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 As originally enacted, crofting tenure occurred only in the Counties of Argyll, Inverness, Ross and Cromarty, Sutherland, Caithness and Orkney and Shetland, known as the crofting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.

Any existing property section crofting note, typically in the following style: "The subjects in this Title comprise a croft as defined in the Crofters (Scotland) Act 1993", should be removed on a subsequent transfer of the subjects.

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:

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.
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.
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.

Procedure for entering ‘discount’ security in title sheet

If it is declared in gremio of a standard security that it is granted under the terms of section 14(3) (or 13(4)) of the Crofters (Scotland) Act 1993, that declaration should be reflected in the entry of the standard security in the securities section as follows:

‘Standard Security to secure sums which may become payable under section 14(3) of the Crofters (Scotland) Act 1993 by said A to B.’

If it is not disclosed in gremio of the standard security, but revealed elsewhere in the application (e.g. on the application form or the backing of the deed) a note in the following form will be added to the entry in the securities section:

‘Note: The standard security in entry x was granted in respect of sums which may become payable under section 14(3) of the Crofters (Scotland) Act 1993.’

If a standard security granted in favour of the former landlord is not stated, either in the deed or elsewhere, to be in respect of sums which may become payable etc. the standard security should be treated as a straightforward loan security.

Removal of ‘discount’ security

If the five or ten year period has clearly elapsed without any disposal of the property, the Keeper will not insist upon a formal discharge being registered for a security that is clearly stated on the title sheet to have been granted in terms of section 14(3) (or 13(4)) of the 1993 Act. The security may be removed from the title sheet at the time of the next dealing or on separate application being made. It is stressed that this instruction only applies to those securities expressly granted in terms of section 14(3) (or 13(4)) of the 1993 Act).

Where a security in favour of the former landlord is not granted under those provisions, a discharge will be required before the security can be removed from the title sheet.

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.

Consequences for the Keeper - first sale of croft

The Keeper is not in a position to know whether such a section 19(3) security is likely to be forthcoming for, in virtually all cases, they will not be submitted for registration until some considerable time after the application for registration in respect of the purchase of the croft. If another standard security is submitted for registration prior to submission of a S19(3) standard security, that registration should proceed as normal.

If a section 19(3) standard security is submitted for registration the following note should be added to any existing standard security by the debtor:

‘Note: The above standard security is affected by ranking provisions contained in section 19(3) of the Crofters (Scotland) Act 1993.’

Such a note would be added to a standard security to HIE if a section 19(3) standard security in favour of Scottish Ministers is received.

Scottish Ministers may grant a loan for the purchase of a croft which will be supported by a standard security; this may be received in a period up to 7 years after the purchase. Such a standard security would be affected by the ranking provisions in section 19(3) and accordingly the above note would be added to the entry in the securities section for a s.45 security in the event of the subsequent receipt of a s19(3) security.

If the section 19(3) security is registered prior to any other standard security then no note is required after that later entry.

Consequences for the Keeper - subsequent sales of croft

Once the original purchaser of the croft (the former tenant crofter) has sold the subjects any application to register a security by the original owner in favour of either Scottish Ministers or HIE would fall to be rejected as not being granted by the proprietor.

Discharge of standard securities by Scottish Ministers

Provision is made in schedule 5 of the 1993 Act for standard securities granted by Scottish Ministers to be discharged by means of a certificate as opposed to a formal discharge.

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.

Notices in terms of the 2006 regulations have to be signed by an officer of the Scottish Ministers and witnessed (i.e. self-evidencing). Notices in terms of the 2016 regulations only need to be subscribed (i.e. signed by the Scottish Ministers). The 2016 notices do not specify that the subscription by the Scottish Ministers be witnessed.

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:

Expiry of the period of conditions

Both the 2006 and 2016 regulations specify that the conditions of a grant made by the Scottish Ministers will cease to apply after certain periods of time. For grants under the 2006 regulations, the period can be 10 or 15 years; for grants under the 2016 regulations, the period is 10 years. The notice itself will state the date of the period during which the conditions are to apply, and the length of the period itself. An entry in a title sheet for a notice where the conditions have expired can be removed from a title sheet on the next occasion that it is updated.

The notice of cessor of conditions of grant and notice of cessation of conditions of grant referred to above are not registered or recorded when the conditions of a grant expire; instead, they are used when the conditions cease to apply because a crofter repays the appropriate sum to the Scottish Ministers during the 10 (or 15) year period comes to an end.

