4.3.2 Entries in the ROI - Information supplied in Land Register Application Forms 1, 2 and 3

For all applications submitted on or after 22 January 2007, applicants for registration are asked in application forms 1, 2 and 3 to supply relevant information about any ROI search (whether as part of a Land Register report provided by the Keeper or otherwise) where this search was either obtained by them or exhibited to them by any other party to the transaction in question.

Question concerning whether the deed inducing registration transfers or creates, etc an interest in land

The applicant is firstly asked to confirm whether the deed inducing registration is of a type which might be adversely affected by an entry in the ROI. The registration officer should not use the answer to this question to decide whether a ROI search is appropriate as part of the registration officer's examination of the application. This decision must be made in accordance with the guidance at ROI search practice: in relation to applications for registration.

Questions concerning whether a Land Register report which includes a ROI search, or a ROI search alone, has been obtained

If the applicant has answered the initial question in the affirmative, they are then expected to confirm if a search in the ROI was obtained. Registration officers should note that whether the parties to a transaction carry out or obtain a search in the ROI is not a matter for the Keeper.  If the applicant advises that no search was obtained then the registration officer should carry out a search for the usual five year period if the application is within the criteria at ROI search practice: in relation to applications for registration.

Date of certification of report, where obtained and whether adverse entries disclosed

Where the applicant confirms a ROI search was obtained and the date to which the search was brought down, but does not indicate that any adverse entries were disclosed, the registration officer may then use this information, where appropriate, to determine the period during which they should carry out a ROI search. For further information see Applications submitted on and after 22 January 2007.

If the applicant advises that a search was obtained which disclosed adverse entries, the registration officer should follow the guidance provided at Applications received on or after 22 January 2007- adverse entries noted on application form.

4.4 ROI Search practice

4.4.1 ROI search practice in relation to applications for registration

The following table contains a list of those deed types for which a search in the ROI against the grantor of the deed must be carried out. The registration officer should also consult Public bodies &c not to be searched against (4.6 below).

The following table contains a list of those deed types for which no ROI search at all need be carried out.

For discharges of standard securities granted by parties other than major lenders, local authorities, government departments or agencies, registration officers must search the granter of the discharge.

In summary, the registration officer is required to search only parties who are grantors of deeds upon which the application for registration follows.  This requirement in the context of sequestrations is discussed at Acquisitions by debtor prior to discharge and Debtor's transactions prior to discharge.

Example 1- Application for registration of Disposition only

The registration officer is dealing with an application for registration of a disposition only, and no standard security has been granted by the purchaser. The officer should search the grantor of the disposition, since an inhibition affecting that party might result in the disposition being voidable. In contrast there is no requirement to search against the purchaser since any inhibition against the purchaser would not affect the validity of the disposition. The purchaser's title to the property would be indefeasible and therefore any inhibition registered against the purchaser is not adverse.  

Example 2- Applications for registration of Disposition and Standard Security

The registration officer is dealing with applications for registration of a disposition and a standard security granted by the grantee of the disposition. A search is required against both the grantor of the disposition and the grantor of the standard security. In other words a ROI search against both the seller and the purchaser must be carried out. The search against the purchaser (being the grantor of the standard security) is required because the grant of the standard security would be voidable at the instance of an inhibiting creditor should they have registered an inhibition against the purchaser.

Example 3 - Application for registration of a Standard Security only

The registration officer is dealing with an application for the registration of the creation of a heritable security. No ROI search is required against the creditor in the security. A ROI search is required only against the grantor of the standard security. No search is required against the grantee of the security (the creditor), as an inhibition against them would not affect the validity of a heritable security (or other deed) being granted in their favour.

Example 4- Application for registration of Discharge of heritable security

The registration officer is dealing with an application for the discharge of a heritable security. No ROI search is required against the proprietor, who is the grantee in the discharge.

If the application is a Dealing with Whole for a discharge of a heritable security granted by a major lender or well known public body and is not accompanied by another application relating to that property there is no requirement to search the ROI against any party.

If the grantor of the discharge is not covered within Public bodies &c not to be searched against, then the grantor of the discharge should be searched against.

Example 5 - Application for registration of a disposition by creditor in exercise of power of sale

Both the former proprietor, as debtor, and the granter of the deed should be searched against (unless the granter of the deed is one of the major creditors that do not get searched).  N.B. where the creditors standard security is already registered any pre-exiting inhibition against the debtor should already be disclosed on the title sheet.  See fuller information in chapter 22 regarding applications in terms of power of sale.

Example 6- Notice of Payment of Repairs/Improvement Grant or Notice of Potential Liability for Costs

Where the application the registration officer is dealing with relates to a notice of payment of repairs/improvement grant, or a notice of potential liability for costs, no search in the ROI is required against the registered proprietor in the title sheet. Nor is a search required against the applicant in any of these deed types.

4.4.2 ROI Search practice in relation to updating of title sheets

4.4.2.1 Title Updating

For those registration officers working on the updating of existing title sheets to account for burdens extinguished by the Abolition of Feudal Tenure Act and the Title Conditions Act, sometimes known as "cleansing", no ROI search is required against the registered proprietor as a result of carrying out such work.

4.4.2.2 Form 5 Applications

A Form 5 application is made for the noting of an Overriding Interest, other than a short term lease, or the interests of non-entitled spouses.

A Form 5 can be used to note rights created by virtue of a deed, such as noting a servitude created in a deed executed before 28 November 2004 against the burdened property title sheet. In cases where the overriding interest to which the application refers was not created by a deed, the registration officer need not carry out a ROI check against either the registered proprietor of the subjects in the title sheet to which the application relates or against the applicant. If the officer is in doubt as to whether a ROI check is appropriate for a particular Form 5 application, the matter should be referred to a senior caseworker.

4.5 Parties to be searched against

It is the registration officer’s responsibility to search the ROI against all relevant parties in each application. While theoretically all persons who have granted a relevant deed during the prescriptive period should be searched against, a ROI search will be limited to the relevant parties in the current transaction.

The first step in this process is to identify whether the deed or deeds to which the application/applications for registration relate falls in to the category of deeds which require a ROI search - see Search practice in relation to applications for registration. If they do then a decision must be taken on who to search against. This will include:

• The grantor/s of such deed or deeds,
• The grantor/s of any unrecorded mid-couple or link in title on which the title of the grantor of the deed/s to which the application/s for registration relate, such as a docquet transfer by the executor of a previous proprietor
• Any consentor to such deed or deeds, unless they are consenting for the purposes of Matrimonial Homes Act or the Civil Partnership Act, or in a sub-sale situation

A consentor who is a beneficiary entitled to the property under a will, who may instruct the executors to dispone the property, without actually taking title in her or his own name, should be searched against. The property becomes part of the beneficiary’s property and any subsequent inhibition would affect the beneficiary’s power of disposal.

