Insolvency - Personal and Corporate

Table of Contents

Table of Contents

1 General
2 What is the Register of inhibitions?
3 Personal Insolvency
- 3.1 Inhibition
- 3.2 ROI Entries relating to Proceeds of Crime legislation
- 3.3 Sequestration
- 3.4 Trust deed for creditors
- 3.5 Adjudication
- 3.6 Notice of litigiosity
4 Corporate Insolvency
- 4.1 Administration
- 4.2 Liquidation
- 4.3 Receivership

Useful Links

Advance Notices

Decree of Adjudication in Execution - Example Deeds

Decree of Rectification of Defectively Expressed Deed - Example Deeds

Decree of Reduction of Voidable Deed - Example Deeds

Register of Inhibitions - Reference Materials

Requirements of Registrable Deeds

Securities Section Information

Warranty

General

In terms of sections 10(2)(c) and 32(2) of the 2012 Act, where the validity of a registrable deed to which an application relates might be affected by an entry in the Register of Inhibitions (ROI), the Keeper must enter a reference to the entry in the ROI in the relevant title sheet. However, the statutory duty is to disclose an entry in the ROI on a title sheet in the Land Register only when the inhibited person has granted a deed which appears to be in breach of an entry in the ROI.

The note containing the particulars of the ROI entry is made in the proprietorship section of the title sheet. No separate limitation or exclusion of the Keeper's warranty is required.

What is the Register of inhibitions?

The Register of Inhibitions and Adjudications is defined in the Conveyancing (Scotland) Act 1924 as being for the registration of 'inhibitions, interdictions, adjudications, reductions and notices of litigiosity'. These are notifications that the owner of the property or holder of the right cannot competently grant future voluntary deeds alienating or encumbering that property or right. It is commonly known as the ‘personal register’ and legal professionals often refer to instructing a ‘personal search’ of the ROI.

The existence of an entry in the ROI affecting the granter or consenter to a deed does not necessarily prevent a transaction proceeding; rather the deed being registered is at risk of being reduced by court action raised at the instance of the inhibiting party. For example a disposition granted by an inhibited person is liable to being reduced at the instance of an inhibiting creditor. The deed is not ineffective at the time of registration, rather a decree of reduction renders it ineffective at the date of the decree.

An entry in the ROI affects future voluntary transactions by the inhibited party over all properties owned by them so, for example, an entry would not affect a notice of payment of grant as this is not a voluntary deed. An inhibition or other entry in the ROI can affect many types of registrable deed. Typically, these will be registrable deeds which either alienate or encumber the inhibited debtor's property although transactions by the holder of a subordinate right to vary or discharge that right, such as a discharge of a standard security by an inhibited heritable creditor, may also be liable to reduction.

There are two ways in which an officer may become aware of a potential adverse entry in the ROI:

The application form contains questions designed to elicit information from the applicant as to whether they have obtained searches of the ROI and the outcome of such searches.

The registration officer is required to consider whether to search the ROI and thereafter further investigate any apparently adverse entries. The Keeper will not duplicate a search reported by the applicant's agent on the application form. The registration officer will only require to carry out a search for the 'gap' period subsequent to the date to which that search was certified as specified on the application form. If no search has been carried out, unless the deed is of a type where no search is required, a five year search will be carried out by the registration officer. If the granter/proprietor does not voluntarily alienate or grant a right in or over that property, then no ROI search is necessary as the validity of the registrable deed under consideration cannot be adversely affected by an entry in the ROI.

When to search and who to search against

In general terms, a registration officer will carry out an ROI search against the granter of, and any consenter to, a registrable deed which is a voluntary act alienating or encumbering the granter's property. If the registrable deed is not a voluntary alienation (such as a transfer of title, grant of lease or assignation of lease) or a voluntary creation of an encumbrance (such as a standard security, servitude or burden) or a voluntary discharge of such a right, no ROI search is necessary against the proprietor (or any other party to the deed). This is because the transaction is not one which can breach an inhibition and so no search of the ROI is necessary. However, when undertaking a search in relation to a disposition being granted in exercise of power of sale, both the creditor exercising their right and the debtor should be searched (subject to guidance below on well known financial institutions).

The following parties must be searched against: Granter(s) of a deed of the type mentioned below unless the granter is of a type not searched against for risk reasons; and Consenters (except for Matrimonial Homes or Civil Partnership purposes - because a consenter for these purposes is not conveying a relevant property right); Grantees do not require to be searched. For example, where only an application for registration of a disposition is presented and the grantee in a disposition is not themselves granting a standard security, then only the granter of the disposition requires to be searched, unless the registration officer is also examining a separate application for registration of a standard security or other deed granted by the grantee in the disposition.

