.

Notice of repayment or notice of cessor of conditions

Where the conditions of the grant cease to apply before the expiry of the stipulated period, a notice of repayment or a notice of cessor of conditions may be drawn up and registered. Registration of such a notice will have the effect of terminating the grant and the entry will be removed from the title sheet.

Crofting grants

The statutes governing crofting provide for a specific type of grant payable to crofters and for certain documents relating to these grants to be recordable or registrable. For further information on these grants and how to reflect them in a title sheet, see Crofting.

See also Outstanding Securities, Grants and Statutory Charges below for further information.

Statutory Charges

Charging orders

Under various Acts of Parliament, the Secretary of State for Scotland, the Scottish Ministers and local authorities may make orders charging or burdening land and property with repayment of loans or recovery of grants made, or expenses incurred, by them in respect of building works, improvements, water supply, etc. Such orders are known as absolute orders, repayment charges or charging orders and usually provide for the repayment of a capital sum, often by instalments. Such charges fall to be entered in the securities section of the title sheet.

As the specific Act under which the order is made will make provision for the conditions which will apply, it is important that the Act is narrated in the entry. In any case, as with grants, whether it is an outstanding order from the Sasine Register or whether a new order submitted for registration, the charge is entered in the securities section. The Act under which the charge is granted will make provision for how the charge will rank in accordance with other charges, for example, a repayment charge under the Housing (Scotland) Act 2006 has priority over most other encumbrances, the exceptions being certain other statutory charges which rank in accordance with date of registration (for example charging orders under the Health and Social Services and Social Security Adjudications Act 1983, see below).

A sale under power of sale procedures has the effect of discharging any other securities or charges that rank pari passu with or postponed to the security under which the power of sale procedures are being exercised, this includes charging orders.

Execution of charging orders

Charging orders may be executed in accordance with section 193 of the Local Government (Scotland) Act 1973 (see Authentication of Registrable Deeds), but this does not apply to orders under the Health and Social Services and Social Security Adjudications Act 1983, for which see below.

Examples of styles for the entry in the securities section

Absolute Order by Secretary of State for Scotland under section ……. of the …… ……… Act {insert year}.. – Charging the subjects in this Title with payment of a yearly sum of £ ….. , payable half yearly, for …. years from …………..[date].
Charging Order by …………… Council in exercise of powers conferred by …………….. Act {insert year}… - Charging the subjects in this Title [or the area …… on the cadastral map] with payment of an annuity of £ …… payable on ……[date] in every year for …. years commencing ……. [date].
Repayment Charge by …… Council in exercise of powers conferred by section … of the Housing (Scotland) Act yyyy, CHARGE the subjects in this Title [or describe as appropriate] with a repayable amount of £xx, payable in thirty equal annual instalments on the same date every succeeding calendar year.

Discharge of orders

Absolute orders, repayment charges and charging orders may be discharged in whole or in part. The creditor may grant a discharge of absolute order, or order of release, or receipt.

Any of these deeds will be given effect to by removing the charge from the title sheet, if it discharges the order in full, or by amendment of the entry if it discharges the subjects to a certain extent (as in a partial discharge of a standard security).

Specific provisons relating to particular types of charging orders

Charging Orders by Local Authorities Under the Health and Social Services etc Act 1983

Sections 21 to 24 of the Health and Social Services and Social Security Adjudications Act 1983 (HASSASSA) were brought into effect by subordinate legislation on 12 April 1993. These sections gave local authorities in Scotland, England and Wales powers to recover charges for residential accommodation from the assets of residents. Previously local authorities had no means of recovering such charges, if a resident was unwilling or unable to pay, and would merely rank as an ordinary creditor on the estate of the resident after his or her death.

Only one of the new powers is relevant to the work of Registers of Scotland. Section 23 provides that a local authority in Scotland, England or Wales may record or register a charging order over any one interest in land in Scotland owned by a resident.