On the other hand, in a sub-sale situation, an inhibition against the consenter would not strike at the transaction. Where B acquires a personal right to property under missives and then, without taking a title, sells to C, such a situation will usually be reflected in a disposition by A with the consent of B in favour of C. In the case of Leeds Permanent Building Society v Aitken Malone & Mackay 1986 SLT 338, it was held that the right of the purchaser under missives is moveable and does not become heritable until a disposition has been delivered. Therefore, if B does not take delivery of a disposition but sells to C, then an inhibition against B with an effective date either before or after the date of the missives concluded between A and B would not strike at the sale to C. (Similarly, if B assigned his rights under the missives to C, any inhibition against B would not strike at that assignation). If in any doubt, registration officers should refer the matter to a senior officer.

No search is required against a non-entitled spouse or registered civil partner consenting for the purposes of the Matrimonial Homes Act or the Civil Partnership Act.

In certain circumstances, an entry in the ROI may restrict a creditor’s right to grant a discharge of a heritable security. Unless the creditor is one of the main banks or building societies, the grantor of a discharge should also be searched against.

4.6 Public bodies &c not to be searched against

The Keeper has adopted a policy of not searching against well-known public bodies, banks, etc. The following list is not exhaustive, but is a guide to parties that need not be searched against:

• Local authorities
• Government departments and agencies (including Scottish Enterprise, Scottish Homes, Highland and Islands Enterprise).
• Bank of Scotland, Clydesdale Bank PLC, Royal Bank of Scotland PLC and other well-known banks
• All well-known building societies

Should a public body be inhibited, then the manager of CAJR should notify the appropriate people.

4.7 Searching the ROI- the period of search

4.7.1 Applications submitted prior to 22 January 2007

The period of search is 5 years back from the latest application that contains a deed that requires the grantor to be searched against.

The period of search is, in all cases, for 5 years back from the latest application.

The registration officer must check that the date to which the search is carried out is correct, and update it if necessary, for example, because of subsequent dealings.

Where a deed is re-engrossed, the ROI search must be updated to correspond with the title sheet which will also be updated (registration officers are reminded they must also check the application record).

Registration officers can import the names of the applicants or in some cases the registered proprietors, where necessary, checking all relevant parties are included, if there is more than one application. The names of other relevant parties are added manually, together with any alternative names.

Where there are attached applications, parties in the earlier ones will be searched against for less than the five-year period. If the search produces disclosures against such parties subsequent to the date of registration of that earlier application, a further search should be done against that party for a period of 5 years back from the date of that application. Should this produce further disclosures, registration officers should consult their referral point.

4.7.2 Applications submitted on and after 22 January 2007

For applications submitted on and after 22 January 2007, application forms 1, 2 and 3, as introduced by the Land Registration (Scotland) Rules 2006, now contain questions pertaining to entries in the ROI. The period for which the registration officer is required to search the ROI will depend upon the answers to the relevant questions, given in the application form.

For cases where the ROI questions have not been answered, but in accordance with the guidance at ROI search practice in relation to applications for registration the registration officer will require to carry out a search, see Applications received on or after 22 January 2007- incomplete answers to ROI questions on application forms.

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 may use that date in fixing the period during which he or she must search the ROI as part of the examination of the application.

For example, if the date of application for registration is dated 23 January 2012, and the date to which the applicant has certified that a search has been carried out in the ROI, is 6 January 2012. Provided that that applicant has not disclosed any adverse entries in the application form, the registration officer should search back to 6 January from the date of registration, rather than back 5 years from the date of registration.

Where there are attached applications, the registration officer must take account of all the dates to which a ROI search has been certified as having been carried out in the application forms. Where the granters of each deed inducing registration are different and in addition, the dates to which a search is certified as having been carried out are also different, the registration officer should search back to the earliest date certified. However, if the respective granters of the deeds who require to be searched are the same (e.g. the same person grants two standard securities) the registration officer may search back to the latest date certified.

Example 1- Applications for registration of a disposition and standard security

The registration officer is dealing with the registration of a disposition by A to B and a standard security granted by B, he or she will be carrying out a search against both A and B. If the dates to which a ROI is certified to have been carried out in the separate application forms are different, the registration officer should search back against both A and B to the earliest date certified.

Example 2- Applications for registration of a first and subsequent standard security

In contrast to Example 1, the standard securities will be granted by the same person and the registration officer will search only the granter. If each application certifies that a ROI has been carried out to a different date, it is acceptable for the registration officer to search back to the most recent of these dates.

4.7.3 Applications received on or after 22 January 2007- incomplete or negative answers to ROI questions on application forms

Where the applicant

(1) indicates that the deed inducing registration is not one which grants, transfers, creates, varies or discharges an interest in land  but the transaction is of a type where, in ROI search practice in relation to applications for registration, the Keeper would 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 should proceed to carry out a full five year search as normal.

4.7.4 Applications received on or after 22 January 2007- adverse entries noted on application form

The registration officer is dealing with an application where the deed inducing registration is of a type where the guidance at ROI search practice in relation to applications for registration requires that the registration officer carry out a ROI search. The applicant's agent has advised on the application form that the ROI search obtained by them or exhibited to them during the transaction has disclosed adverse entries.

The registration officer should carry out a full five year search and confirm that the entries are considered to be adverse in terms of the guidance in the Legal Manual.  This may also necessitate raising a requisition of the applicant's agent for further information (such as evidence of the missives in the case of a disposition).

If there is any discrepancy between the search printout obtained by them and the information provided by the agent, the registration officer should refer the matter to a senior colleague.

4.8 Searching procedure

4.8.1 General

While, as a general principle, the ROI searching system has been set up to reveal common variations of names, the registration officer should bear in mind the basic searching rules and must decide if a name requires to be entered in more than one format to complete an exhaustive search.

Generally punctuation is ignored in the ROI search, i.e. the settler should not include full stops, commas, hyphens or apostrophes (as in ‘P.L.C.’ etc).

An exception to this is apostrophes in names such as:

‘O’Brien’ or ‘M’Wada’, etc, where it is an integral part of the name; or

‘Jones’s Taxis’, ‘MCG’s’, where the omission of the apostrophe would make a different name.

Extraneous words such as ‘Mr’, ‘junior’, ‘of’, ‘as’ ‘The’ etc. are ignored for the purposes of searching.

4.8.2 Special type of grantor

4.8.3 Personal names

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 writ as it is registered and a minute made. A ROI search is likely to reveal entries similar to the following:

Bissett     

Alan 9901234
Allan 9905678
Joseph 9901234
Martina 9914321

In the example above, Alan Bissett appeared in writ/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, registration officers should check all the surnames are entered in the surname field: e.g. ‘Sutton or Jones or Walker’ typed as one line.