It is considered a ‘justifiable insurance risk’ (i.e. no real threat to the Keeper’s warranty) not to search against large, well-established public bodies and financial institutions. These include: Local Authorities; Government Departments/Ministers of State or Scottish Ministers; National Undertakings (such as Scottish Power, British Gas etc.); Well know financial institutions (such as Bank of Scotland, RBS, Nationwide, Santander etc.); Accountant in Bankruptcy.

Unless the granter is major lender, local authority, government department, agency, Minister etc then the registration officer should search the granters when examining an application pertaining to one of the following registrable deeds: Most common registrable deeds Less common registrable deeds Disposition Agreement (Nature Conservancy) Standard security Assignation (or partial assignation) of lease/Assignation and variation of lease Discharge of standard security Assignation of Bond Assignation of standard security Conveyance in liferent Deed of variation of standard security Countryside Management Agreement Deed of restriction of standard security Deed of conditions/Deed of real burdens- separate benefited property or properties nominated at registration Ranking Agreement Deed of servitude Assignation of lease Deed of variation of servitude Contract of Excambion Deed of servitude, discharge Grant of lease/ sub-lease Deed of application/disapplication of development management scheme Deed of variation of burdens Discharge of bond/ex facie absolute disposition Discharge of real burdens/servitude Forestry dedication agreement Good neighbour agreements Minute of extension of lease Renunciation of lease Section 32 Agreement (Enterprise and New Towns (Scotland) Act 1990) Section 75 planning agreements Undertaking not to exercise pre-emption Unilateral obligations (Section 75(1)(b) Town and Country Planning (Scotland) Act 1997 Variation of development management scheme

Do not search any person when examining applications for registration of any of the following registrable deed types. In most cases, this is because either (1) the registrable deeds are not voluntary acts of the proprietor of the subjects but are transactions undertaken by third parties or court orders, (2) a policy decision has been made not to search against the granter of the deed or (3) there is no recipient of a right which would be at risk of reduction. Ancient monuments Lands Tribunal Order Certificate granted by private rented Housing Committee Nature Conservation Order Certificate of consignation Notice of decision to vary or revoke a repairing standard enforcement order Certificate of exclusion of monuments Notice of cessor of improvement grant/repairs grant Charging order- all types Notice of revocation of maintenance plan CPO Notice of payment of grant/loan Decree of adjudication in execution (for debt) Notice of termination Decree of adjudication in implement Notice of title Decree of foreclosure Notice of potential liability for costs Decree of irritancy Notice of decision to vary/revoke RSEO Decree of reduction of voidable deed Notice of revocation of maintenance plan Decree of rectification of defectively expressed deed Receipt under Industrial and Provident Societies Act Deed of Conditions/Deed of Real Burdens- no separate benefited property/ies at registration Schedule conveyance/statutory conveyance or conveyance under s106 Title Conditions Act Determinations under Town and Country Planning (Scotland) Act 1997 Stopping up order Discharge of repayment order Tree Preservation Order Discharge of charging order Maintenance order Extract decree of foreclosure Maintenance plan Extract Decree of irritancy of lease Management Agreement (National Parks) GVD Voluntary registration application Guardianship order or Intervention order under Adults with Incapacity (Scotland) Act 2000

Search the granter of the Disposition, as an inhibition affecting the granter/seller might result in the Disposition being declared void. Do not search against the grantee — any inhibition against them will not affect the validity of the Disposition.

Search (1) the granter of the Disposition and (2) the granter of the Standard Security (invariably the grantee in the Disposition). In other words, search the ROI against both seller and purchaser. The search against the granter of the standard security is necessary because if he/she is inhibited then the standard security is voidable by the inhibiting creditor.

Search the granter of the Standard Security Do not search the creditor in the standard security. An inhibition against the creditor does not affect the validity of a heritable Security (or other deed) being granted in their favour.

Do not search the proprietor of the subjects (usually this is the grantee in the discharge). Do not search against the granter of a discharge who is a major lender or well-known public body etc. However, if the creditor is neither a major lender nor a public body, then they must be searched against.

No search is required. Do not search either the registered proprietor in the title sheet or the applicant in the application.

If the Granter/proprietor does not voluntarily alienate, no ROI search is necessary against the proprietor (or any other party to the deed) because the transaction is not one which is in breach of the inhibition.

Searching procedures - how to search correctly

This section concerns the best practice in searching the ROI using the LRS. In particular it considers how to search non-natural persons, such as companies but also types of individuals such as members of the nobility or foreign forms of personal name.

