Crofting

General

The current legislation regulating crofting is to be found in the Crofters (Scotland) Act 1993 (‘the 1993 Act’) as amended which came into force on 5 January 1994. As originally enacted, crofting tenure occurred only in the Counties of Argyll, Inverness, Ross and Cromarty, Sutherland, Caithness and Orkney and Shetland, known as the crofting counties. The Crofting Reform etc. Act 2007 added provisions enabling the Crofting Commission to constitute, on application by the owner, land as a croft within areas outwith the crofting counties but as designated by order of the Scottish Ministers. With effect from 4th February 2010, the following were designated as areas where crofting legislation could apply to subjects following their constitution as a croft:

• that part of the local government area of Highland previously outwith the crofting counties;

• the local government area of Moray;

• in the local government area of Argyll and Bute, the parishes of Kingarth, North Bute and Rothesay; and

• the Island of Arran (including Holy Island and Pladda), Great Cumbrae and Little Cumbrae.

The name of the Commission was changed from the Crofter's Commission to the Crofting Commission by the Crofting (Scotland) Act 2010.

In essence, crofting involves the tenancy of agricultural land, usually with a pertinent dwellinghouse, on a rolling year to year lease. It is noted that there is no requirement for such a lease to be in writing. Under the 1993 Act, crofters are given statutory rights to buy both their croft agricultural lands and also the dwellings pertaining thereto. Unless the subjects that are purchased are formally decrofted, they will remain subject to the controls contained in the 1993 Act. This is not a matter the Keeper will be aware of and is not reflected on the title sheet. Consequently, no investigation should be made as to whether subjects have been, or remain, a croft.

In terms of the 2012 Act, it is not appropriate for the Keeper to add information directly relating to crofting to a title sheet. This is information that should be contained in the Crofting Register.

Securities Section 

There are various provisions in the crofting regulations that mean there are different provisions that apply to both standard securities and grants when the affected property is a croft. However, as the fact of whether subjects comprise a croft is not a matter for the Land Register, the Keeper will merely reflect the information provided by the submitting agent when considering which standard securities and grants are to be shown in the securities section of the title sheet.

Automatic disburdenment of standard security by the former landlord over croft land

Under section 19(4) of the 1993 Act, any subjects purchased under the right to buy provisions are automatically disburdened of any prior standard security granted by the former landlord, without the need for a formal discharge or deed of disburdenment. As it is unlikely that it will be apparent to the Keeper that the application is a croft purchased under the right to buy provisions, it will be for the applicant to note, as further information on the application form, that they consider the prior security disburdened. 

‘Discount’ security in favour of landlord

Crofters are permitted to buy their agricultural land at a reduced price and any subsequent disposal by the crofter within a certain period may give rise to a duty to repay the difference between the reduced price paid and the then market value to the landlord: this is often referred to as "clawback". That duty normally arises where the Land Court has ordered the landlord to sell the croft land and in doing so has also ordered the crofter to grant a standard security in favour of the landlord to secure this payment. The period during which the clawback arrangement strikes depends on the date that the Land Court order was made (see below). Similar provision does not exist in relation to purchases of the croft house. 

Although the concept is similar to discount standard securities granted in council house purchases, three important differences should be noted:

1. Where the Land Court order directing the landlord to sell is made before 1 July 2011, the security strikes at disposals within a five year period.

2. Where the Land Court order directing the landlord to sell is made on or after 1 July 2011, the security strikes at disposals within a ten year period.

3. There is no statutory alteration to the ranking of these securities. In contrast to the position with council houses where the discount security always ranks postponed to a security for the purchase or improvement of the subjects, a discount security in favour of a former landlord will simply rank according to its date of registration.

Any instance where apparent clawback provisions are contained within the disposition should be referred to a senior caseworker.

Standard securities in favour of Scottish Ministers and Highlands and Islands Enterprise (HIE)

Section 19(3) of the 1993 Act alters the normal rules on ranking of securities. The section provides that where a tenant crofter has received lending to fund improvements to the croft, from either the Scottish Ministers or Highlands and Islands Enterprise (HIE), and then subsequently buys their croft, either of those bodies may obtain a standard security from the crofter. Regardless of the date of registration of such a standard security, these securities rank prior to any other security. If both bodies take security, the Scottish Ministers’ security ranks prior to that of HIE.

Notices of Payment of Grant in Crofting Titles

Scottish legislation has contained provision for government grants to crofters for over sixty years. The current scheme of grants is based on s42 of the Crofters (Scotland) Act 1993, as amended by the Crofting Reform (Scotland) Act 2007, and the Croft House Grant (Scotland) Regulations 2016. These regulations revoke and replace the Croft House Grant (Scotland) Regulations 2006. However, the 2016 regulations effectively replicate their 2006 equivalent where they set out that, provided certain conditions are met, notices in the forms prescribed in the regulations must be recorded or registered by the Scottish Ministers.