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. So if a deed in an application gives a party, who has to be searched against, in the diminutive form, that party should be searched against both forms. The reverse is not the case, however. If the deed gives the full name there is no need to search against possible diminutives. However, in Atlas Appointments Ltd v Tinsley 1997 SCLR 482 (IH), it was held that an inhibition would be valid, notwithstanding a different version of a name, if the person was sufficiently identified. The party searched against was Stephen, but appeared as Steve in the inhibition. From the Keeper’s point of view, the current searching system should pick up common variations of names, but registration officers should exercise care in such cases, and check for address matches.

For names of foreign origin, the whole of the surname, including any prefix, will go in the surname field, e.g.

De La Rue Daniel

Le Mesurier John

Da Costa Antonia

Van der Merwe Hendrik

Registration officers should also be aware that in some ethnic communities, the conventions for the composition of personal names may be different. It will not always be obvious which name may constitute the surname. In order to assist Agency staff, in an article in the Journal of the Law Society of Scotland in 1997 (p291), the Keeper asked agents to underline on the application form all the person’s names except the surname. This should now be less of a problem for registration officers and searchers as the system should be able to search all the components of a name.

4.8.4 Trading names and firm names

If the party to be searched against is narrated in the deed as ‘Allan Bissett, trading as Allan Bissett, Replacement Windows, at 5 Hill Street, Colinsburgh, Fife’, only Allan Bissett as an individual is searched against. The additional information is merely a designation. However, if he is referred to in the deed as Allan Bissett as partner of ‘Allan Bissett’s Windows’ then the individual and the firm are both searched against.

The ‘Firm of Redwatch’ is searched as Redwatch, with ‘Firm of’ being entered in the prefix field. Firms which also include an individual’s name e.g. Firm of John 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.

Mr Minit

Mister Lees

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 M Findlay and E D Lonie’ should be searched as:

Findlay and E D Lonie (Firm) T M

Findlay and E D Lonie T M Firm of (in prefix field)

4.8.5 Company names

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

Grant Brown and Smith Limited

and

Brown and Smith Limited Grant

Full stops, brackets, hyphens, commas, etc should be omitted when entering a search. The software is programmed to link common abbreviations. Accordingly, there is no need to type ‘Ltd’ or ‘plc’ in full.

4.8.6 Nobility

Titles are entered in the forename field. Registration officers should search members of the nobility under all their names/titles. ‘John Stewart, Earl of Glamis and Baron Stewart’ will be searched under all three names/titles, viz:

Stewart, John

Glamis, Earl of

Stewart, Baron

4.8.7 Executors and trustees

Executors and trustees are not searched as individuals. ‘Executors of’ (‘Trustees of’, or ‘Mar Con Trustees of’) will be entered in the prefix field.

4.9 Changes to Inhibition Regime

The Bankruptcy & Diligence etc (Scotland) Act 2007 (Commencement No 4, Savings and Transitionals) Order 2009 introduced a number of important changes to submissions to the Register of Inhibitions with effect from 22 April 2009 (‘the commencement date’).  These changes result from the commencement of Part 5 (Inhibition) of the Bankruptcy and Diligence etc. (Scotland) Act 2007 (‘the 2007 Act’).

Both the procedure for the inhibitor and the effect of inhibition will be different, depending on whether the inhibition was executed (a) before 22 April 2009 or (b) on or after 22 April 2009 an inhibition is ‘executed’ when it is served on the debtor by an officer of the court.  Registration staff should note that the relevant date is the date of ‘execution’ rather than the date of registration in the ROI.

(However, where an inhibition on the dependence of a court action was executed prior to 22 April 2009 but subsequently converts into an inhibition in execution on or after 22 April 2009, it is the rules applying to inhibitions on or after 22 April 2009 that will apply to the inhibition in execution – see e.g. conversion of limited inhib. on dependence to unlimited inhib in execution)

The following paragraphs set out the procedure and effect of inhibitions, depending on whether they are executed prior to or on or after 22 April 2009.  Registration officers should be aware that these paragraphs relate only to inhibitions in execution; different rules may apply to other ROI entries which have inhibitory effect (e.g. Notice of Determination of Sequestration).

4.9.1 Inhibitions executed prior to 22 April 2009

4.9.1.1 Inhibitions – effective date

The date an inhibition takes effect is of key importance. An inhibition can be:

• • Letters of Inhibition – which proceed on a document of debt (i.e. any self-evidencing document whereby the debtor has bound himself to pay) which is now due and payable; or
  • Summons and Inhibition – where one party takes another party to court, to seek a judgment ordering the second party to pay a sum of money to the first party. To try and prevent the second party from disposing of his assets before judgment is given, the first party obtains authority from the court to inhibit the second party on the dependence of the court action. This authority is included in the ‘Summons and Inhibition’.

Both letters of inhibition and summons and inhibitions take effect on the day that they are registered in the ROI. However, as both involve fairly lengthy procedures, there is a danger that the debtor might attempt to defeat the inhibition by disposing of his property before the inhibition is registered. To prevent this, the law allows a creditor to register a Notice of Letters of Inhibition or a Notice of Summons and Inhibition.

Provided the letters or summons is registered within 21 days of the notice, the effective date then of the inhibition is the date of registration of the notice. (For example, a notice is registered in the ROI on 12 March. The summons is registered on 20 March, well within the 21-day period. The inhibition is therefore effective as from 12 March.) If a notice is not followed up within 21 days by letters of inhibition or a summons and inhibition, the notice falls and can be ignored. If there is no notice, or if the letters or summons is registered more than 21 days after the notice, then the effective date will be the date of registration of the letters or summons.

4.9.2 Inhibitions executed on or after 22 April 2009

4.9.2.1 Abolition of letters of inhibition

Prior to the commencement date, a creditor wishing to inhibit in execution of a sheriff court decree had to apply by letters of inhibition to the Court of Session. Section 146(6) of the 2007 Act abolishes this procedure.

4.9.2.2 Inhibition in execution

From 22 April 2009 a person can be inhibited in the following ways:-

(a) where the creditor has obtained a decree in the Sheriff Court or in the Court of Session, either for payment of a debt or for specific implement of an obligation. The decree itself authorises inhibition obviating the need for a separate petition for letters of inhibition;

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

(c) where a liability order is made in terms of section 38 of the Child Support Act 1991 this shall be warrant for inhibition;

(d) where a person has 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 terms of section 148(1) of the 2007 Act, letters of inhibition will no longer be registered in the ROI; instead, what will be registered is (a) the Schedule of Inhibition and (b) the Certificate of Execution of Inhibition (in forms prescribed by the Diligence (Scotland) Regulations 2009). These documents will be registered at the same time, and will result in a single entry in the ROI Minute Book, in the following style:

Schedule of Inhibition [inhibitor] against [inhibited, designed] served [date] per XY, Agent etc

4.9.2.3 Effective date of Inhibition

In terms of section 149 of the 2007 Act, an inhibition has effect from the beginning of the day on which it is registered.