When an ROI search is run from the LRS, the search results are accessed via a link that can be found on the Intranet under "Quick Links" called "LRS ROI Search/Disclosure Results" . The results of your search can be found either by doing a "Title Number Search" which will display your results or you can select the relevant County and then click on the Submit button to display a list of results in title number order. Scroll down the list to find your title number and click on it to display the results "print" on your screen. Alternatively, if there are a large number of results you can use the "Edit" "Find on this page" functionality in your browser (Ctrl-F) and type in your title number to find your results in the list.

The system which searches the ROI via the LRS employs a searching strategy using names as ‘keys’. Names are not required to be formatted or normalised and usually it will only be necessary to import them as they appear on the screen. The system is designed to catch not only precise name matches but also common variations. All of the individual components of a name are searched e.g. Muhammed McKay is searched giving equal value to both ‘Muhammed’ and ‘McKay’. While, as a general principle, the ROI searching system has been set up to reveal common variations of names, the basic searching rules should be borne in mind when considering whether a name requires to be entered in more than one format to complete an exhaustive search.

Personal names are indexed under surname, and are linked to the entry in the register by a unique number. The numbers are allocated to each deed as it is registered and a minute made. An ROI search is likely to reveal entries similar to the following: Bissett Alan 99/01234 Allan 99/05678 In the example above, Alan Bissett appeared in deed/minute number 01234 in the year 1999. If an inhibition is registered in the name of Mr and Mrs A Bissett an entry in the Register would be made under ‘Bissett A’ and ‘Bissett’. A search against Alan Bissett should return all entries under ‘Bissett’, together with variations in spelling (Alan/Allan). In the case of women with two or more surnames, a check should be made to ensure that all the surnames are entered in the surname field: e.g. ‘Young or Sutton or Jones or Walker’ typed as one line.

Generally punctuation is ignored in the ROI search, i.e. full stops, commas, hyphens or apostrophes (as in ‘P.L.C.’ etc) should not be included. An exception to this general rule applies to apostrophes which form an integral part of a name, such as ‘O’Brien’ or ‘M’Wada’, or ‘Jones’s Taxis’, ‘MCG’s’, where the omission of the apostrophe would create a different name. Words such as ‘Mr’, ‘junior’, ‘of’, ‘as’ ‘The’ etc. are ignored.

Diminutives of names can cause problems when searching. A person may be referred to in a deed as Liz or Bill but it may be that when the entry was made in the ROI the name was given in its full form of Elizabeth or William. If a deed narrates a diminutive form of the party who is to be searched against, both forms of the name should be entered. However, if the deed gives the full name there is no need to search against possible diminutives. The current searching system should pick up common variations of names, but care should be exercised in such cases.

The surname plus the prefixes are entered in the surname field Surname Forename De La Rue Frances Le Mesurier Charles De Mello Frank Antony van den Bergh Hendrick

Where the granter of a deed is an executor or trustee, they are not searched as individuals. They must be searched in their capacity as executor or trustee. ‘Executors of’ (‘Trustees of’, or ‘Mar Con Trustees of’) will be entered in the prefix field.

Titles are entered in the forename field. Nobility should be under all their names/titles. ‘Edward Bruce Logan, Earl of Leith, Viscount Portobello, Baron of Seafield’ will be searched under all three names/titles, viz: Surname: Logan Forename: Edward Bruce and Surname: Leith Forename: Earl of and Surname: Portobello Forename: Viscount and Surname: Seafield Forename: Baron of

If the party to be searched against is narrated in the deed as ‘Muhammed McKay, trading as Muhammed McKay, Replacement Windows, at 5 Hill Street, Colinsburgh, Fife’, only Muhammed McKay as an individual is searched against i.e. Surname: McKay Forename: Muhammed The additional information is merely a designation. However, if he is referred to in the deed as Muhammed McKay, partner of ‘Muhammed McKay’s Windows’ then the individual (as above) and the firm are both searched against i.e. Surname: McKay's Windows (firm) Forename: Muhammed Prefix: partner of The ‘Firm of Redwood’ is searched as Redwood, with ‘Firm of’ being entered in the prefix field. Firms which also include an individual’s name e.g. Firm of Margaret Smith are searched as ‘Smith (Firm)’ in the surname field. One-line entry firm names follow the deed and are entered in full in the surname field e.g. Miss Tidy Mister Clean Firms which include individual names or initials often have more than one possibility for indexing and in these instances all possibilities should be searched, e.g. ‘Firm of T C Herriot and E F Jenkins’ should be searched as: Surname: Herriot and E F Jenkins (Firm) Forename: T C and Surname: Herriot and E F Jenkins Forename: T C Prefix: Firm of

Companies are searched as they appear unless the first word of the name could be the forename of a person. Meadowbank Homes Limited would be searched as a straight line entry under ‘Meadowbank Homes Limited’. However, George Brown and Smith Limited would require to be searched under: Surname: George Brown and Smith Limited and Surname: Brown and Smith Limited Forename: George

Review your results, following the guidance below at Which ROI disclosures can be ruled out and which should be considered for disclosure. If required, you can print out any relevant pages using the normal print functionality in your browser. If there are no matching entries, the disclosure result will simply state ‘No deed’.

