9.1 Introduction (the statutory requirements)

In terms of Section 2(3) of the Land Registration (Scotland) Act 1979 the creation of inter alia a heritable security over a registered interest in land is registrable in the Land Register and on its registration it becomes a ‘registered interest in land’. In terms of section 2(4) any other transaction or event affecting the title to a registered interest in land (apart from an overriding interest) is registrable. Registration has the effect of vesting in the person registered as entitled to the interest, a real right in and to the interest (section 3(1)(a)).

The Keeper is obliged under section 6(1)(d) to enter in the title sheet any heritable security over the registered interest, and in terms of Section 5(1)(b) the Keeper shall complete registration in respect of a heritable security by making such amendment as is necessary to the Title Sheet of the interest in land to which the heritable security relates. Rule 6 of the 2006 Rules provides that details of any heritable security or other charges (such as pecuniary real burdens) shall be entered in the charges section.

Section 69 of the Abolition of Feudal Tenure etc. (Scotland) Act 2000 provides that the provisions of sections 14 to 30 of the Conveyancing and Feudal Reform (Scotland) Act 1970 shall apply to heritable securities granted prior to 29 November 1970 (prior to this date such older securities were governed by extremely detailed, obsolete provisions); however this amendment does not apply to ex facie absolute dispositions. Sections 14 to 30 relate to assignation, variation, discharge and calling up etc. of securities; accordingly procedures relating to these matters that apply to standard securities can be utilised in relation to earlier heritable securities.

9.1.1 Charge Certificates

Section 5(3) of the 1979 Act requires the Keeper, on completion of the registration of a heritable security, to issue a Charge Certificate to the applicant (the creditor). A Charge Certificate shall, however, only be issued in respect of a heritable security as defined in Section 28(1) of the 1979 Act, which adopts the definition in Section 9(8)(a) of the Conveyancing and Feudal Reform (Scotland) Act 1970, namely ‘any security capable of being constituted over any interest in land by disposition or assignation of the interest in security of any debt’. The standard security is the most common example.

No charge certificate will be issued in respect of an application for registration of the effect of a deed which charges the interest with a ‘debt’ as defined in Section 9(8)(c) of the 1970 Act but does not contain a disposition or assignation of the interest in security. This includes Notices of Grant, Absolute Orders and other statutory charges.

9.1.2 Deeds registered or given effect to in the charges section

Rule 6 of the 2006 Rules provides for the matters that shall be entered in the charges section. Deeds that fall to be registered or given effect to in the charges section can usually be categorised as either heritable securities, statutory charges or notices of grant although other types of deeds may be shown.

9.1.3 Contents of the charges section

An entry in the charges section will normally contain the following particulars:

- the entry number;

- the name of the deed creating/affecting the security or charge;

- the name(s) and designation(s) of the granter(s) of the security;

- the name(s) and designation(s) of the creditor(s) taking account of guidelines on company designations in Proprietorship Section under Designation of a company [section 7.5.1]; Note that no attempt should be made to update creditors names in existing entries unless application is made to register a deed which affects that interest (e.g. ranking agreement or variation) see section 9.26;

- the capacity of the creditor(s) (where appropriate);

- the effect of the deed on the interest (where appropriate);

- the debt or obligation (e.g. the amount or ‘in respect of discount’);

- ranking provisions;

- the Date of Registration, or the Date of Recording in the Sasine Register if the charge has not been registered in the Land Register (see Disposition and deed of variation for charges which have been recorded and are subsequently registered)

Table of Contents

9.2 Standard Security

Since the passing of the 1970 Act, heritable securities over land may only be created by way of a Standard Security, which must be drawn up in conformity with either Form A or Form B of Schedule 2 of the Act.

Form A is used where the personal obligation (usually the repayment of a monetary loan but not necessarily) is included in the deed. A Form B security is used where the personal obligation (the undertaking) is contained in a separate document (back letter), which is not recorded or registered.

9.2.1 Omissions in pro forma Standard Securities

Major lending institutions such as Banks and Building Societies commonly use pro forma Standard Securities which contain a number of pre-printed clauses and a series of boxes for insertion of the details of the debtors, amount of loan, property description etc.