However, when all of the following requirements are met:

• • a separate Notice of Inhibition is registered in the ROI (in the form prescribed);
  • the Schedule of Inhibition is served on the debtor after that notice is registered; and
  • the Schedule of Inhibition and Certificate of Execution are registered before 21 days have expired from the date of registration of the Notice

inhibition then takes effect from the date of service of the Schedule on the debtor, which date will be entered on the Certificate of Execution and in the ROI entry.

This may lead to complications. For example, there may be two debtors cited and the Schedule of Inhibition might be served on party A on the Monday and party B on the Tuesday. In consequence the effective date of the inhibition may not be the same for both parties. Such instances should be referred to a senior officer.

4.9.2.4 Form of Notice of Inhibition

The form of the Notice of Inhibition as prescribed by section 155(4) of the Titles to Land Consolidation (Scotland) Act 1868 (added by section 149 of the 2007 Act) will be entered on the ROI as follows:

Notice of Inhibition by [inhibitor, designed] against [inhibited, designed]. Dated

4.9.2.5 Inhibition against a specific property

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.

The entry in the ROI Minute Book will indicate that the inhibition is limited to a specific property, and will follow the following style:

Schedule of Inhibition [inhibitor] against [inhibited, designed] in relation to [description of property being inhibited]  per

4.9.2.6 Conversion of inhibition limited to a specific property to a general inhibition

Inhibition on the dependence of an action can be converted into an inhibition in execution. Section 152(2) of the said 2007 Act permits a creditor who 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, and which inhibition had been limited by the Court to specified property, to turn that inhibition into a general inhibition (i.e. no longer specific to that property).

The Bankruptcy and Diligence etc. (Scotland) Act 2007 (Inhibition) Order 2009 provides for an extract of the decree or a copy of the interlocutor certified by the clerk of court to be registered in the ROI along with a Notice of Decree immediately after the decree/interlocutor is issued. This is in order to publicise the change in status of the inhibition, which will come into effect on the beginning of the date of registration of the Notice of Decree in the ROI.  The entry in the ROI Minute Book will be in the following style:

[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 a notice in these terms is disclosed on a ROI search following an inhibition limited to an individual property, the inhibition will thereafter affect all property in which the inhibited party has an interest. Registration officers should refer the matter if they are in any doubt as to whether such an inhibition affects the subjects of a particular application in the Land Register.

4.9.3 Proceeds of Crime Legislation

In terms of the Proceeds of Crime Act 2002 there are a number of recourses available to enable the recovery of property the purchase of which was funded by the proceeds of crime.  One is, having obtained a restraint order, to apply to the court for a warrant for inhibition against someone specified in such an order; the CCI containing the warrant is then registered in the ROI.  Another option is to obtain a civil recovery order, and register this in the ROI.

Both have inhibitory effect against an individual's property; the warrant for inhibition resulting from a restraint order has inhibitory effect from the date of registration in the ROI, whereas the civil recovery order has an inhibitory effect from the date it is made.  If either entry is encountered in a search of the ROI it should be dealt with by registration officers in the same way as any other inhibition, taking account of the foregoing comment on the effective date.  However the recovery order will also vest property in the trustee who will act in the civil recovery of the assets.  It is therefore open to the trustee for civil recovery to complete title to any heritage using the recovery order as a link in title.  The inhibitory effect of the order and its registration in the ROI provides a safeguard against transactions by the individual in question prior to the trustee completing title.

When the trustee completes title the Proprietorship Section of the Title Sheet should be updated to remove the existing proprietor and register the trustee as the new proprietor.  The recovery order may not vest all of the individual's property in the Trustee; accordingly the order must be submitted and examined to ensure that the subjects are included in the provisions of the order.

4.10 Breach of Inhibition executed before 22 April 2009

4.10.1.1 Inhibition affecting the Grantor of a disposition

Where the party inhibited is the grantor of a disposition, in most cases, the critical date in determining whether the disposition is affected by the inhibition is the date when the missives were concluded. Missives are generally held to be concluded when the actual final letter of acceptance is delivered to the solicitors to whom it is addressed (sending a faxed copy is not sufficient). 

If missives have been concluded prior to the date of the inhibition, the inhibition does not bite at the property. The reason for this is that the debtor has already contracted to sell the property and does not therefore still have a power of voluntary disposal. The inhibition does not require to be disclosed (and should not be disclosed) in the title sheet, as it is not adverse to the interest of the grantee/new registered proprietor or any other party, such as the heritable creditor of the new registered proprietor.

If for some reason the missives were not implemented, the inhibition would bite and a sale to a third party would be struck at.

If the inhibition against the grantor/seller is registered on the same date as that on which missives are completed, or missives were concluded after the inhibition was registered, the inhibition will strike at that transaction and will require to be shown in the B Section of the title sheet with an appropriate exclusion of indemnity, for which see Style of entry and exclusion of indemnity notes in B Section- grantor of disposition inhibited.

In the vast majority of applications, a disposition will implement a contract formed by the exchange of missives. However, it is possible that the conveyance of the property might result from another form of contract, such as a separation agreement between a husband and wife or an unmarried couple. Since an inhibition can strike only at the voluntary acts or deeds of the inhibited person, where property has been conveyed by virtue of an obligation in such an agreement entered into prior to the date of the inhibition, the disposition is not struck at by the inhibition.

Where the inhibition strikes at the disposition and the grantee in the disposition (the new registered proprietor) has granted a standard security, an exclusion of indemnity will not only be necessary in the B Section, but one will also be required in the C Section since both the deeds in favour of the grantee (purchaser) in the disposition and the grantee in the standard security (the heritable creditor) are voidable at the instance of the inhibiting creditor of the grantor of the disposition.

4.10.1.2 Style of entry and exclusion of indemnity notes in B section- grantor of disposition inhibited

Note 2: Letters of Inhibition, First National Bank PLC – against said Alan Wilson [or against Alan Wilson (desig)], per John Smith, Registers of Scotland, recorded Register of Inhibitions and Adjudications 19 August 1996, Notice whereof was recorded 7 August 1996.

Note 3: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss arising from the reduction of any dealing following the above Inhibition.

The details for the note in the B section are obtained from the ROI minute.

Both the adverse entry note and exclusion note are entered after the matrimonial homes note. The inhibition will relate to a previous proprietor, and the designation of the inhibitee will need to be inserted. If the inhibition followed upon a notice of inhibition which was registered within 21 days prior to the recording of the inhibition, then the notice is shown also, as the date of the notice is the date on which the Inhibition became effective (see above example, Note 2).

If the new registered proprietor has granted a standard security, then not only does the inhibiting creditor have the power to reduce the disposition, they can also reduce the standard security. This means the inhibition is adverse both to the interest of the new proprietor and to that of the heritable creditor's interest. An appropriate exclusion of indemnity must also be included in the C Section.

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss resulting from a reduction of the above Standard Security following the Letters of Inhibition, recorded 19 August 2001, Notice whereof was recorded 7 August 2001, referred to in the Proprietorship Section.