Outstanding notice of grant in Sasine Register

If information provided by an applicant or examination of the search sheet discloses the existence of a grant or statutory charge recorded in the Sasine Register that affects the subjects of registration (where the period for which the conditions apply has not expired and no notice of cessor of conditions has been recorded or submitted for registration), it must be shown in the securities section. The following style can be used, but it may be adapted to fit the terms of the notice in question:

Notice of Payment of Grant of £[amount] by Scottish Ministers to [name], in terms of the Crofters (Scotland) Act 1993 and the Croft House Grant (Scotland) Regulations [year], in respect of the subjects in this title/or in respect of the part tinted [colour] on the cadastral map, containing conditions to be observed for [number] years from [date], recorded GRS [county] [date].

If the notice of grant itself is not submitted with the application, the wording of the entry in the securities section can be taken from the minute for the deed as it appears in the search sheet.

When conducting an examination of a search sheet, registration staff may encounter a reference to a notice of grant made under the Crofters etc Building Grants (Scotland) Regulations 1990. Such grants could be made up to 15 May 2006 and the conditions of these grants, where they were made for the erection or rebuilding of a dwellinghouse, cease to have effect 15 years after the date specified on the notice itself. This period does not apply to grants made for the purposes of improvements. The conditions for this type of grant ceased to have effect after only 5 years.

Where a search sheet discloses the existence of a notice of grant made in terms of the 1990 regulations and fewer than fifteen years have passed since the date stated on the notice, the application should be referred through the usual channels. This is because further investigation will be required in order to determine if an entry should be made in the title sheet for the notice in question.

Outstanding notice of grant in sasines where no entry is needed.

As stated above, there has been provision in place for the recording and registration of notices of grant to crofters in Scotland for some decades. However, the terms of the statute mean that the conditions of grants made under the following pieces of legislation will have expired:

Crofters etc Building Grants (Scotland) Regulations 1982
Crofting Reform (Scotland) Act 1976
Agriculture Act 1967
Crofters etc Building Grants (Scotland) Regulations 1956
Crofters (Scotland) Act 1955; and
Landholders and Cottars (Building Grant) (Scotland) Regulations 1949

Accordingly, where a search sheet discloses the existence of a notice in terms of any of the pieces of legislation listed above, no entry should be made for it in the title sheet.

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:

Notice of Conditions of Grant of £[amount] by Scottish Ministers to [name] in terms of the Crofters (Scotland) Act 1993 and the Croft House Grant (Scotland) Regulations 2016, in respect of the subjects in this title/in respect of the part tinted [colour] on the cadastral map containing conditions to be observed for [number] years from [date

Ranking of notices of grant

The 2006 and 2016 regulations provide that a grant must be repaid 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.

If an application for registration of a notice of conditions of grant is received after a security granted in favour of anyone other than the Scottish Ministers or Highlands and Islands Enterprise the application should be referred through the usual channels so that the ranking implications can be considered.

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:

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.
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.

It is the responsibility of the applicant to satisfy themselves that they are submitting a valid application. If the applicant intimates as part of the application that it is the sub-division of an owner-occupied croft and that the requirements of section 19D have not been complied with the application should be rejected

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 tenants (there must be more than one), who have a right to a share in the grazing (normally by virtue of their tenancy of the croft). It is possible to distinguish Township Common Grazings, which are shared by tenants in a township, and General Common Grazings, which are shared by several townships, some of which may also have their own township common grazings. The common grazings are not usually divided by fencing into individual shares, all stock being allowed to range over the entire area.

The extent of the common grazing can be reduced following successful application by the landlord for a resumption order, or can be temporarily affected by the apportionment by the Crofting Commission of part of the common grazing following application by the crofter. Apportionments are not a permanent alteration of the extent of the common grazing.

Shareholders are nearly always crofters, who have shares by virtue of their crofting tenancies or ownership of the land. They have rights to graze animals and to take peat and seaweed, if available, for their own use on their crofts. They also have the right to apply to the Crofting Commission for the apportionment, for their exclusive use, of a part of the common grazings. 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. They are also entitled to apply for apportionments.

In addition to the foregoing there is another form of common grazing which still exists in many townships; this practice is called Open Township. During the winter months, usually from a set date in November to a set date in April, each shareholder opens the arable ground on which the croft is built (the in-bye land) to stock belonging to the other shareholders in the common grazings. A shareholder has the right of appeal to the Crofters Commission to be excused from this regulation if the practice interferes with his individual use of his in-bye land. Any application identifying subjects as comprising open township common grazing should be referred to a senior caseworker.

Right to use common grazings

A right to common grazing is not an ownership right and if expressed in such terms will not be disclosed on a title sheet as a pertinent to the plot of land. However, if a right in common to land (that happens to be common grazing) is conveyed then it will fall to be dealt with in the same manner as any other shared ownership plot.

As common grazings 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 adviser for consideration.

Sale of common grazings

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