Liferent

Table of Contents

Table of Contents
1 General 2 Registrability of Liferents 2.1 Registrability of standalone liferent deeds 3 Creation of Liferents 4 Warranty 5 Improper Liferents 5.1 Occupancy Rights 5.2 Liferent purportedly affecting lease 6 Termination of Liferents 7 Standard Security over a Liferent Interest

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Burdens Section Summary

General

In terms of section 9(1)(f) of the Land Registration etc (Scotland) Act 2012, the burdens section of a title sheet for a plot of land must include any other encumbrance the inclusion of which in the register is permitted or required by an enactment, along with the name and designation of the person entitled to enforce that encumbrance.

A deed creating a proper liferent is a registrable deed in terms of section 51(1)(a). A proper liferent is an encumbrance on property and falls to be noted in the burdens section of a title sheet for a plot of land.

Liferenter must be named and designed in burdens section entry

Section 9(1)(f) requires that the person entitled to enforce the encumbrance (in this case the liferenter) must be named and designed as given in the registrable deed.

Where the registrable deed induces first registration in the Land Register and the liferent was created by the recording of another deed in the Register of Sasines, the deed should be referred to on the application form as a burdens deed and will usually also be referred to in the registrable deed, and the burdens deed itself submitted to allow an entry to be constituted in the title sheet. If this deed is not referred to by the applicant the legal settler can accept that they have satisfied themselves that the liferent no longer subsists.

Essentially, the law recognises two different models for classifying liferents.

The first model distinguishes proper liferents and improper (or beneficial) liferents. In proper liferents, the liferenter is vested directly with an interest in land; in improper liferents, the liferenter enjoys the benefit of property by way of a trust. There is a subcategory of improper liferent, known as the alimentary liferent, which provides for the maintenance of the beneficiary.

The second model, which distinguishes legal and conventional liferents, is virtually obsolete. Legal liferents arise by operation of law and come in two types: widow's terce and widower's courtesy. These cannot be claimed in respect of any death that occurred after 10 September 1964 and any surviving examples will be extremely rare by now. Conventional liferents arise by voluntary act.

There are other features of liferent terminology which registration officers may occasionally encounter. The party who has the use of the subjects is the 'liferenter'. The Latin phrase salva rerum substantia (without encroaching on the substance) applies to the liferenter's use of the subjects, indicating that the liferenter is not totally free to exploit the subjects as an owner can. The 'fiar' is the party who gains possession of the subjects once the liferent terminates. The word 'fiar' derives from the word 'fee', which in most other aspects of conveyancing practice means full ownership. Confusingly, in the context of liferents, 'fee' has a more limited usage, describing only the position of the fiar.

A fiar, under a liferent and fee title, has a registrable interest in the property but, because of the existence of the liferent, cannot occupy the subjects. The liferenter will be the occupier.

It is also possible to have a liferent over a pro indiviso share and an ownership interest in the remainder or another pro indiviso share; this is more fully considered below.

A final general point concerning liferents of which registration officers should be aware is that, although the usual duration of a liferent is the lifetime of the liferenter, a liferent can be created for any fixed or uncertain period. An example of a liferent for a fixed period is provided below at Liferent for a fixed period. An example of a liferent for an uncertain period is a liferent stipulated to last until the marriage of the liferenter.

The law concerning liferents is complicated. The second edition of Gordon's 'Scottish Land Law' devotes an entire chapter to the subject. The 'Stair Memorial Encyclopaedia' (Vol 13) contains a lengthy section headed ‘Liferent and Fee.’ These texts are recommended reading for anyone who needs more detailed information on liferents. Gordon's 'Scottish Land Law' is available from the RoS library.

Registrability of Liferents

A liferent is registrable only if:

it is a proper, conventional liferent (i.e. created by specific grant or reservation in a conveyance of the subjects, or by specific grant in a standalone deed) resulting in the creation of two distinct real rights, those of the fiar and the liferenter; and
the interest over which it is created is registered in the Land Register.

The rules for the creation of a real right in a proper liferent are stated in section 51 of the 2012 Act and section 9(1)(f) requires that the person entitled to enforce the encumbrance (in this case the liferenter) must be named and designed as given in the registrable deed.