4.10.2 Inhibitions against the Grantor of a standard security

For the avoidance of doubt, it is not necessary to conduct a ROI search against the purchaser of a property, unless the registration officer is also processing an application for registration of another deed granted by the purchaser. Typically, this will be a standard security.

Where the registration officer is dealing both with registration of a disposition, and a standard security granted by the purchaser, if a search against the purchaser as grantor of the standard security discloses an inhibition affecting them, then there are two critical dates to bear in mind:

• • the date of settlement of the transaction, i.e., the date of delivery of the conveyance in favour of the purchaser, and
  • the date of settlement of the loan transaction

The purchaser’s right under missives is the right to a conveyance of the subjects delivered to him in exchange for the purchase price and until that deed is delivered the purchaser has no title to the subjects. An inhibition does not affect property acquired after the date of registration of the inhibition, or any future dealings with such property, for example the grant of a standard security. 

Where the registration officer is dealing with the registration of a standard security alone, then the critical date will be the date of settlement of the loan transaction. For the avoidance of doubt, any standard securities that are already registered at the time an inhibition is recorded are not affected by that inhibition.

4.10.3 Inhibition registered before date of registration of both disposition and standard security

4.10.3.1 Disposition delivered after date of registration of the inhibition

If the date of delivery of the disposition is after the date of registration of the inhibition in the ROI, the property acquired by the purchaser is acquirenda.A standard security granted by the purchaser (or any other future dealing by the purchaser) over that property is consequently unaffected by the inhibition. The registration officer need not consider the matter further and the inhibition does not require to be disclosed in the title sheet.

4.10.3.2 Disposition delivered before date of registration of the inhibition

If the date of delivery of the disposition is clearly before the date of registration of the inhibition then the purchaser had power of disposal of the property at the relevant time. Although the inhibition is not adverse to the proprietor's interest, the standard security will be rendered voidable by the inhibition and an appropriate note and an exclusion of indemnity are required. The details of the inhibition are entered in the B Section and the exclusion is entered in the C Section. No exclusion is required in the B Section as the inhibition does not affect the proprietor's title.

If an inhibition is registered against a purchaser on the same date as that on which his or her purchase is completed, the inhibition will strike at the validity of the standard security and will require to be shown in the title sheet with an appropriate exclusion of indemnity.

4.10.4 Inhibition registered after date of registration of disposition but before date of registration of the standard security

In this case, the registration officer may be dealing either with

• • an application for registration of both a disposition and a standard security or
  • of a standard security alone.

If the inhibited person is already obligated to grant the security when the inhibition is registered in the ROI, then the inhibition does not affect the security and no entry is required in the title sheet for the inhibition. In cases of doubt, the date of settlement of the loan transaction will be taken to be the date of encashment of the cheque for the advance, since there can be no obligation to grant a standard security until the advance has been made.

It is unsafe to rely upon the date of execution of the security, since that is frequently a matter of convenience between the purchaser and his or her solicitor and need have no relevance to the actual date of settlement of the loan transaction. Normally, settlement of the purchase and loan transactions will occur at or about the same time, but it should be remembered that it is not uncommon for the loan to be delayed although the purchase is settled by use of bridging finance. The issue will arise more frequently in re-mortgages.

In cases where it is uncertain whether or not a standard security is struck at by an inhibition, registration officers will seek confirmation from agents of the date of encashment of the loan cheque. If that confirmation shows that the security is affected by that inhibition, then an entry must be made on the B Section of the title sheet for the details of the inhibition. No note of exclusion is required in the B Section as the inhibition does not affect the title of the proprietor. Instead, a note excluding indemnity must be added after the entry for the security in the Charges Section.

4.10.4.1 Style of adverse entry note- inhibition against grantor of standard security

An entry is required in the B Section for the details of the inhibition itself, but no exclusion note is required in that section. An exclusion of indemnity in the undernoted terms should be entered in the C Section since the inhibition is adverse to the heritable creditor's interest but does not affect the validity of the new proprietor's title.

• • Note Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss resulting from a reduction of the above Standard Security following the Letters of Inhibition, recorded 19 August 2001, Notice whereof was recorded 7 August 2001, referred to in the Proprietorship Section.

4.10.4.2 Charge certificate

An appropriate exclusion of indemnity must also be shown on the certification page of the charge certificate in the following terms:

• • Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss resulting from a reduction of the abovementioned heritable security following the Letters of Inhibition, First National Bank PLC, - against said Alan Wilson [or against Alan Wilson (desig)], per John Smith, Registers of Scotland, recorded Register of Inhibitions and Adjudications 19 August 2001, Notice whereof was recorded 7 August 2001.

4.11 Breach of Inhibition executed after 22 April 2009

Section 160 of the 2007 Act states 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. There is some uncertainty around the effect of this provision on the future voluntary rule of the common law described above. A recent Court of Session (Outer House) case (Playfair Investments Limited v. Anielka Karus or McElvogue and others [2012] CSOH 148) discussed some of the issues, including the practical difficulty with determining when an act was voluntary or not in terms of the common law rule.   Registration officers should note that the principle is the same as that noted above for pre 22 April 2009 inhibitions. The onus is on the submitting solicitor to decide what, if any, effect s 160 has on the common law rule and what, if any, the implications are for their application.

Accordingly, If there is an apparent breach of an inhibition the submitting agent should be informed and advised that the inhibition and relevant exclusion of indemnity will be entered on the title sheet unless they agent advises there is no breach. Settlers should use (L23 or L23A)

Again, if the agent can provide a clear statement that their deed does not breach the inhibition then the inhibition should not be disclosed on the title sheet and there is no requirement for an exclusion of indemnity.   

If the presenting agent is unable or unwilling to provide such clear statement the inhibition will require to be shown in the title sheet with an appropriate exclusion of indemnity. How this is reflected will depend on the deed type being registered. Guidance is given here Style of entry and exclusion of indemnity notes in B Section- grantor of disposition inhibited.

Styles

If the breach is due to disposal of the property the inhibition and exclusion of indemnity will be entered on the title sheet in the following terms:-

Schedule of Inhibition, Scottish Bank plc,   against John McSmith, 3 Minard Road, Glasgow, served 15 Mar 2009, per A N Other, Edinburgh, recorded Register of Inhibitions and Adjudications [date]  [Notice whereof was recorded [date]]

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss arising from the reduction of any dealing following the above Inhibition.

If the inhibited debtor grants a security in breach of the inhibition then, as in 4.10.4.1 above an entry will be required in the B section for the inhibition itself and an exclusion of indemnity in the following terms should be entered in the C Section

Note Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss resulting from a reduction of the above Standard Security following the Schedule of Inhibition, recorded xx xx xxxx, [Notice whereof was recorded xx xx xxxx], referred to in the Proprietorship Section.