Registration Officers should ensure that such deeds are properly completed, particularly where the operative clause contains terms which are defined only by means of what has been inserted in the boxes. If any of the ‘boxes’ in such a Standard Security have not been completed correctly, the Registration Officer should contact the agent to point out the defect. If the omission results in the deed not complying with the statutory requirements noted above, the application for registration of the security must be rejected unless the agent agrees to correct the omission. However, if the omission relates to a matter which does not affect the intrinsic validity of the deed and the agent does not wish to amend the deed, it should be pointed out that it cannot be subsequently amended. Should the agent wish to amend it a later date, the only method of achieving that would be by discharging the security and registering a new one. In particular, the agent should be informed that unauthorised changes to a Charge Certificate are not permitted, and that therefore the amendment cannot simply be added into the bound Charge Certificate. If the agent does not wish to amend the error, the registration officer should note this on the title workdesk. See also Chapter 2 Documents and Evidence at Discharges engrossed on Debound Charge Certificates.

9.2.2 Property description in standard securities - background

Note 1 of schedule 2 to the 1970 Act made provision regarding the description of the subjects of the security. It provided that:

The security subjects shall be described by means of a particular description or by reference to a description thereof as in Schedule D to the Conveyancing (Scotland) Act 1924 or as in Schedule G to the Titles to Land Consolidation (Scotland) Act 1868

The courts gave consideration to that note in the cases of Bennett v Beneficial Bank 1995 SCLR 284 and Beneficial Bank v McConnachie 1996 SLT 413. The courts ruled that although a general property description was valid for conveyances and other deeds, standard securities had higher requirements because of Note 1 to Schedule 2. This caused a great deal of confusion for a few years until the matter was put beyond doubt by a section added to the Abolition of Feudal Tenure (Scotland) Act 2000 which amended the note in the 1970 Act retrospectively.

9.2.3 Property description in standard securities- Current position

Section 77(3) of the Abolition of Feudal Tenure etc (Scotland) Act 2000 amended the wording of note 1 to schedule 2 of the 1970 Act. This came into effect on 9 June 2000 and note 1 now reads:

The security subjects shall be described sufficiently to identify them; but this note is without prejudice to any additional requirement imposed as respects any register.

The 2000 Act brings the standard of description into line with the standard of description required in other deeds, such as a disposition. A standard security will no longer be deemed void because of the absence of a particular description or a description by reference to an earlier deed that contained a particular description. This is a considerable relaxation of the pre-abolition Act position. While it is not possible to offer hard and fast rules for what will and will not be acceptable to the Keeper, the following offers a general guide to acceptable methods of description:

- Particular description – this is essentially a bounding description where the subjects are identified by reference to actual physical features on the ground. A deed plan may or may not be included.

- Description by reference – the subjects are identified by reference to a previous recorded deed which contains either a particular or a general description (note that reference to a deed being registered of even date with the security is not acceptable and one of the other forms of description must be adopted).

- Description by exception – this is where the subjects are described by reference to the whole area under exception of the subjects conveyed in earlier deeds.

- General description – in essence this comprises a simple postal address.

9.2.4 Postal addresses

It is emphasised that whilst the Keeper will now accept security deeds which contain solely a general description (i.e. a postal address), there may be occasions when such a description will not be sufficient. The postal address given must always be adequate to identify the property being secured and this will be dependent on the particular circumstances of the deed.

An example of where a postal address would not be adequate is where the subjects are described as, for instance, ‘a flat at 53 Marchmont Road …’. Clearly this is not sufficient to identify the particular flat in question.

If, on the other hand, the subjects were described as ‘the northmost flat on the first floor above the ground floor entering by the common passage at 53 Marchmont Road…’ this would be acceptable.

In cases of doubt, guidance on whether the description of the security subjects is adequate should be sought from a senior caseworker, who will if necessary consult Legal Services.

9.2.5 Implications for the Land Register

For Dealings with Whole, the title number of the subjects, with or without further verbal description, is an adequate description of the subjects in terms of section 15(1) of the Land Registration (Scotland) Act 1979.