A proper liferent is typically created on registration, however the deed which grants or reserves the right may provide for it being exercisable from a later date, see examples below.

If any legal liferents (the widow's terce and widower's courtesy) still subsist and application is made to register the liferent, the application should be referred to a senior caseworker for consideration. These rights may not be registrable, in terms of section 51 of the 2012 Act, as they are legal and not conventional liferents.

The creation of the liferent is affected by registration of the deed creating the liferent against the plot of land.

Occasionally, we receive deeds where the liferent is referred to as being 'preserved' rather than 'reserved'. Such deeds do not create a proper liferent, and the attempted liferent should not be reflected in the title sheet.

Registrability of standalone liferent deeds

In order to create a liferent in a standalone deed, the deed must contain a specific grant of liferent. The following examples are not generally acceptable:

A liferent which is purportedly created by a standalone deed of reservation is not registrable. A reservation of liferent is only competent in a deed that conveys the subjects.
A standalone deed of agreement where parties agree to the creation or reservation of a liferent does not constitute a specific grant, and is not registrable.

Creation of Liferents

A liferent may be created in a registrable deed or subsist at the time the interest over which it exists first enters the Land Register, although in the latter case its existence must be confirmed by the applicant for registration in order for it to be shown in the burdens section of the title sheet. If a registration officer is unsure whether the deed creating the liferent is registrable, they should refer the application to their referral officer who can consider the information set out below or may refer the matter to a senior adviser if required. The following examples offer guidance on the most common scenarios encountered by registration officers and provide appropriate styles of burdens section entries.

In the event that an application for first registration discloses the existence of a proper liferent in the subjects by the earlier recording of a deed in the sasine register, the Keeper does not require an application in respect of the liferent. However, only the fiar will receive the benefit of warranty as this is given only to an applicant. In processing the application, the registration officer should enter the liferent on the title sheet, in the burdens section. Otherwise, the interest being registered will no longer be subject to the liferent.

Example style:

Disposition by AB (designed) to CD, recorded G.R.S. (County) DD MMM YYYY, of the subjects in this Title, reserves a liferent in favour of said AB.

When a liferent is created by specific grant in a standalone deed over a registered interest, the liferenter must apply to register the deed creating their interest.

Example style:

Disposition by AB to CD (designed), registered DD MMM YYYY, of a liferent interest in the subjects in this Title.

Where the deed inducing registration creates a liferent interest, either by specific grant or reservation, the application to register the deed has the effect of creating the liferent interest.

Example styles:

Disposition by AB to CD, registered DD MMM YYYY, of the subjects in this Title, grants a liferent in favour of EF (designed).

Disposition by AB (designed) to CD, registered DD MMM YYYY, of the subjects in this Title, reserves a liferent in favour of said AB.

Although seldom occurring a liferent can be limited to a fixed period. For example, a liferent could be limited to a fixed period of 10 years from a given date. The deed remains registrable and the Keeper would be bound to accept a valid application for its registration. The entry on the title sheet should indicate the fixed period of the liferent's duration.

Example styles:

Disposition by AB to CD, registered DD MMM YYYY, of the subjects in this Title, grants a liferent in favour of EF (designed) which shall subsist until the earliest of the following events (1) the marriage of said EF, (2) the said EF being declared unfit by a qualified medical professional to to look after themselves or (3) the death of said EF.

Disposition by AB to CD, registered DD MMM YYYY of the subjects in this Title, grants a liferent in favour of EF (designed) for a period of 10 years from dd mmm yyyy.

Example style:

Disposition by AB to CD, registered DD MMM YYYY, of the subjects in this Title, grants a liferent in favour of EF (designed) with effect from [reflect terms of deed].

The Keeper accepts that a liferent of a pro indiviso share is competent, however it is only acceptable for registration if a proper liferent is being created - see above for guidance on improper liferents.

Example style:

Disposition by AB (designed) to CD, registered DD MMM YYYY, of 1/2 pro indiviso share of the subjects in this Title, reserves a liferent in favour of said AB.

Occasionally, deeds are received that burden a property with a liferent interest and describe this as a "real burden". For the avoidance of doubt, a liferent interest does not constitute a real burden and a deed that creates a liferent interest therefore does not need to comply with the requirements of s4 and 120 of the Title Conditions (Scotland) Act 2003.