The appropriate exclusion note should also be entered in the Charge Certificate

Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss resulting from a reduction of the abovementioned heritable security following the Schedule of Inhibition, First National Bank PLC, - against said Alan Wilson [or against Alan Wilson (desig)], per John Smith, Registers of Scotland, recorded Register of Inhibitions and Adjudications xx xx xxxx, [Notice whereof was recorded xx xx xxxx]

A deed delivered in breach of an inhibition may be reduced at the instance of the inhibitor.  The inhibitor’s right to reduce the deed remains in existence for 20 years from the date that the inhibition is breached.

4.12 Extinction of Inhibitions

4.12.1 Inhibitions executed prior to 22 April 2009

4.12.1.1 Discharge

If the debt is repaid, the creditor will grant a discharge which is then registered in the ROI. An inhibition may also be extinguished by voluntary discharge, by recall by the court, by the death of the debtor and by 5 years’ prescription (quinquennial prescription).

In the case of a summons and inhibition, if the court does not grant the decree necessary to constitute the debt, it should grant a decree of dismissal of the action or absolvitor, and an extract of the decree will be registered in the ROI to clear the record. In certain cases the debtor can apply to the court to seek to have the inhibition lifted. If the court upholds this, a certified copy interlocutor (CCI) from the court recalling the inhibition will be registered in the ROI to clear the record.

4.12.1.2 Restriction of an Inhibition

It is possible to have part of the debtor’s property released from the inhibition. This may be by general release, with specified exceptions, or by specific release.

4.12.1.3 Termination by death or prescription

On the death of the debtor, the inhibition lapses (i.e. it does not strike at transactions with the debtor’s property which are entered into by his executor), but if the deceased had already entered into a transaction which breached the inhibition, then the inhibitor has the right to reduce that transaction for up to 20 years after the transaction took place.

An inhibition lapses five years after the date of its registration in the ROI. Any transactions entered into by the debtor after that date are not struck at by the inhibition. However, if the debtor has entered into a transaction during the five-year period which breached the inhibition, the inhibitor has the right to reduce that transaction for up to 20 years after the transaction took place.

In practice, however, where the debtor has transferred title which is struck at by an inhibition, the transferee and his or her successors will normally have the benefit of the ten-year positive prescription – i.e. the inhibitor’s right to reduce will be ineffective if it is not exercised within ten years of the transfer of title. Therefore such an inhibition and relevant exclusion of indemnity cannot be excluded from a Title Sheet without appropriate evidence that no action has been raised within that 10 year period to reduce an affected deed.

4.12.2 Inhibitions executed on or after 22 April 2009

Part 5 of the 2007 Act sets out a number of ways in which inhibition may be extinguished.

4.12.2.1 Expiry of five year period

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 following the date that the inhibition is breached.)

4.12.2.2 Repayment of debt

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.

4.12.2.3 Performance ad factum praestandum

Section 158 of the 2007 Act confirms that where a decree for the performance of a particular act (a decree ad factum praestandum) is complied with, any inhibition executed to enforce that decree ceases to have effect. Confirmation that this is the case might include a court declarator to that effect or written confirmation from the inhibitor that the inhibition has lapsed. Any such case should be referred to a senior caseworker.

4.12.2.4 Property acquired by third party acting in good faith

The provisions of Section 159 of the 2007 Act provide that an inhibition ceases to affect the property if the conveyance/granting of the right is for value and made to a person acquiring the property or right who acts in good faith. In this case, the purchaser acquires the property or right free of the encumbrance of the inhibition. 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.

In practical terms, and in relation to the Keeper’s powers under sections 6(1)(c) and 12(2) of the Land Registration (Scotland) Act 1979, the Keeper would be unlikely to omit a ROI entry or exclusion of indemnity on the basis of an assertion that the acquirer was protected by section 159, unless evidence was available that the creditor acknowledged that the inhibition did not strike at the transaction in question.

Thus, where there is an apparent breach of an inhibition, the Keeper will contact the agent to confirm that he intends to disclose the inhibition and exclude indemnity. If the agent asserts that section 159 applies, the Keeper would expect to see a discharge or recall of the inhibition, or at the very least confirmation from the inhibitor that they consider the inhibition to be no longer effective. In any case where no discharge or recall has been registered, the application should be referred to a senior caseworker.

4.12.2.5 Discharge

Once the Inhibition is extinguished the creditor may grant a discharge of inhibition in order to clear the record. This will be registered in the ROI using the following style of Minute:

Discharge by [creditor] of inhibition [registration date] against [inhibited, designed] per XY, Agent

4.12.2.6 Recall of an inhibition

Where the debt and other relevant sums have been repaid (see paragraph 4.12.5), the debtor is entitled to a discharge from the inhibitor.  If the inhibitor fails to grant a discharge, the debtor may petition the court for recall of the inhibition.  A court order recalling an inhibition may be registered in the ROI, and will be reflected in the ROI Minute Book by entry in the following style:

Certified Copy Interlocutor [dated] recalling Inhibition [registration date] in causa [inhibitor] - against [inhibited, designed] per XY, Agent

4.13 Re-inhibition

Although an inhibition lasts for only 5 years from the date it comes into force the creditor can re-inhibit at the end of that period and on subsequent occasions for a further five year period. The inhibitor may wish to re-inhibit, either because the inhibition has prescribed or is about to prescribe, or so as to inhibit property acquired by the debtor after the date of the original inhibition. 

To all intents and purposes, re-inhibition constitutes an inhibition of new and the rules outlined in paragraph 4.9.2.3 will apply (i.e. the effective date of the inhibition will be either the beginning of the date of registration or the date of service of the Schedule on the debtor). Furthermore, the inhibition will strike only at property over which the debtor has a power of disposal at the time the new inhibition becomes effective, which may be different from property struck at by the original inhibition.

In practical terms, re-inhibition may in future be comparatively rare as section 165 of the 2007 Act provides that the expenses of only one further inhibition after the original inhibition will be recoverable from the debtor.

4.14 Checking the ROI search

The search printout will list those names that are the same or similar to the names being searched, together with the minute numbers of the entries in which they appear. (There are occasions when there are no entries shown on the printout which will simply state ‘No deed’.) To see the minute in full, a further ‘search document’ (S.DOC) is required. The registration officer should examine the entries to see if any of the names listed in the search printout can be eliminated.

• All obvious non-matches can be eliminated.
• Any entry which contains additional or different middle names (or initials), e.g. where PSA (party searched against) is ‘John White’, then entries for ‘J F White’, ‘John J White’ and ‘John Rae White’ may not relate to the same John White. However, sometimes the inhibitor will not know the full name of the debtor, so before the registration officer can eliminate such entries the addresses should be checked.
• If the exact name matches relate to the purchaser, then the registration officer should instruct a disclosure of the minutes (S.DOC).
• If the PSA is the seller and the seller’s address is the same as the registration subjects, all name matches with a different address in entries between the date of the seller’s acquisition of the subjects and the date of the current application can be eliminated. An S.DOC may still have to be instructed in order to check the date of any minute in the same year as the seller’s acquisition of the property.