For First Registrations, Transfers of Part and Dealings with Part (e.g. a standard security over part of registered subjects), the registration officer should ensure that the description of the security subjects conforms with one or more of the methods of description outlined in Current position above.

9.2.6 Retrospective effect of alteration to Note 1

Section 77(3) of the Feudal Abolition Act provides that the revised Note 1 to Schedule 2 to the 1970 Act has retrospective effect. In other words, Note 1 is to be deemed as having always been in such terms. The consequence of this is that descriptions in standard securities recorded or registered prior to the passing of the Feudal Abolition Act and which fell foul of the rules which emerged from the Beneficial Bank cases will be deemed to be valid so long as the description of the security subjects meets the new criterion (i.e. ‘described sufficiently to identify them’). This would, of course, include standard securities executed prior to 9 June 2000 but not presented for recording or registration until after that date. They will similarly be acceptable for recording or registration, provided the description of the subjects meets the new criterion.

9.2.7 Previous exclusions of indemnity

Standard securities registered prior to the change to Note 1 may have been registered with an exclusion of indemnity, in respect of the description having not met the standard required following the Beneficial Bank cases. These may now have the exclusion removed provided the description meets the new standard.

Points to note:

- Registration Officers should ensure that the description is now acceptable before removing the exclusion note.

- An application Form 2 and the appropriate fee should accompany any request by an agent for the removal of the exclusion note from the title sheet (unless the request is made at the same time as an application for registration in respect of some other matter regarding the title). If the charge certificate accompanies the application it should be updated at the same time.

In cases of doubt, the matter should be referred to a senior caseworker.

9.3 Creation of burdens and servitudes in standard securities

9.3.1 Creation of burdens

The Title Conditions (Scotland) Act 2003 does not prescribe a style or type of constitutive deed. Accordingly it is theoretically possible to create real burdens that affect the land owned by the granter in a standard security; however the format would have to comply fully with the requirements of the 2003 Act as regards the characteristics and creation of the real burden. Accordingly any such deed should be referred to a senior caseworker.

9.3.2 Creation of servitudes

When the secured subjects are only part of a larger area owned by the debtor, a creditor will frequently attempt to incorporate servitudes into the security deed in an attempt to protect their interest in the event of selling the secured subjects under power of sale procedures. The rights are frequently appended to the description of the subjects in the same form as in a conveyance (i.e. together with a servitude right of access…).

The form of a standard security is prescribed in the 1970 Act and incorporates the words "grant a standard security in favour of the creditor over (subjects)"; the Keeper is doubtful that these words are capable of creating a stand-alone servitude. Further the right will normally be granted in favour of the creditor, but not in their capacity as proprietor of the benefited land.

Any attempt to create a servitude in a standard security should be referred to a senior caseworker in the first instance. It will generally be necessary to contact the agent to highlight the Keeper's concerns as regards the servitude. Alternative solutions would be:

- a standalone servitude defining the benefited property that would become effective when the two tenements were held by separate owners;
- a deed of conditions specifying the servitude that could be referred to in a subsequent sale of the relative area; or
- another standard security over the remaining land covering an obligation to grant a servitude.

9.4 Styles for security entries in the charges section

Examples of styles:

Deed	Entry
1. Deed is granted for a loan of a fixed amount (desig)	Standard Security for £ … by said AB to CD
2. for a maximum sum	Standard Security for maximum sum of £ …by said AB to CD (desig)
3. for a loan of a fixed amount and for further or future advances	Standard Security for £ … and further sums by said AB to CD (desig)
4. for a loan of a fixed amount and for all sums due and to become due	as 3 above
5. for certain advances of which the initial amount is £ …	as 3 above
6. deed is granted to two different creditors for separate amounts	Standard Security by said AB to (1) CD (desig), for £ … and (2) EF (desig) for £…
7. under Housing (Scotland) Act	Standard Security in respect of discount* under Section 72 of the Housing (Scotland) Act 1987 by said AB to XY Council
8. in respect of an obligation for a specific sum	as in 1 above
9. in respect of an obligation for a specific sum and further advance	as in 3 above
10. for unspecified advances	Standard Security by said AB to CD (desig)
11. granted in respect of an obligation of a non-monetary nature	as in 10
12. Amount expressed as foreign currency	Standard Security for <VL> euros and further sums by said <DB> to <CR>. **

*For more information on discount securities, see Miscellanous Registrations under Council House Sales under Discount Standard Securities.