If the deed specifically "reserves" a liferent, use the reserve option from the LRS picklist. Otherwise use the grant option. Avoid using other wording such as "conveys" or "dispones".

Warranty

A liferenter will only obtain the benefit of warranty if their interest is created in a standalone deed that is the subject of a separate application for registration. This fact will be clear from the style of entry, i.e. that it is a grant of only a liferent interest. Accordingly, if a liferent existed at the time of first registration of the property then the liferenter does not obtain the benefit of warranty. However, if the registrable deed does not only relate to the constitution of the liferent, for example, a disposition transferring the ownership of the property also creates the liferent by grant or reservation, then no separate application for registration requires to be made by the liferenter.

Regarding the classifications of liferents set out in the section containing Background information and general guidance above and the following section on improper liferents, registration officers should note that legal and improper liferents are not registrable.

Improper Liferents

It is unlikely that the Keeper will be aware that an application is being made to register what is an improper liferent. It is for the applicant to have satisfied themselves as to the validity of the right they are seeking to register prior to submitting the application. If the right was not registrable in the first place then its registration does not change that, or confer any greater validity to it.

If the applicant provides information that indicates a liferent they are seeking to register is improper then the application would fall to be rejected.

An improper liferent (otherwise known as a trust liferent) will frequently be established as part of the terms of a Will. For example, the deceased party may have wanted to protect the occupancy rights of one person while transferring the heritage to another party. However, it is the trustees who have ownership of the property; they are either fiars by virtue of having a recorded or registered title, or they have a personal right to record or register their title as the fiar.

If the Will is submitted and indicates that the subjects are to be held for the benefit of the liferenter then this is an improper liferent and accordingly not registrable. However if the disposition by the executors includes a specific grant of the liferent, as required for creation of a proper liferent, then the application should be referred to a senior caseworker to consider whether there has been an appropriate variation of the Will which would enable registration to proceed.

When rejecting an application relating to an improper liferent it may be appropriate to advise the applicant that the liferent element of an application will not be accepted for registration in the situations set out below:

Application is by the purported liferenter, but other information provided indicates the property itself is held by trustees for the benefit of the fiar and the liferenter. In such a case the trustees may complete their title under a separate application and may then, if they consider it appropriate, create a proper liferent in favour of the liferenter (and the fee again if they consider it necessary) by a conveyancing deed such as a disposition.
Application is by the purported fiar and liferenter, but other information indicates that the property itself is held by trustees for the benefit of the liferenter with provisions to transfer to the fiar only on termination of the liferent.
Application is by trustees under trust deed and there is also an application for the right of a purported liferenter but additional information indicates the property itself is held by the trustees/executors for the eventual fiar and the purported liferenter - in this case the application by the trustees for completion of their title may proceed on the usual evidence but as regards the interest of the liferenter if there is no separate conveyance by the trustees which involves the clear grant of the liferent, the application by the liferenter falls to be rejected as the interest of the liferenter is not a registrable interest. If a single deed has been used in this scenario the fiar's part of the application would also fall to be rejected.
The liferent is stated to be alimentary. This is a form of improper liferent and accordingly unregistrable. If the term "alimentary" had been erroneously incorporated into the grant then it will remain open to the agent to prepare a separate deed creating a proper liferent.
Title is granted "subject to" a liferent interest and the liferent has not already been created as a proper liferent. The use of the phrase "subject to" is not sufficient to create a proper liferent.

If registration of the liferent is only part of an application that also includes registration of the fiar's interest then the deed should be rejected as it is not valid under section 113(2) of the Act as the deed purports to create a liferent but fails.

Occupancy Rights

If a deed narrates a reservation of "a right to occupy" the property, or a simillarly worded right which is only in respect of the occupation of the subjects, this is not a right which can be included in a title sheet under the terms of S9 of the 2012 Act

Liferent purportedly affecting lease

A liferent which is purportedly created in an assignation of a long lease (over the lease) is not registrable, and should not be referred to in the resulting lease title sheet. This may be a form of improper liferent. Section 51 of the 2012 Act indicates that a liferent can be created only over "land".