Where a Report has been issued by the Agency, any entries against persons whose present whereabouts are unknown should have been disclosed. The agent should also have been informed that, at the time of registration, the Keeper would accept a certification from both agents to the transaction that they have satisfied themselves from their enquiries that the party disclosed in the report is not a party to the transaction. Registration officers should, therefore, check the documents submitted in support of the application before proceeding. If the certification has been submitted, the entry to which it relates will not be disclosed in the title sheet.

If the steps in the previous paragraph have not eliminated all the name matches, the registration officer will need to order an S.DOC disclosing the outstanding entries. If any party to the transaction is a public body listed in the paragraph Public bodies &c not to be searched against, the S.DOC must include the name of the public body in the list of parties to be searched against if it is going to be sent to an agent. The S.DOC provides a full print of the ROI minute for each entry requested. The registration officer must then decide whether the minutes constitute an adverse entry or not. This will depend on two factors. Firstly, whether the entry relates to an inhibition or not and, secondly, whether the person searched is a seller or purchaser.

4.15 Eliminating disclosures

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.  That in turn is dependent on whether the inhibition was executed (a) prior to 22 April 2009 or (b) on or after 22 April 2009.  Different rules may apply to other ROI entries which have inhibitory effect (e.g. Notice of Determination of Sequestration).

An inhibition may be eliminated only if it is clear that it cannot strike at the transaction in question.

4.16 Recording the ROI search result

Where the ROI is clear there is no requirement to add a copy of the printout to the archive, instead ‘ROI clear’ should be added to the application notes. Conversely where the search is not clear, officers should archive the print and any correspondence, and also add details of what action was taken, and why, to the title workdesk notes and instructions.

4.17 Adverse entries

Once an adverse entry in the ROI has been identified (whether disclosed to the Keeper in the application form and ascertained to be adverse or noted as part of the ROI search carried out by the registration officer), it will require to be entered in the title sheet. This will also necessitate an exclusion of indemnity because if there is no exclusion, then the provisions of section 9(3)(b) of the 1979 Act would prevent the court ordering rectification of the Register in implement of a decree of reduction sought by the creditor in the ROI entry.

The registration officer should check if an Agency report was issued and obtain a copy to check that the entry was disclosed to the agent. If an Agency report failed to disclose the inhibition it may result in a claim against the Keeper. The case should then be referred through a senior team leader to the Agency’s Indemnity Officer, in the Legal Services.

All potential ROI exclusions must be referred to the registration officer’s team leader. If the team leader confirms that the adverse entry should be entered on the title sheet, then where the agent did not disclose the entry in the application form, they must firstly be informed of the entry, and however the adverse entry came to light, that an exclusion of indemnity will be shown in the title sheet. The officer will send an L23 to the agent, together with a copy of the adverse entry/entries. The agent should be informed that, unless written evidence confirming that these entries do not relate to the application is submitted, a note detailing the inhibition and the exclusion note will be inserted in the title sheet.

One of the following forms of evidence may satisfy the Keeper:

• Documents demonstrating that the effective date of the transaction pre-dates the effective date of the inhibition (see paras 4.9.1.1 and 4.9.2.3).  Such evidence should be referred to a senior caseworker.
• Certification from the agent stating that the person named in the ROI entry is not the same person as in the application.

The only occasion on which it will be unnecessary for the registration officer to examine the documentation is when Pre-Registration Enquiries Section have already examined it and have stated in correspondence that there would be no exclusion of indemnity. Often, however, in the enquiry to Pre-Registration Section the agent will have narrated the circumstances without actually submitting the supporting evidence. Any response given by Pre-Registration Enquiries Section, therefore, will have been conditional on the facts being verified at settle stage. In such circumstances the registration officer will still be required to requisition and examine the relevant documentation.

Unless the agent provides satisfactory evidence that the entry is not relevant, the entry will be shown in the B section together with an indemnity exclusion note.

4.18 Long negative prescription

Section 161 of the 2007 Act clarifies that the period of long negative prescription (set out in section 8(1) of the Prescription and Limitation (Scotland) Act 1973) applies to inhibition, i.e. an inhibitor can have a deed granted in breach of an inhibition reduced for up to twenty years following the date of delivery of that deed. In light of this, the Keeper will not automatically remove an exclusion of indemnity from the title sheet on the grounds that the five year inhibitory effect has expired but would expect confirmation that the inhibitor was not intending to seek reduction of such a deed granted in breach of an inhibition.

4.19 Reduction of deed by inhibitor

In any situation where the Keeper is presented with evidence of reduction by an inhibitor of a deed which gave rise to an application for registration (or forms part of the prescriptive progress of titles for such an application), the case should be referred to a senior caseworker. This area of law is both complex and potentially contentious, and the senior caseworker should therefore consult Legal Services if in any doubt as to what action is required.

4.19.1 Reduction of a deed granted in breach of inhibition

Section 162 of the 2007 Act adds section 159A of the Titles to Land Consolidation (Scotland) Act 1868. This states that where an inhibiting creditor raises an action of reduction of a deed or conveyance granted in breach of an inhibition they must register a notice of summons in an action of reduction in the ROI and a certified copy thereof in the Land Register or Register of Sasines as appropriate. Registration should be effected as soon as reasonably practicable after the summons is signeted, and if possible registration in the ROI and the Land/Sasine Register should take place on the same day. The summons indicates that the property has been rendered litigious and will be minuted in the ROI as follows

NOTICE of signeted summons in an action of reduction of conveyance or deed in breach of an Inhibition —A.B. designed [pursuer] against C.D. designed [defender] Signeted dd mmm yyyy. Summons in relation to [description of property (Sasines)/title number (land register)]

In practice, the Keeper’s expectation is that the Notice and certified copy thereof should be submitted for contemporaneous registration in both the ROI and the relevant property register.  In all such cases, Land Register staff should ensure that the submitting agent’s intentions are understood.  Where the Notice is submitted for contemporaneous registration in the Land Register and the ROI, confirmation of its acceptability will be required by the ROI staff on the date of receipt, in time to complete registration of that day’s ROI intake. 

The information in the Notice will be entered as a note in the B Section of the title sheet as follows:

Notice of Summons of Reduction registered dd mmm yyyy of Disposition by CD to EF registered dd mmm yyyy [on which the entitlement of the proprietor of the subjects in this Title was founded]

An inhibiting creditor who fails to obtain a decree of reduction will discharge the notice.

As with a Notice of Summons, the discharge will be registered in the ROI and a certified copy thereof will be registered in the relevant property register. This is in order that the land no longer appears as litigious.  Again, the Keeper’s expectation is that registration in the two registers will be contemporaneous.