If you are unable to eliminate all the name matches from the results, you need to enter the minute numbers in question in your ROI search in the LRS in order to disclose these outstanding entries. The disclosure print obtained from this will provide a full print of the ROI minute for each minute number entered. Following the guidance below you must then decide whether these minutes could constitute an adverse entry and so may require entry in the title sheet under section 32 of the 2012 Act.

Period of search

The application form contains questions pertaining to entries in the ROI. The period that the registration officer must search will depend upon the answers given to the relevant questions in the application form. If the applicant has certified the date to which a search of the ROI has been carried out, (whether in part (i) or (ii) of the question on the application form), the registration officer will use that date in fixing the period during which the ROI is searched.

When to search the 'gap' period

Where for example the date of the application for registration is 23 January 2015, and the date to which the applicant has certified that a search has been carried out in the ROI is 6 January 2015, the period of search will be 6 January to 23 January 2015. Should the applicant disclose any adverse entries in the application form, the period of search will be five years back from 23 January 2015. Where there are attached applications, the registration officer must take account of all the dates to which an ROI search has been certified as having been carried out. Where the granters of each deed are different and in addition, the dates to which a search is certified are also different, the start date for the search should be the earliest date certified. However, if the respective granters of the deeds who require to be searched are one and the same (e.g. the same person grants two Standard Securities) the start date for the search will be the latest date certified.

The disposition is by A to B and the standard security is granted by B. A search will be carried out against both A and B. If the dates to which an ROI is certified to have been carried out in the separate application forms are different, you should search back against both A and B to the earliest date certified.

The standard securities will be granted by the same person and only the granter will be searched against. If each application form certifies that an ROI has been carried out to a different date, it is acceptable for the start date of the search to be the most recent of these dates.

When to do a five year search

The registration officer should search for five years back from the date of application where there are:

Where the applicant- indicates that the deed to which the application relates is not capable of being affected by an entry in the ROI but the registrable deed is of a type against which the Keeper would normally carry out a search; or certifies that no search has been carried out; or does not certify a date to which the search has been carried out, then the registration officer must carry out a full five year search back from the date of application.

The application contains a deed which requires an ROI search to be carried out. The applicant has advised on the application form that the ROI search obtained by them or exhibited to them during the transaction has disclosed an adverse entry or entries. A full five year search should be carried out to confirm whether the entries are adverse. This may also necessitate raising a requisition of the applicant's agent for further information as per the guidance at Which ROI disclosures can be ruled out and which should be considered for disclosure below. Any discrepancy between the search printout and the information provided by the agent should be referred to the Team Leader or senior caseworker as appropriate.

Which ROI disclosures can be ruled out and which should be considered for disclosure

Whether an inhibition in execution which is disclosed in the ROI search will strike at a particular transaction is governed by the rules determining the effective date of that transaction. An inhibition may only be eliminated prior to raising a requisition if it is clear that it cannot strike at the transaction in question, or if an advance notice protects the registrable deed in the circumstances.

(1) Inexact matches e.g. exact name, different address at a distance from any address provided for the granter(s) exact name (common), present whereabouts unknown similar name, different address. (2) Discharge or recall registered in ROI for the inhibition or other ROI entry identified. (3) Inhibition over 5 years old which has not been discharged. (4) Notice which was not followed by Schedule within 21 days (unless registrable deed is being registered within the 21 day period) or subsequent entry in ROI was after date of application for registrable deed. (5) Inhibition against seller recorded after missives signed: Seller no longer has power of disposal, so Inhibition does not affect. (6) Inhibition against purchaser recorded before date of delivery: Purchaser does not have power of disposal, so Inhibition does not affect. .

Exact name and address Exact name and nearby address Exact name if uncommon, present whereabouts unknown Similar name, exact address Disclose the hits by entering the relevant minutes in the ROI screen in the LRS and then viewing them in the LRS ROI search/disclosure results tab in Quick Links on the intranet homepage.

Outstanding letters of inhibition/summons of inhibition. Any entry appearing less than 35 days prior to the application date whether or not there is an advance notice for the registrable deed, to obtain authorisation for entry of details of ROI entry in title sheet. Any other entries e.g. certified notice of determination/mem of renewal/notice of abandonment.