If a standard security is granted subject to the terms of a particular Act, e.g. the Crofting Reform (Scotland) Act 1976 or the Crofters (Scotland) Act 1993, reference will be made in the entry to the Act and the relevant section if narrated in the deed, e.g.:

Standard Security [for £ … ] by said AB to …. in terms of [section … of] the Crofting Act 1976

Where the granter of the heritable security or charge is also the current registered proprietor in the proprietorship section, there is no need to repeat their designation in the charges section, e.g.

Standard Security for £40,000 and further sums by said John Smith to Big Bank plc (desig) …

** There may be occasions when the loan stated in a Standard Security is in a currency other than £ Sterling. In such an event registration officers should not convert the sum into sterling but should reflect the exact terms of the deed in the appropriate style. The entry will be similar to the following:

Standard Security for <VL> euros and further sums by said <DB> to <CR>.

9.5 Outstanding heritable securities

In terms of Rule 6 of the 2006 Rules, the Keeper is required to enter in the charges section particulars of any heritable security or charge over the interest. As well as charges being submitted for registration, the registration officer may also need to consider outstanding securities, including for first registration applications those revealed on examination of the search sheet.

If the registration officer is aware that the Keeper has issued a report prior to the registration application and an outstanding security had inadvertently been omitted, the matter should be referred to a senior caseworker.

The Joint Consultative Committee between Registers of Scotland and the Law Society of Scotland agreed that in the case of a Form 10 report it should disclose any outstanding charges revealed by an examination of the search sheet for a 40 year period. This would include any charge recorded outwith the 40 year period but whose existence is revealed by, for example, an assignation or a partial discharge recorded within that period. Where a Form 10 report has been issued by the Keeper, the Registration Officer need only check the search sheet forward from the date of the report. Where no report has been issued, or a report has been completed by one of the private searching companies, the Registration Officer will have to undertake a full examination of the search sheet.

If any documents in the first registration application reveal the existence of a charge outwith the 40 years, it will still have to be entered as an outstanding security if no discharge has been recorded or submitted with the application.

A Form 10 report discloses any discharges recorded within the previous 5 years, so that the agent can examine them. The reason for the examination is section 41 of the 1970 Act which provides that the reduction of a discharge more than five years after the discharge was recorded will not prejudice the title of a person who has acquired in good faith for value if the discharge bears to be granted by the person entitled to do so. This does not therefore apply in the case of a discharge recorded within the previous 5 years, or one granted by a party not entitled to do so. The registration officer can accept the validity of any discharge or deed of restriction already recorded in the Register of Sasines without further examination unless a note on the search sheet (or any documentation in the application) casts doubt on its validity. The registration officer must, however, examine any discharge or deed of restriction not previously recorded.

9.5.1 Procedure for outstanding standard securities or charges

If there is an outstanding security, but no discharge is listed on the inventory, then the registration officer should proceed with registration showing the outstanding security in the charges section and (where appropriate) in a schedule of prior ranking charges; even if the inventory (Form 4) shows the discharge is ‘to follow’ the current application should not be delayed. The Keeper's policy changed for applications from 1 September 2010. If an application to register a discharge is submitted before the earlier application for registration is completed then the registration officer should process the cases together.

In the case of a First Registration, the creditor’s interest in the outstanding standard security will not be covered by the Keeper’s indemnity, even though it's recording it disclosed in the charges section and no charge certificate requires to be issued.

9.5.2.1 Entry for outstanding heritable security - First Registration

Where there exists an outstanding security at the time of first registration, it must be entered in the charges section before any charges that are being registered, to preserve the right of the creditors and show the current position of the title.

- Where the granter is not the current registered proprietor, he or she must be designed.

- Where the creditor at the time of the first registration is not the original creditor, particulars of the current creditor (obtained from the search sheet or from the application) will be added below the entry, as a note.

- The date of recording in the Register of Sasines will be included in the entry, as the creditor’s real right dates from the date of recording.

