39.3 Registrability of liferents

Regarding the classifications of liferents outlined in the immediately preceding paragraph, registration officers should note that legal and improper liferents are not registrable. A liferent is registrable only if

1. it is a proper, conventional liferent (i.e. created by specific grant or reservation in a conveyance of the subjects) resulting in the creation of two distinct real rights, those of the fiar and the liferenter and
2. the interest over which it is created is registered in the Land Register.  

The rules for the creation of a real right in a proper liferent were re-stated by section 65 of the Abolition of Feudal Tenure etc. (Scotland) Act 2000. A proper liferent is typically created on registration, or in unusual cases, at a later date specified in the deed which grants or reserves the right, see 39.8 below.

If any legal liferents (the widow's terce and widower's courtesy) still subsist, they may be capable of being noted on title sheets as overriding interests in terms of section 28 (1)(h) of the 1979 Act. In the unlikely event that a Form 5 application for the noting of a legal liferent is ever received, it should be referred to a senior caseworker for consideration.

Section 5(1) of the 1979 Act rules out the opening of a separate title sheet for a registrable liferent. Consequently, no land certificate is issued in respect of the liferent alone. Instead, the liferent is entered on the title sheet for the interest to which it relates.

39.3.1 Improper Liferents

An improper liferent (otherwise known as trust liferents) will frequently be established as part of the terms of a Will; the deceased party wanting to protect the occupancy rights of one person while transferring the heritage to another party.  It is the trustees who have ownership of the property; they are either fiars by virtue of having a recorded or registered title, or they have a personal right to record or register their title as the fiar.

As the transfer to the heritable beneficiary will generally be for no consideration the Will should be submitted for examination by the Keeper to ensure the property is being transferred to the true beneficiary.  If the terms of the Will indicate that the subjects are to be held for the benefit of the liferenter then this is an improper liferent and accordingly not registrable.  [However if the disposition by the executors includes a specific grant of the liferent, as required for creation of a proper liferent, then the application should be referred to a senior caseworker to consider whether there has been an appropriate variation of the Will which would enable registration to proceed; either fully indemnified or subject to an exclusion of indemnity.]

Agents should be advised that the liferent element of an application will not be accepted for registration in situations where:

• Application is by the purported liferenter, but the only evidence is a will or trust deed where the property itself is held by the trustees for the benefit of the fiar and the liferenter. In such a case the trustees may complete their title under a separate application and may then, if they consider it appropriate create a proper liferent in favour of the liferenter (and the fee again if they consider it necessary) by a conveyancing deed such as a disposition.
• Application is by the purported fiar and liferenter, but the only evidence is a will or trust deed where the property itself is held by trustees for the benefit of the liferenter with provisions to transfer to the fiar on termination of the liferent.
• Application is by trustees under trust deed created either in the lifetime of the truster or which comes into effect on their death (in which case the trust deed may be a will), and there is also an application for the right of the purported liferenter but again the only evidence of the existence of the liferent is a will or trust deed where the property itself is held by the trustees/executors for the eventual fiar and the purported liferenter - in this case the application by the trustees for completion of their title may proceed on the usual evidence but as regards the interest of the liferenter if there is no separate conveyance by the trustees which involves the clear grant of the liferent, the application by the liferenter should be rejected, as the interest of the liferenter is not a registrable interest.
• The liferent is stated to be alimentary.  This is a form of improper liferent and accordingly unregistrable. If term "alimentary" had been erroneously incorporated into the grant then it will remain open to the agent to prepare a separate deed creating a proper liferent.
• Title is granted "subject to" a liferent interest and the liferent has not already been created as a proper liferent.  The use of the phrase "subject to" is not sufficient to create a proper liferent.

If registration of the liferent is only part of an application that also includes registration of the fiar's interest then only a partial cancellation of the application may be required.

39.4 Liferent existing at time of first registration

In the event that an application for first registration discloses the existence of a proper liferent in the subjects, the procedure is as outlined below.

Assuming that the liferenter has already established a real right, by the earlier recording of a deed in the Sasine Register, the Keeper does not require a separate application from the liferenter. In processing the application, the registration officer should simply note the liferent on the title sheet, in the B Section. Otherwise, the interest being registered will no longer be subject to the liferent.

As regards the proprietor of the interest being registered, the entry in the B Section is the normal kind of entry for any proprietor, showing name, address, date of registration, etc. There is no need to refer to the proprietor as a fiar. The liferent interest is shown as a note indicating that it is a burden on the subjects rather than a registered real right, along the following lines:

Note: The subjects in this Title are burdened by a liferent interest in favour of Audrey Barbour or Conway, 7 Dalrymple Crescent, Edinburgh, created by reservation in Disposition to Edward Francis Conway, recorded GRS (Midlothian) 22 April 1999.