The 2006 regulations provide for the following two types of form to be registered or recorded:

• Notice of Payment of Grant

• Notice of Cesser of Conditions of Grant

The 2016 regulations provide for the following two types of form to be registered or recorded:

• Notice of Conditions of Grant

• Notice of Cessation of Conditions of Grant

The 2006 regulations continue to apply where an application for a grant was made to the Scottish Ministers before 1 April 2016. This means that where a Notice of Payment of Grant in terms of the 2006 regulations was registered or recorded, a Notice of Cesser of Conditions of Grant (i.e. the form prescribed in the 2006 regulations) should be used. The agent's certification of the application form can be accepted by registration staff as confirmation that the correct style has been used, but in cases of doubt, an application can be referred to the registration officer's usual referral point.

Previously registered or recorded notices of grant

In relation to applications affected by a previously registered or recorded notice, the registration officer may have to consider the following:

Notices of grant submitted for registration

Where a new notice is submitted for registration, an entry for it should be made in the securities section as follows:

Ranking of notices of grant 

The 2006 and 2016 regulations provide that a grant must be rdepaid if one of its conditions is breached. The conditions are such that, if a notice of grant is still outstanding when a de-crofted property is registered for the first time, the notice should be shown as a charge that ranks prior to any security also being registered.

However, as explained in the section on Discount security in favour of landlord above, a crofter is able to buy their land at a reduced price. This has implications for a subsequent sale by the crofter, because the terms of the discount standard security could mean that the crofter is obliged to repay the difference between the reduced price he or she paid for the croft and the market value of the property at the time of the purchase from the landlord. This obligation typically arises when the Land Court has ordered the landlord to sell the croft land and has also ordered the crofter to grant a standard security in favour of the landlord to secure this payment.

Alternatively, an order from the Land Court can result in a crofter granting a security in favour of the Scottish Ministers or Highlands and Islands Enterprise. In that case, the guidance contained in the section on Standard securities in favour of Scottish Ministers and Highlands and Islands Enterprise (HIE) above can be followed.

Notice of cessor/cessation of conditions of grant submitted for registration

A notice of cessor/cessation of conditions could be presented for registration in the following circumstances:

1. As an application over a title sheet that already contains an entry for a notice of grant in the securities section. Such an application is given effect in the register by removing the existing entry for the notice of grant.

2. As part of an application for first registration of a property. In this situation, where the property is affected by a notice of grant, the submission of the notice of cessor/cessation means that there is no need to make an entry for the notice in the securities section.

Crofting Rights of Pre-emption

There are two possible scenarios concerning pre-emption rights, namely:

Sale by landlord to tenant in pursuance of Land Court order

Section 17(3) of the Crofters (Scotland) Act 1993 disapplies any rights of pre-emption in relation to sales of crofts in pursuance of a Land Court order. There is, unfortunately, no judicial authority on the point that determines whether this has the effect of disapplying the pre-emption right for all time or simply for the particular transfer to the crofter. The Keeper will disclose any pre-emption right unless advised by the applicant that it is not enforceable (see Rights of pre-emption on the general topic of pre-emption rights).

Sale by landlord to tenant in pursuance of voluntary agreement

Where the sale is by the agreement of landlord and tenant, the normal rules regarding pre-emption apply.

Transfer of Crofting Estates (Scotland) Act 1997

Section 1 of the above Act enables Scottish Ministers to transfer their crofting estates to approved bodies. Scottish Ministers may also transfer any interests in mineral, sporting or other rights relating to crofting estates. By virtue of Section 5, any right of pre-emption affecting the property being disposed of by the Secretary of State is permanently extinguished. Thus, in contrast to the position outlined in Right to Buy: Pre-emption Rights, pre-emption rights should not be disclosed in the burdens section where it is clear the transfer of crofting interests is being made under the 1997 Act. The Keeper should be advised of this fact by the applicant.

Division of Owner-Occupied Crofts

Section 34 of the Crofting Reform (Scotland) Act 2010 (‘the 2010 Act’) came into effect on 1 October 2011 and inserted a new section 19D into the Crofters (Scotland) Act 1993. Under section 19D, an owner-occupier crofter requires the consent of the Crofting Commission before dividing his or her croft. If the croft has not been divided with the Commission’s consent prior to the transfer, then the transfer and any deed purporting to transfer ownership of part of the croft is null and void. Section 19D applies to any such transfer, where missives are concluded on or after 1 October 2011.

Common Grazings 

There is no statutory definition of common grazing although actions under statute allow for the constitution of certain areas as common grazings and give credence to the land being subject to crofting tenure. It is generally considered that a common grazing is an area of land belonging to a landlord but used by those who have a right to a share in the grazing (normally by virtue of their crofting tenancy or by ownership and occupation of a croft). The common grazings are not usually divided by fencing into individual shares, all stock being allowed to range over the entire area. 

