Insolvency - Personal and Corporate

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. 

The following parties must be searched against:

1. Granter(s) of a deed of the type mentioned below unless the granter is of a type not searched against for risk reasons; and

2. 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:

1. Local Authorities;

2. Government Departments/Ministers of State or Scottish Ministers;

3. National Undertakings (such as Scottish Power, British Gas etc.);

4. Well know financial institutions (such as Bank of Scotland, RBS, Nationwide, Santander etc.);

5. 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:

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.

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

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 

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.

Where the applicant-

1. 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

2. certifies that no search has been carried out; or 

3. 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.

(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.

A person can be inhibited:

a) where their creditor has obtained a court decree in a Scottish court, either for payment of a debt or for specific implement of an obligation;

(b) where a document for debt in which they are the debtor has been registered for execution in the Books of Council & Session (i.e. without any court action);

(c) where a liability order is made against them in terms of section 38 of the Child Support Act 1991;

(d) where they have been interdicted from dealing with property by a restraint order in terms of section 32 of the Proceeds of Crime (Scotland) Act 1995 or section 123 of the Proceeds of Crime Act 2002, the Courts may grant warrant for inhibition against any person interdicted by the order.

In general terms, an inhibition may affect any heritable property of the debtor. However, an exception is provided by section 153 of the 2007 Act which states that where an inhibition is executed to enforce a decree for specific implement of an obligation to (i) convey heritable property to a creditor or (ii) grant a real right in security to the creditor, the inhibition will then be limited to that property. In such circumstances the property will be specified in the Schedule of Inhibition. If the title is in the Land Register, the description will be by reference to the title number and if in the Register of Sasines by a description conforming to Schedule D or J to the Conveyancing (Scotland) Act 1924.

This can occur where a creditor has obtained a decree for payment of all or part of a principal sum in an action in which the creditor had executed inhibition on the dependence. An extract of the decree or a certified copy of the interlocutor can then be registered in the ROI along with a Notice of Decree immediately after the decree/interlocutor is issued. The change in status takes effect on the beginning of the date of registration of the Notice of Decree. The ROI entry will be:

[Notice of Decree [dated] following limited inhibition on the dependence under section 15J(b) of the Debtors (Scotland) Act 1987 by [inhibitor] against [inhibitee, designed] in relation to [property description] on [date] with relative [extract][interlocutor] thereon ]

If there is any doubt as to whether such an inhibition affects the subjects of a particular application in the Land Register, it must be referred to a senior officer.

The inhibition can only affect acts which occur after the inhibition comes into effect.

Where an individual is under a legally enforceable obligation to act at the time of the inhibition, carrying out that act will not breach the inhibition as it was not voluntary. A requisition would require the applicant to confirm that the registrable deed granted by the inhibited debtor was not a voluntary act.

An inhibition can affect only property already held by the debtor. Where an inhibition is registered in the ROI before the disposition in favour of the (now) registered proprietor/ inhibited debtor is registered in the Land Register, the inhibition does not affect the property. However, the law is complex as regards whether a debtor might acquire property, for the purposes of the effectiveness of an inhibition against them, on conclusion of a contract for acquisition of the property, or delivery of the title deed. A requisition would require to be raised to seek the applicant's confirmation whether the inhibition affected or did not affect.

Section 61(1) and (2) provide a "deed to which an advance notice relates, if registered on a date which falls within the protected period, is not subject to:

(1) an inhibition ... taking effect before that date but during that period; or

(2) anything registered or recorded in that register and taking effect, before that date but during that period, and having the effect of an inhibition registered against the granter."

See Check for advance notice above.

Section 159 of the 2007 Act provides that an inhibition ceases to affect a property of the debtor if the conveyance/granting of the right is for value and the person acquiring the property or right acts in good faith. A person is assumed to act in good faith if they have no knowledge of the inhibition and have taken all reasonable steps to find out whether or not such an inhibition exists. The purchaser will be considered to have acquired the property or a right in it on the date of delivery of the conveyancing deed.

This provides that an inhibited debtor breaches an inhibition when they deliver a deed to a third party transferring/granting a right in any property which is affected by the inhibition. Section 160 may interact with the common law rule that only a voluntary act of the debtor can be affected, and comes into effect where a concluded contract exists at the time of the effective date of the inhibition against the seller.

An inhibition ceases to have effect after five years have expired from the date on which it became effective, unless it has been breached. If the inhibition has been breached, the right to reduce any deed which breached the inhibition remains for up to 20 years from the date that the inhibition is breached.   

In terms of section 157 of the 2007 Act, where an inhibition is executed to enforce payment of a debt and a sum is paid in respect of that debt plus interest, the inhibition expenses and the expenses of discharging the inhibition, the inhibition will cease to have effect. In these circumstances, the Keeper will not disclose the inhibition in a title sheet, provided that a discharge of the inhibition has been registered in the ROI.

If an application contains written confirmation that the provisions of section 157 apply to an apparently outstanding inhibition, but no discharge has been registered, the application should be referred to a senior caseworker.