Example of style of entry:

Bond for £5000 and Disposition in Security by said AB [or by AB (desig)] to CD (desig), recorded GRS (Renfrew) 29 Jul 1968

Note: The current creditor in the above Bond is EF (desig) conform to Assignation recorded GRS (Renfrew) 4 Sep 1974

While the outstanding security is entered in the charges section, it is not actually registered and the creditor does not obtain the benefits of registration (e.g. indemnity). Should the agent wish the security to be registered, an application with accompanying Forms 2 and 4 and relevant fee should be submitted. The date of registration will then be entered and a charge certificate issued, but the original date of recording must still be narrated, as it remains the date of the creation of the creditor’s real right.

9.5.2.2 Entry for outstanding heritable security - Transfer of Part

Where there exists an outstanding security at the time of the transfer of part, it must be entered in the charges section before any charges that are being registered against the new title, to preserve the right of the creditors and show the current position of the title.

- Where the granter is not the current registered proprietor, he or she must be designed.

- Where the creditor at the time of the transfer of part is not the original creditor, particulars of the current creditor (obtained from the existing entry, a pending application for an assignation against the parent title or from the current application) will be added below the entry, as a note.

- Where the security subjects are more extensive than the subjects in the transfer of part (e.g. the security was over the whole of the parent title subjects) the entry in the new title sheet must reflect this.

Example of style of entry:

Parent title sheet

Entry No	Specification	Date of Registration
1	Standard Security by said Big Developer to A BIG BANK (design)	19 Jan. 2004

Transfer of part title sheet

Entry No

Specification

Date of Registration

1

Standard Security by Big Developer (design) to A BIG BANK (design) over the subjects in this Title and other subjects

Note: The above Standard Security was assigned to NEW BANK (design) conform to Assignation registered dd mmm yyyy.

19 Jan. 2004

2

Standard Security by said Purchaser to HOME LOANS LIMITED (design)

12 Jul. 2011

As the outstanding security has already been registered under the parent title the creditor already has the benefits of registration (e.g. indemnity) and a charge certificate under the parent title number; no new charge certificate should be issued. The new creditors charge certificate should show the outstanding security in a schedule of prior ranking charges.

9.6 Personal obligation by different or additional parties

Where a standard security contains a personal obligation by someone other than the registered proprietor (e.g. Standard Security by A containing a personal obligation to repay by A and B), this is not reflected in the entry in the charges section. The important point is that the standard security has been granted by the registered proprietor, or all of the registered proprietors. The entry will be: ‘Standard Security …. by A’.

9.6.1 Standard security granted by additional parties

A standard security may be granted by the registered proprietor and also (wrongly) by another borrower, who is not the proprietor but is undertaking to repay the loan. Usually this happens because the wording of a pro forma standard security is based on the mistaken assumption that the borrowers and the granters of the security are always the same. Correct practice is for the proprietor(s) alone to grant the security, regardless of whether additional names appear in the security as borrowers. It is also competent for A to borrow and undertake a personal obligation and B, the registered proprietor, to grant the security. What counts is that the registered proprietors (all of them) grant the security. The inclusion of additional parties as granters is incorrect, but will not lead to an exclusion of indemnity. All parties granting the security should be reflected in the charges section.

The Keeper’s former practice in such situations was to exclude indemnity, so if an application is submitted affecting a title sheet bearing an exclusion of indemnity in this respect the exclusion note should be removed.

9.7 Standard Security not granted by all the registered proprietors

Where a registered title is in the name of two or more persons any standard security granted over the whole registered subjects must be granted by all those persons who are registered as proprietors. A standard security over the whole registered subjects cannot competently be granted by only one, or some, of the registered proprietors. This is because such a granter (or granters) does not have title to the whole registered subjects, rather they only have title to a share of the registered subjects.

If a registration officer encounters an application to register a standard security over the whole registered subjects where the standard security has not been granted by all the registered proprietors the standard security should be returned to the submitting agent requisitioning an amendment to the deed. The agent should be advised that the standard security requires to be granted by all the registered proprietors, or it is only granted over the share that the party has title to - this is also acceptable. The agent should be further advised that a failure to amend the standard security will result in the following:

(1) the deed will be registered against only the share of the subjects owned by the granter; and
(2) indemnity will be excluded.