Shareholders are nearly always crofters, who have shares by virtue of their crofting tenancies or their ownership and occupation of the croft. They have rights to graze animals and to take peat and seaweed, if available, for their own use on their crofts. Non-crofters may also have shares by virtue of their occupation of holdings other than crofts, and if so, are bound by the grazings regulations.  

Apportionments

An apportionment is the setting aside a specific part of a common grazing for the exclusive use of one crofter. This has the effect of removing that part from the extent of the common grazings, but not from crofting tenure.  

References to crofts and common grazings in Land Register deeds

References to crofts in Dispositions

Crofting tenancies, shares in common grazings, and apportionments are all crofting interests that are exclusively registrable in the Crofting Register. These interests are all unregistrable in the Land Register and should never be disclosed in a title sheet. 

The use of crofting terminology in Dispositions has the potential to lead to ambiguity. A croft (being a cadastrally identified unit falling under crofting tenure) is a legal entity that is capable of registration in the Crofting Register.  Ownership of that cadastral extent will be either recorded in the Sasine Register or registered in the Land Register. Sasine or Land Register subjects can be described as a croft (in the same way that some properties are described as being a farm or an estate), but this description is a label/identifier for the recorded/registered ground and does not refer to the crofting interest capable of registration in the Crofting Register. A “croft” can refer to ground that is subject to crofting tenure, which crofting interest is registrable in the Crofting Register, but not the Land Register. The same word can also be used in a Disposition to describe/label the proprietor’s interest in ground, which proprietor’s interest is registrable in the Land Register, but not the Crofting Register.

Where an application for first registration is received which describes the subjects as a “croft”, Registration staff should treat the Disposition as a conveyance of the ownership interest, and not the crofting interest unless the application expressly states that it is the crofting interest which is being conveyed. In almost all cases, the application will be preceded by a Sasine title which supports the granter’s claim to ownership of the subjects disponed. Any instances of dubiety should be referred to a Senior Caseworker for consideration, who can refer to Policy as necessary. 

References to common grazings and apportionments in Dispositions

Reference to common grazings and apportionments in Dispositions can be more ambiguous and problematic. Inclusion of either a right of common grazing or an apportionment as a pertinent in a Disposition is sometimes seen in the crofting counties and is particularly common for subjects in Shetland. Like the term “croft”, the terms “common grazing” and “apportionment” can refer to a crofting interest, but they can also be a label/identifier for an ownership interest. Where rights to common grazings or apportionments comprise crofting interests rather than ownership interests, they must not be disclosed on a title sheet as pertinents to the plot of land, even when the word “solum” is used within the description.

However, the granter of a Disposition can dispone subjects which happen to comprise a common grazing/apportionment, or part thereof, and be described/labelled as such, if they are the underlying proprietor of the subjects and what is being conveyed is the ownership interest. 

Dispositions conveying the ownership interest in subjects described/labelled as a common grazing or apportionment should be supported by an underlying Sasine title demonstrating the granter’s ownership of same. Lack of a granter’s supporting Sasine title to common grazing or apportionment is an indication that the Disposition is purporting to convey a crofting interest. 

In cases where it is unclear whether the terms common grazing or apportionment refer to crofting interest or ownership interest, then Registration colleagues should refer to a Senior Caseworker, who can in turn refer to Policy as required. In such scenarios it is generally appropriate for clarification to be sought from the presenting agent before completing the registration. 

Another scenario that may be encountered is when a Disposition purports to convey “…the croft knowns as xxx, with the apportionment pertaining thereto … being the subjects delineated and coloured pink on the plan “A” and “B” annexed and signed as relative hereto”. In those cases where the apportionment comprises the crofting interest rather than the ownership reference, the apportionment area should not be included in the title sheet. Where the area comprising the apportionment can be identified, the Keeper will register to exclude the apportionment extent. However, where no distinction is made on the plan(s), and the extent of the apportionment cannot be identified, the Keeper will not be able to identify the extent of the registrable subjects. In such circumstances, we need to consider rejection.

Reference to common grazings or apportionments as an encumbrance 

As common grazings and apportionments do not appear to fall into any of the categories of encumbrances that the 2012 Act requires to be included in the burdens section, we would not expect to receive applications referring to them as an encumbrance. Any such applications received however should be referred to a Senior Caseworker for consideration. 

Reference to rights to common grazings being excepted from warrandice

If rights to use common grazings are excepted from warrandice in the deed inducing registration then registration can proceed with no qualifying note or limitation of warrandice on the title sheet, omitting any crofting interests from the title sheet.

Occasionally a wider range of crofting related rights are excepted from warrandice in the deed inducing registration, for example:

Open

Registration can proceed with no qualifying note or limitation of warrandice on the title sheet, omitting any crofting interests from the title sheet.