The legal registration officer should note:

- if a resident owns several properties in Scotland, only one property can be made subject to the charge;

- a charging order is competent even where the resident only owns a pro indiviso share of property (e.g. a husband and wife situation);

- a charging order is also competent when the resident has not recorded or registered their title as proprietor (i.e. has right to the property or a share therein based on a midcouple or link in title). The order will have included a clause of deduction of title if it was recorded in the Sasine Register, for Land Register purposes it is for the submitting agent to have satisfied themselves that the party has a right to the property that could be made real by registration;

- a charging order under this legislation is similar to a standard security in some ways. It ranks in the same way as a standard security, i.e. according to the date of registration, unless there is an agreement stating otherwise. However, it cannot be assigned, see below for the recommended style of entry in the securities section.

Charging order style of entry

Charging Order by [local authority] in exercise of powers conferred by Section 23 of the Health and Social Services and Social Security Adjudications Act 1983 – Charging the subjects in this Title [or the area tinted ….. on the cadastral map] with payment of the sum of £ …. [with interest thereon] [or all debts due or to become due] by Y [design if appropriate] to said Council in respect of assessed charges for accommodation.

Execution of charging order under HASSASSA

A charging order under this Act could not be executed before 16 July 1993. To be accepted for recording or registration, a charging order or discharge must conform (or as nearly as circumstances permit, conform) to the prescribed statutory form in the schedule to the Charging Order (Residential Accommodation) (Scotland) Order 1993 (SI 1993/1516), which is as follows:

Form of charging order

We (name of local authority), in exercise of the powers conferred upon us by section 23 of the Health and Social Services and Social Security Adjudications Act 1983 ("the 1983 Act"), hereby make a charging order over All and Whole (describe the security subjects) being an interest in land held by (name and designation of debtor) in respect of any debt due or to become due by the said (name of debtor) to us in respect of the provision by us of accommodation for the said (name of debtor), all in terms of the said section 23, together with any interest thereon as specified in section 24 of the 1983 Act as amended (details of any amendments)

See also guidance in example deeds - Charging Order (HAASSASSAA).

In the case of a charging order by a Scottish local authority, it must be executed as a deed. Orders under HASSASSA merely executed in terms of section 193 of the Local Government (Scotland) Act 1973, purporting to bear the signature of the proper officer (or facsimile thereof), which is permitted in documents such as notices of grant, are not acceptable for recording or registration. (For further information on execution under section 193 see Notices of grant above and also Authentication of Registrable Deeds)

Prior to 1 August 1995, the order had to be executed in terms of section 194 of the Local Government (Scotland) Act 1973. This required that a deed to which a local authority was a party had to be sealed with its common seal and subscribed by two members of the council and the proper officer (whether attested by witnesses or not) or, alternatively, the deed was executed in a manner provided for in a local act. After 1 August 1995, the order must be executed in terms of section 3 and Schedules 1 and 2, paragraphs 1 and 4 of the Requirements of Writing (Scotland) Act 1995.

English and Welsh local authorities will still require to execute charging orders or discharges in accordance with the general Scottish law on execution of deeds. As there is doubt as to the exact form such executions should take, any such instances should be referred to a senior case worker.

Discharge or calling-up of a charging order under HASSASSA

There is provision for the charging order to be formally discharged upon payment being made. The form is prescribed in the 1993 Order as follows:

Form of discharge of charging order

We (name of local authority), in consideration of £ being the whole amount secured by the charging order aftermentioned paid by (name and designation of debtor or as the case may be) hereby discharge the charging order over All and Whole (describe the security subjects), which charging order was made by us in our favour dated and (recorded in the Register of Sasines for… on…)(or registered under Title No. )

A local authority is able to call up a charging order once the resident has died. If the resident is still alive, the local authority may only call-up the charging order in the event of:

- the resident’s insolvency;

- the sale or transfer of the interest in land;

- the calling-up of any standard security over the same interest.

