Absorptions

Introduction

Absorption is the process by which two or more interests in the same plot of land become merged. Absorption is an obligatory requirement and is not an optional or voluntary procedure that can be carried out for convenience. An example is the termination of a lease by way of a renunciation. The tenant's right (the lower interest) is absorbed into the landlord's right (the higher interest). 

Where a deed is accepted for registration in the Land Register that requires the merging of interests, section 31(2) of the 2012 Act requires that the Keeper make such changes to the title sheet, or each of the title sheets, to which the application relates as are necessary to give effect to the deed and make such changes (if any) to the cadastral map as are necessary or expedient. In terms of section 31(4)(a) these changes may include cancelling a title sheet. 

Where a deed is submitted for registration in the Land Register that results in the same person in the same capacity holding both the higher and the lower interests in the same plot of land (i.e. same person is both tenant and landlord or the same person is both creditor and lender) it should not be assumed that the absorption procedures automatically apply. Further consideration must be given as to whether confusio applies before proceeding with absorption procedures.

Procedures and Considerations

The methods of giving effect to the absorption of the interests vary, according to whether either or both of the interests are registered or unregistered. During the transitional period, while the Register of Sasines and the Land Register co-exist in an operational area, the lower interest is absorbed into the higher interest in whichever register is appropriate for the higher interest.

If the higher interest is registered in the Land Register and the lower interest is recorded in the Sasine Register, the deed effecting the merger is registered in the Land Register, even if there is no transfer for valuable consideration. If both the higher and the lower interests are recorded in the Sasine Register, the deed effecting the merger is recorded in the Sasine Register (until such time as the Sasine Register is closed to such deeds), whether or not there is a transfer for valuable consideration. If the lower interest is registered in the Land Register and the higher interest is recorded in the Sasine Register the deed effecting the merger is registered in the Land Register and the lower interest is merged with the higher interest in the Sasine Register, This is the only situation in which an interest is removed from the Land Register and returned to the Sasine Register. Unless both the higher and the lower interests are registered in the sasine register, the applicant should submit an application for registration in the Land Register to permit the Keeper to give effect to the merger in the Land Register. This is achieved by closure of the title sheet for the lower interest. Some practical examples are detailed below and the example scenarios page also provides additional guidance specific to a termination/renunciation of lease.

As detailed above, where a transfer of title deed merely vests an interest in a person who already holds title to a higher or lower interest without effecting a consolidation or merger, the normal rules regarding registration in the Land Register or recording in the Sasine Register will apply. When both interests are vested in one party the question of whether the lower real right merges with the higher real right by application of the doctrine of confusio is fraught with problems and should be referred to a senior caseworker. 

A creditor who has a registered standard security over the lower interest will be prejudiced by cancellation of the title sheet. The standard security will no longer relate to a registered interest, and the Keeper’s warranty will no longer apply. Consideration must be given as to whether a discharge of an outstanding standard security is required before proceeding with absorption as voluntary termination of an interest may not be permissible if it would prejudice a creditor. If in doubt refer to a senior caseworker.