There is, however, no indemnity in respect of a liferent entered without an application from the liferenter. If the liferenter wishes their interest to be shown as a registered real right, and thereby obtain the benefit of the Keeper's indemnity, they have to apply for registration on a Form 2. The fixed registration fee is payable for the application. The registration officer should then enter the liferenter in the B Section in the following manner.

The note regarding the blank fields should be added after any other notes (e.g. MH/CPA - see 39.11 below).

The addition of the phrase ‘in liferent’ is enough to differentiate the liferenter from the other persons entered in the B Section.

The date of registration in respect of the liferent interest is the date on which that application is received.

39.5 Liferent created after first registration

When a liferent is created over a registered interest, the liferenter must register their interest in order to obtain a real right, by applying for registration on a Form 2. The entry for the interest of the liferenter is shown in the B Section as indicated in the immediately preceding paragraph.

39.6 Liferent created in deed inducing registration (FR, DW or TP)

Whether the application is a first registration, a dealing or a transfer of part, when the deed inducing registration creates a liferent interest by reservation, the registration officer should advise the agent that a separate application is required for the liferent if a real right to it is desired. If the agent agrees that the separate application will be made, the registration officer should put the case in standover. When the liferenter's application is received, it will be processed according to the procedure outlined in 39.4 - Liferent existing at time of first registration. If, however, no separate application is to be made, the registration officer will insert a note in the following style in the B Section of the title sheet, disclosing the creation of the liferent but stating clearly that the right is not real:

Note: In terms of Disposition to said Graham Hendrie registered 9 August 2002 a liferent interest in this Title was reserved to Irma Jenkins or Hendrie, 11 Kirk Road, Lochgilphead. [No application for registration of the liferent interest has been made and no real right in the liferent has been completed].

39.7 Liferent for a fixed period

Although it very seldom occurs in real life, in theory a liferent can be limited to a fixed period. For example, a liferent could be limited to a fixed period of 10 years from a given date. Despite the relative brevity of the liferent's duration, it remains registrable and the Keeper would be bound to accept a valid application for its registration. The registration would follow the appropriate steps (see above). The note on the title sheet should indicate the fixed period of the liferent's duration, e.g., ‘Audrey Barbour or Conway, 7 Dalrymple Crescent, Edinburgh, in liferent for a period of 10 years from 5 April 1999’. If the liferenter was still alive on the date of the expiry of the 10 years, the liferent would terminate and the liferenter would have to surrender possession of the subjects to the fiar.

The entry for the liferent interest should be removed on the next occasion the title sheet is updated following the date of termination.

39.8 Effective date of liferent delayed

Section 65(1)(a)(ii) of the 2000 Act provides that if a deed provides for a future date to be the effective date for a liferent interest and the right has been registered the proper liferent will be created on such specified date.

On the basis an application is made to register the liferent interest the proprietorship section should reflect the situation as indicated below.

The above notes should be added after any other notes (e.g. MH/CPA).

39.9 Liferent of pro indiviso share

There has been an increase in the number of applications the Keeper receives purporting to create a liferent over a pro indiviso share while the liferenter is also fiar in the other ½ pi share. The increase appears to be a result of a combination of attempts to avoid potential care costs and protect against loss of inheritance amongst step-families. The increase may also have arisen as a result of the clarification in the Title Conditions (Scotland) Act 2003 that it is not possible to create real burdens over or in favour of a pro indiviso share in property; it was relatively common prior to this Act to encounter pre-emptions affecting a pro indiviso share in favour of the proprietor of the remaining pro indiviso share.

39.9.1 Pro-indiviso share - proper liferent

The Keeper accepts that a liferent of a pro indiviso share is competent, however it is only acceptable for registration if a proper liferent is being created - see 39.3 above and also 39.3.1 for guidance on improper liferents.

39.9.2 Entry in proprietorship section where liferent is only in respect of a pro indiviso share of subjects

The proprietorship section should clearly reflect the different interests, for example:

The note regarding the blank fields should be added after any other notes (e.g. MH/CPA).

If the DIR is a disposition by the executors including a specific grant of the liferent, as required for creation of a proper liferent, then the deed would be accepted for registration; however the application should be referred to a senior caseworker to consider whether there has been appropriate variation of the Will by the relevant parties and consequently whether the registration should be subject to an exclusion of indemnity e.g.

Note: As regards the interests in entries 2 and 3 indemnity is excluded in terms of section 12(2) of the Land registration (Scotland) Act 1979 in respect of any loss arising in the event of the Disposition registered dd mmm yyyy of a 1/2 pro indiviso share of the subjects in this title by the executors of Jessie Smith to Jean Smith or Brown in fee and John Smith in liferent being reduced.

39.10 Termination of liferents

A registered liferent, when terminated, is removed from the title sheet only on receipt of evidence of its termination. A stand-alone application for registration of the termination may be made (by the fiar, usually). But, if a transfer of the fiar’s interest is in prospect, the evidence of the liferent's termination may accompany the application for registration of the transfer, without any need for a separate application as regards the termination.