When an applicant for registration derives title from a local authority exercising a power of sale under a charging order, the legal registration officer should follow guidance provided under Power of Sale below.

Where the resident has alienated the property

Section 21 of HASSASSA contains avoidance provisions intended to defeat a resident’s attempt to avoid the assessed charge by, for example, transferring the property to a family member. The avoidance provisions do not affect the title to the property in any way. Local authorities are not empowered to make charging orders over property already alienated by residents, whether prior to or during their residence in the local authority accommodation. Instead, the party benefiting from the alienation will be personally liable to pay the assessed charge up to the value of the property received.

Thus, if a charging order is presented for registration, but the debtor is no longer the proprietor of the subjects, the order may be ultra vires. In such cases the registration officer should refer the case through normal channels for further advice. If the transfer appears to be at arms length for full market value the application to register the charging order should be rejected. However if the transaction is not at arms length the charging order should be registered. It will remain open to either party to seek rectification if additional facts are available that indicate an inaccuracy in how the application has been processed.

If a charging order was recorded or registered prior to the alienation, then the charge is already secured over the property and the local authority would be able to call it up if need be.

Charging Orders Under the Legal Aid (Scotland) Act 1986

Since 26 August 1991 it has not been competent to make charging orders under the above Act, but discharges of such charging orders already recorded or registered may still be submitted.

Floating Charges and Debentures

The existence of a floating charge or debenture would be noted in a title sheet as an overriding interest in terms of the Land Registration (Scotland) Act 1979 if disclosed to the Keeper in an application, normally within the terms of a ranking agreement. However, there is no equivalent provision for noting the existence of such charges in a title sheet in the 2012 Act and the same should be dealt with as follows:

Floating charge

The concept of a floating charge was introduced to Scottish conveyancing law by the Companies (Floating Charges) (Scotland) Act 1961. This has been variously repealed, re-enacted and incorporated into subsequent company legislation. While primarily granted by companies it is also competent for limited liability partnerships, industrial and provident societies and European Economic Interest Groupings to grant floating charges.

A floating charge may be granted over all or any part of property which may from time to time form part of the granter's property, including heritable property, but the floating charge only "attaches" to property on either of the following:

the date of commencement of winding up the company, or
the date when a receiver is appointed.

The floating charge requires to be registered in the Register of Charges kept by the Registrar of Companies, but it is not recordable or registrable in the Sasine or Land Registers. In addition, there is no provision for noting the existence of a floating charge in a title sheet in the 2012 Act. Consequently, if the existence of a floating charge comes to light in a new application for registration, the floating charge should not be disclosed in the title sheet. Unless absolutely necessary, no mention of the floating charge should be made in any ranking note, rather it should merely reflect that the security is affected by ranking provisions, e.g.:

Note: The above Standard Security is affected by ranking provisions contained in the Ranking Agreement registered 11 Jan. 2015.

If the existence of a floating charge has been noted in a previously registered title, reference to the floating charge should only be removed where it is feasible and where (i) a notification of inaccuracy by an external party has been submitted, or (ii) where an application undergoing registration discloses a request to remove an existing reference. In either case, there must be a specific request for the charge to be removed and sufficient information must be submitted to the Keeper as evidence that the charge has been satisfied. If these conditions are met and only a single standard security and the floating charge are affected by ranking provisions, then this will become an off-register matter and the floating charge and note can be deleted. However, if there are multiple securities and the floating charge is affected by ranking provisions then the entry for the floating charge should not be removed if this would result in any existing ranking notes becoming unclear and possibly misrepresenting the position regarding ranking. Guidance should be obtained from a referral officer as required.

Debenture

A debenture and debenture stock are English legal terms that relate to documents of debt. These would only be considered for inclusion in a title sheet as an overriding interest in terms of the 1979 Act if the debenture incorporated a floating charge. Consequently, in terms of the 2012 Act, the existence of a debenture that comes to light in a new application for registration should also not be referred to in a title sheet and any existing entry should only be removed if feasible and where the same conditions are met as detailed above for floating charges.