The entry in the ROI Minute Book will be in the following style:

DISCHARGE of Notice of signeted summons of reduction of a conveyance or deed of or relating to lands granted in breach of Inhibition – A.B. designed [pursuer] against C.D. designed [defender] Signeted dd mmm yyyy. Summons in relation to [description of property (Sasines)/title number (land register)]

On registration thereof in the Land Register the settler will remove the Note in the B section regarding the Summons of Reduction from the title sheet.

4.19.2 Reduction of a lease granted in breach of inhibition

In terms of Section 163 of the 2007 Act the above procedure of reduction is also applicable to leasehold interests. Where an inhibited debtor grants a lease of land affected by inhibition, such a Lease is reducible if it has at least five years to run as at the date on which the action for reduction is raised. A lease which is not capable of lasting 5 years after that date will be reducible only if the Court of Session is satisfied that it would be fair and reasonable in all circumstances to do so.

4.20 Inhibitions and company liquidations

Please see chapter on Insolvency - personal and corporate.

4.21 Notice of litigiosity

The Law Reform (Miscellaneous Provisions) (Scotland) Act 1985, which came into force on 30 December 1985, introduced a document called a notice of litigiosity which may be recorded in the Register of Inhibitions and Adjudications. Section 8(7) provides that it is competent to register in the ROI a notice of an application (to the Court of Session or the Sheriff Court) for the rectification of a deed relating to land. The land to which the application relates is rendered litigious (which means that a deed granted by the debtor while the action was depending would be reducible) from the date of registration. Litigiosity expires after 5 years.

The 1985 Act amended the previous form of notices of litigiosity (governed by section 159 of the Titles to Land Consolidation (Scotland) Act 1868 and Schedule RR thereof) to allow for the insertion in the statutory notice of a description of the lands to which the notice relates. For the notice to be effective, the subjects must be identified. The registration officer would therefore expect to see a conveyancing description or, if the subjects are registered, the title number.

Registration Officers should, however, bear in mind that the term ‘notice of litigiosity’ is also used in other contexts, such as that of a notice of litigiosity on the dependence of an action of adjudication. The latter (also called a ‘notice of summons of adjudication’) effectively inhibits the debtor from dealing with a specified property in respect of which court proceedings have been instigated.

Registration Officers should also bear in mind that, on and after 22 April 2009, the procedure under Schedule RR no longer applies to actions for reduction of a deed in breach of an inhibition. Instead, the procedure in Reduction of a deed granted in breach of an inhibition will apply.

4.22 Adjudication in execution

Although uncommon in modern times, adjudication is the next step for an inhibitor to take to obtain a real right in the heritable property of the debtor, although it is a separate form of diligence and it is possible to adjudge without inhibiting. Whereas inhibition is a quick process and has a blanket effect, eliminating the need to identify the property held by the debtor, adjudication is a lengthy process and the subjects must be specified. The title does not pass to the creditor but the creditor is in a similar position to the holder of a security, and will rank in the usual manner. Although in theory the owner can be removed and the property rented out, it cannot be sold. This remains the position for a period of ten years known as ‘the legal’. At the expiry of the legal, in order to obtain a real right as proprietor, the creditor has to obtain and register a decree of expiry.

There is considerable doubt as to whether a decree of adjudication in execution would induce a first registration. Such an application for registration should be referred to Legal Services for a decision on its acceptability. It would, however, be registrable as a dealing against a registered title. The effects of adjudication in execution and adjudication in implement are quite different and this must be reflected in the title sheet (for the latter, see Adjudication in implement below).

A decree of adjudication (in execution) does not by itself give the adjudger an absolute title to the subjects as the debtor can still purge the debt at any time during ‘the legal’ (a period of 10 years), thereby nullifying the effect of the decree. This situation is given effect to in the B section by leaving the existing entry relating to the registered proprietor (the debtor) as it stands, and making a further entry giving full particulars of the adjudger as registered proprietor or as a pro indiviso or joint proprietor, if only one of the registered proprietors is the debtor in the decree. However, there will be an exclusion of indemnity in respect that the adjudger’s title is a decree of adjudication subject to the legal. An entry is also made in the C section in respect of the security element of the decree, to establish its ranking in relation to other securities.

If, on the expiry of the legal, the adjudger obtains and registers a decree of declarator of expiry of the legal, the entry relating to the former registered proprietor will be removed from the title sheet and the exclusion of indemnity will be removed from the adjudger’s entry. Likewise the C section entry can be removed. If, however, the adjudger chooses not to obtain such a decree, both entries will remain in the B section untouched.

If no declarator of expiry of the legal is registered, since the adjudger’s title is subject to an exclusion of indemnity, prescription will operate in favour of the adjudger from the date of expiry of the legal if prescriptive possession can be proved from that date. The long negative prescription can, of course, operate in favour of the proprietor if the adjudger neither registers a decree of declarator of expiry of the legal nor completes the adjudger’s right by prescriptive possession. The long negative prescription commences on the date of expiry of the legal.

4.22.1 Style for exclusion note in B section

Note: Indemnity is excluded in terms of section 12 (2) of the Land Registration (Scotland) Act 1979 in respect that the entitlement of the said A is founded on an Extract Decree of Adjudication registered on ……………..

4.22.2 Style for C section entry

Extract Decree of Declarator and Adjudication in Action at instance of A (desig) (Pursuer) against the said B (Defender) – Finding and Declaring ……….and Adjudging the subjects in this Title to the Pursuer. Dated………and extracted ……..

Notwithstanding the expiry of the legal, an adjudication in execution will still subsist and remain in the title sheet until a decree of expiry is registered or prescription has run. Prescription does not, however, begin to run until the legal has expired.

The general rule is that adjudications rank chronologically like any other securities (the exception to this is provided for in the Diligence Act 1661 as regards the ranking of more than one adjudication, in that all adjudications within a year and a day rank pari passu). The adjudger will, subject to the ranking of other creditors, be paid any surplus if a prior standard security holder sells the property.

4.22.3 Adjudication in implement

This type of adjudication is not based on the failure to repay a debt. If a seller fails to grant a disposition (or other deed), the purchaser can apply to the court to order the seller to sign the deed. If the seller refuses, the court may grant warrant to the clerk to execute the deed instead of the seller, or alternatively grant a decree of adjudication in implement. This type of situation may arise in a divorce case where one party refuses to sign the disposition when the sale of the house has been completed.

The adjudication operates as a conveyance, and the extract decree can be recorded in the Sasine Register or registered in the Land Register, and may induce first registration. Thus, this event is treated in the same way as a normal transfer of the subjects. If the adjudication in implement affects a registered title, then the existing proprietor will be removed from the proprietorship section. The adjudger’s details will then be entered in the title sheet as the person now entitled to the interest and a land certificate will be issued to the adjudger, or a prior heritable creditor if that is who submitted the application for registration of the effect of the decree of adjudication.

This type of adjudication is not subject to ‘the legal’ (a period of 10 years).