Seven modes of terminating a liferent are possible. Guidelines concerning the necessary evidence or action for each mode of termination are provided below.

(1) Death of the liferenter
The necessary evidence is the extract death certificate for the liferenter.

(2) Expiry of the term of the liferent
The necessary evidence is the deed (or a copy of the deed) that created the liferent interest and specified the fixed term or the date of expiry. (Registration officers should check to see if the deed is available on the archive record before requisitioning it from the agent.)

(3) Occurrence of some specified act or event
The necessary evidence is both of
The deed (or a copy of the deed) that created the liferent interest and specified the act or event that triggered termination. (Registration officers should check to see if the deed is available on the archive record before requisitioning it from the agent) and
Official documentary evidence relating to the occurrence of the act or event, e.g., extract marriage certificate, if the event was the marriage or remarriage of the liferenter, or extract birth certificate, if the event was (say) the liferenter's 25^th birthday. Affidavit evidence may be used instead, if official documentary evidence does not exist.

(4) Confusion or consolidation
This mode of termination is likely to be very rare and only arises when the estates of liferent and fee become united in the hands of one person. Textbooks such as Gordon's Scottish Land Law suggest that, to achieve immediate termination of the liferent, a deed of consolidation of liferent would be needed. Alternatively, positive prescription may operate to consolidate liferent and fee.
Registration officers should refer any application relating to this mode of termination to a senior caseworker for consideration of the matter in consultation with legal services.

(5) Discharge or renunciation
The necessary evidence is the deed executed by the liferenter either specifically renouncing the liferent or consenting to a sale of the subjects free of the liferent.
Because liferenters may be very elderly and infirm, the question of their mental capacity sometimes arises in relation to the discharge or renunciation of liferents. A discharge or renunciation by an attorney on behalf of a liferenter is acceptable only if the power of attorney specifically permits the execution of the renunciation. In other circumstances, the appointment of a curator bonis is probably the only recourse, and the registration officer should examine not only the renunciation by the curator but also the document or order appointing the curator.

Since 1 April 2002 it would be appropriate to appoint a guardian or authorised person to manage an adults affairs in terms of part 6 of the Adults with Incapacity (Scotland) Act 2000 - see guardianship and intervention (13.25).

(6) Negative prescription
This mode of termination is likely to be very rare. Registration officers should refer any application relating to this mode of termination to a senior caseworker for consideration of the matter in consultation with legal services.

(7) Destruction of the object of the liferent
There is some authority for saying that, if the object of the liferent (i.e., the liferented property) is physically destroyed, the liferent terminates. Accordingly, this mode of termination is at least theoretically possible. However, other legal authorities contemplate the rebuilding of property and the continuation of the liferent.
Registration officers should refer any application relating to this mode of termination to a senior caseworker for consideration of the matter in consultation with legal services.

39.11 Liferents and Matrimonial Homes Act evidence

As stated at 39.2 - Basic guidance on the law concerning liferents, a fiar cannot occupy the subjects. On disposal of the property, with the consent of the liferenter, no Matrimonial Homes Act evidence need be supplied to the Keeper for the fiar.

The position is different for the liferent. As the liferenter has both a registrable interest and a right to occupy the subjects, Matrimonial Homes Act evidence will be required. If the liferent was renounced some time before the conveyance of the subjects but after the commencement date of the 1981 Act, the Keeper will require to examine the appropriate Matrimonial Homes Act evidence in respect of both the liferenter and the fiar. In this case the liferenter had an interest up to the time of the renunciation of the liferent, from which point the fiar became entitled to occupy the property.

If a liferenter is incapax, and unable to sign Matrimonial Homes Act documentation, affidavit evidence from persons closely related to and/or in daily contact with the liferenter may provide sufficient reassurance that the liferenter had not married or remarried during the relevant period. Registration officers should treat such affidavits with care and in particular make sure that they contain details of the personal relationship and frequent contact with the liferenter. However, if a curator bonis has been appointed and renounces the liferent, there is no need for Matrimonial Homes Act evidence as an act by the curator is not a voluntary act by the liferenter.

39.12 Standard Security over a liferent interest

A proper liferent is a registrable interest (although cannot support a title sheet in its own right) and accordingly it is theoretically competent to grant a standard security over the interest.  It is hard to foresee a situation where anyone would grant or accept such a security, given a liferent is intransmissible, however it is not precluded by the Conveyancing and Feudal Reform (Scotland) Act 1970.

In the event of receiving an application to register a standard security over a liferent interest it should be registered and a charge certificate issued; the entry should clearly identify that it is only the liferent interest that is secured. As it is the liferent interest being secured there are no ranking implications in relation to any security against the fiar's interest.  A non-public NAN should be created to highlight that the security must be removed on termination of the liferent.

If any enquiry is made as to the acceptability of a standard security against a liferent interest it should be made clear that while it will be accepted for registration it will be deleted from the title sheet on termination of the liferent.