Outstanding Securities, Grants and Statutory Charges

As well as deeds being submitted for registration, the registration officer may also need to consider outstanding securities including those recorded in the Sasine Register.

As part of the application form for a deed that will induce registration of the plot of land, the applicant is expected to provide details of any outstanding heritable security. The search sheet will have been checked by the officer doing the closing note and details of any outstanding securities, notices of grant or statutory charges recorded between the search date certified on the application form and the date of registration of the application will be provided.

If the submitting agent states no search of the Sasine Register has been undertaken, the closing note officer will advise that they have not examined the search sheet. The registration officer will need to examine the search sheet to obtain details of any outstanding securities, notices of grant or statutory charges.

While the period of search is limited to 40 years, if it is apparent that there is an earlier undischarged heritable security then it should also be disclosed on the title sheet (i.e. apparent without having to examine further search sheet images beyond that required for the 40 year search).

Procedure for outstanding standard securities

If there is an outstanding security, and no discharge is submitted, then the registration officer should proceed with registration showing the outstanding security in the securities section, unless an application to register a discharge is submitted prior to completion of the initial registration, in which case both applications should be processed together.

Outstanding heritable security - first registration

Where there exists an outstanding security at the time of first registration, it must be entered in the securities section before any charges that are being registered to preserve the right of the creditors and show the current position of the title.

The granter must be designed if they are not the current registered proprietor.

Where it is known that the creditor at the time of the first registration is not the original creditor, as a consequence of recording an assignation, particulars of the current creditor (based on the assignation or if provided as part of the application) will be added below the entry as a note.

The date of recording in the Register of Sasines will be included in the entry, as the creditor’s real right dates from the date of recording.

Example of style of entry:

Bond for £5000 and Disposition in Security by said AB [or by AB (desig)] to CD (desig), recorded GRS (Renfrew) 29 Jul 1968.

Note: The above Bond was assigned to (new creditor) (designation) conform to Assignation recorded GRS (Renfrew) 4 Sep 1974.

In the case of a first registration, the creditor’s interest in the outstanding standard security is not covered by the Keeper’s warranty as it was not itself the subject of an application for registration, even though its recording is disclosed in the securities section.

Should the agent wish the security to be registered (e.g. if the applicant is undertaking obligations in the security), an application with accompanying form and relevant fee should be submitted. The date of registration will then be entered, but the original date of recording must still be narrated as it remains the date of the creation of the creditor’s real right.

Outstanding heritable security - transfer of part

Where there exists an outstanding security at the time of the transfer of part, it must be entered in the securities section before any charges that are being registered against the new title, to preserve the right of the creditors and show the current position of the title.

Where the granter is not the current registered proprietor, he or she must be designed.

Where the creditor at the time of the transfer of part is not the original creditor, particulars of the current creditor (obtained from the existing entry, a pending application for an assignation against the parent title or from the current application) will be added below the entry as a note.

Where the security subjects are more extensive than the subjects in the transfer of part (e.g. the security was over the whole of the parent title subjects) the entry in the new title sheet must reflect this.

Example of style of entry:

Parent title sheet

Entry No	Specification	Date of Registration
1	Standard Security by said Big Developer to A BIG BANK (design)	19 Jan. 2004

Transfer of part title sheet

Entry No	Specification	Date of Registration
1	Standard Security by Big Developer (design) to A BIG BANK (design) over the subjects in this Title and other subjects	19 Jan. 2004
2	Standard Security by said Purchaser to HOME LOANS LIMITED (design)	12 Dec. 2014

As the outstanding security has already been registered under the parent title the creditor already has the benefits of registration (e.g. warranty).

Procedure for outstanding notice of grant or statutory charge in Sasine Register

If the closing note officer on examining the search sheet identifies a grant or statutory charge recorded in the Sasine Register between the search date certified on the application form and the date of registration of the application that affects the subjects of registration, it must be shown in the securities section. For example styles of entry see below.

Outstanding grant or statutory charge styles of entry

Absolute Order by Secretary of State for Scotland under section ……. of the …… ……… Act {insert year}.. – Charging the subjects in this Title with payment of a yearly sum of £ ….. , payable half yearly, for …. years from …………..[date].
Charging Order by …………… Council in exercise of powers conferred by …………….. Act {insert year}… - Charging the subjects in this Title [or the area …… on the Title Plan] with payment of an annuity of £ …… payable on ……[date] in every year for …. years commencing ……. [date].
Repayment Charge by …… Council in exercise of powers conferred by section … of the Housing (Scotland) Act yyyy, CHARGE the subjects in this Title [or describe as appropriate] with a repayable amount of £xx, payable in thirty equal annual instalments on the same date every succeeding calendar year.
Notice of Payment of (Improvement/Repairs) Grant of £500 by ……….. Council to ……….., under the Housing (Scotland) Act 1987, in respect of the subjects in this title (or in respect of ….. … part of the subjects in this title) containing conditions to be observed for 5 years from ………., recorded GRS (Renfrew) …….
Notice of Grant [of £xxx] by [name authority making grant} to ……….., in accordance with the provisions of section ?? of the Housing (Scotland) Act 2006, in respect of the subjects in this title (or in respect of ….. … part of the subjects in this title) containing conditions to be observed for 10 years from dd mmm yyyy.
Charging Order by [local authority] in exercise of powers conferred by Section 23 of the Health and Social Services and Social Security Adjudications Act 1983 – Charging the subjects in this Title [or the area tinted ….. on the Title plan] with payment of the sum of £ …. [with interest thereon] [or all debts due or to become due] by Y [design if appropriate] to said Council in respect of assessed charges for accommodation.

The name of the relevant Act can only be narrated if the registration officer has sight of the deed itself. If the deed is not submitted with the application, the details of the grant will have to be taken from the sasine minute. If the details of the relevant Act have not been minuted in sasines, details may be obtained by viewing the deed on the sasine archive viewer. If details of the relevant Act are not available from these sources then it will not be possible to narrate them in the entry in the securities section. For the avoidance of doubt registration officers should not requisition any notice of grant that has been recorded in the sasine register.

Pecuniary Real Burdens

While section 117 of the Title Conditions (Scotland) Act 2003 has formally abolished this as a method of creating a charge over land, it is not retrospective. The following instructions apply when a pecuniary real burden was constituted in a deed recorded or registered prior to 28 November 2004 and that deed is referred to for burdens in the DIR or in the application form.

Pecuniary real burdens

A pecuniary real burden was a rarely used method of creating a charge over land. The sum secured was usually an unpaid portion of the purchase price or a sum to be paid toward the cost of forming a road, known as Road Money. Such burdens were almost invariably created by way of a reservation in a conveyance of the subjects. Although there was usually no separate deed to create such a burden, there was no reason why a separate deed would not have been used to create one.

Under s.8(1) of the 2012 Act, a pecuniary real burden for payment of a capital sum should be entered in the securities section of the title sheet. However, it may not be necessary to make an entry in the securities section at all. Deeds which appear to have created pecuniary real burdens can usually be dealt with in one of the following ways:

The agent may have given explicit reasons in the application form why the pecuniary real burden has been extinguished or no longer subsists. In such cases, all reference to the pecuniary real burden can be entirely omitted from the title sheet.
The pecuniary real burden was created in a conveyance of the subjects and relates to ‘Road Money’. It is considered highly probable that the obligation will have been fulfilled by the time there is an application for registration. There is almost never a discharge of road money so no entry will be made in the securities section as it would have to remain for ever. Just in case the obligation has not been fulfilled, and to avoid losing the burden, it will be entered in the burdens section along with any other burdens from that conveyance.
The pecuniary real burden is created by a reservation in a conveyance and is for an unpaid portion of the purchase price. If there has been at least one transfer of the property for full value since the creation of the burden then it is assumed that the unpaid portion of the price will have been repaid and no entry will be made in the securities section. If the only transfer of the subjects since the creation of the burden is the deed inducing registration, then reliance should be placed on the information regarding burdens contained within the application and the repayment obligation should be disclosed if the deed is referred to for burdens. If real burdens are also created in the deed, the obligations should be included as part of the entry in the burdens section. Where no other real burdens are created, an entry should be made in the securities section in the following style:

Real Burden for £xxx in favour of CD (design) constituted by Disposition to AB (design), recorded G.R.S. (County) dd mmm yyyy.

A pecuniary real burden may also have been created under statutory powers. For example, under the Housing (Scotland) Acts a local authority is entitled to charge owners with a proportion of the cost of demolishing their houses. If the owners are absent or if they are unable to meet this expense a Notice, which becomes a real burden on the subjects until it is discharged, is recorded/registered by the Local Authority. This form of burden will be entered in the securities section in this style:

Notice by [Local Authority] of Real Burden of £XXX under [specify Act], recorded G.R.S. (County) dd mmm yyyy.

Any other variant on creating a pecuniary real burden should be referred to a senior adviser.

Discharge

A pecuniary real burden, like a normal heritable security, can be discharged, assigned or restricted by the creditor or their successors. If an application to register a formal discharge is submitted, the entry relating to the burden is simply removed from the title sheet. If an assignation or restriction is submitted, a note will be added under the entry in the securities section. The style of the note will be similar to those used for heritable securities.

It should be noted that the liability of a proprietor to repay part of the discount given to them as part of a local authority sale or a council house sale could never be imposed as a real burden in a conveyance of the subjects, even before the abolition of pecuniary real burdens, and should never be included in the burdens section.

Servitudes and Real Burdens in Standard Securities

The Title Conditions (Scotland) Act 2003 does not prescribe a style or type of constitutive deed in relation to the creation of servitudes or real burdens. Accordingly it is possible for an owner to create new servitudes or real burdens over their land in a standard security.

Creation of real burdens in standard securities

Whilst it is theoretically possible to create real burdens that affect the land owned by the granter in a standard security, the format would have to comply fully with the requirements of the 2003 Act as regards the characteristics and creation of the real burden. Accordingly any such deed should be referred to a senior caseworker.

Creation of servitudes in standard securities

When the secured subjects are only part of a larger area owned by the debtor, a creditor will frequently attempt to incorporate servitudes into the security deed in an attempt to protect their interest in the event of selling the secured subjects under power of sale procedures. The rights are frequently appended to the description of the subjects in the same form as in a conveyance (e.g. together with a servitude right of access …).

The form of a standard security is prescribed in the 1970 Act and incorporates the words "grant a standard security in favour of the creditor over (subjects)"; the Keeper is doubtful that these words are capable of creating a stand-alone servitude. Further the right will normally be granted in favour of the creditor, but not in their capacity as proprietor of the benefited land.

Any attempt to create a servitude in a standard security should be referred to a senior caseworker in the first instance. If the deed is not drawn in appropriate form to properly create a servitude, the right will not be shown in the title sheet and a letter should be prepared for issue to the submitting agent on completion of the registration explaining why the rights are not shown (this is to pre-empt an enquiry from the agent).

Alternatives that may be encountered to address this matter would be:

a standalone servitude defining the benefited property that would become effective when the two tenements were held by separate owners;
a deed of conditions specifying the servitude that could be referred to in a subsequent sale of the relative area; or
another standard security over the remaining land covering an obligation to grant a servitude.

A title sheet entry relating to a standard security protecting an obligation to grant a servitude should not attempt to reflect the terms of the deed, rather it will be in the format:

Standard security by said AB to CD (designed).

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