For example, A and B each own a one-half pro indiviso share in property but A purports to grant a security over the whole. If the agent fails to comply with the request to amend the standard security to narrate both A and B as granters and also to be executed by B, the Keeper will register the real right in security but only in respect of A's pro indiviso one-half share and will also exclude indemnity. B's share will not be burdened by the security.

It would be acceptable in situations where title is held equally by A and B for A to grant a standard security in favour of B over A's 1/2 share as it is A's share being burdened by the security. In the event of a transfer by A to B of their 1/2 share this security would be extinguished confusione. Any variation on this should be referred to a senior caseworker who will consider whether the form of undertaking is sufficiently clear to enable registration of the security to proceed with full indemnity.

Where an agent does not comply with a request to amend a standard security an exclusion of indemnity note in the following terms should be added to the charges section of the title sheet:

“Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss arising as a consequence of the above standard security not having been granted by all of the registered proprietors including, but without prejudice to the foregoing, from the reduction of the above standard security, whether in whole or in part."

An exclusion of indemnity should also be added to the charge certificate in the following style:

“Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss arising as a consequence of the abovementioned heritable security not having been granted by all of the registered proprietors including, but without prejudice to the foregoing, from the reduction of the abovementioned security, whether in whole or in part."

The style of entry for the security will be as follows:

Standard Security [for £ .… ] by said A to Creditor (desig) over said A's [specify amount] pro indiviso share of the subjects in this Title.

The charge certificate cover should also be amended to reflect that the security does not affect the whole of the registered subjects:

The within-mentioned Charge has been registered against part of the subjects in the above title

If in doubt the application should be referred to a senior caseworker.

It has been known for creditors to try to get round this situation by, for example, obtaining a deed of postponement by the registered proprietor who is not a party to the standard security, postponing his or her rights. The Keeper takes the view that this does not adequately remedy the situation. As such the above procedures should be followed.

9.7.1 Standard Security granted by party who is not registered proprietor

Applications for registration of a standard security not granted by the registered proprietor of the property affected (unless there is an application for registration of the title pending or the deed is granted by a proper legal representative of the proprietor such as an attorney or guardian) should be very rare, but if a registration officer does encounter such an application there are some possible explanations; e.g. (1) the granter of the security has recently transferred the property to another party who in the interim has registered their title or (2) an owner (holding on an unrecorded midcouple) may not have submitted their title for registration. The registration officer should, in any event, enquire of the submitting agent the reason why the granter of the standard security is not the registered proprietor.

In the first example, the security application cannot proceed unless the granter of the security subsequently re-acquires the property. This applies even if the security deed was executed prior to the property being sold. Such an application should be cancelled.

In the second example, where a granter has not submitted their title for registration (by not only enclosing the midcouples or links in title but also an application on Form 2 for registration of their interest as proprietor), registration officers should note that any right in security obtained by the creditor may be vulnerable to a supervening event that may make it necessary to remove the security from the register by rectification. For example, X has a registered title and has disponed to Y, but Y has not registered the disposition. Y then grants a standard security to B bank with a deduction of title clause and this is registered under section 12 of the Conveyancing and Feudal Reform (Scotland) Act 1970. However, suppose that X had also disponed to Z and this disposition was subsequently registered; because Z is not a granter or grantee of the security, nor derives right from either of those parties, and may be entitled to become proprietor unencumbered by the security, he or she could seek to have the register rectified to remove the standard security. Accordingly, while the Keeper will accept the standard security granted by Y for registration it is only prudent to also exclude indemnity where the granter chooses not to register their title. Even where indemnity is being excluded, registration officers require to examine the midcouple(s) under which the granter of the security holds unregistered title to the subjects.

It is possible to complete registration of standard security without an exclusion of indemnity, provided the granter submits their title for registration with the appropriate application form and fee. The application to register the standard security should be placed in standover until such time as title application is submitted. In terms of section 15(3) of the Land Registration (Scotland) Act 1979, it is not necessary for the unregistered owner to deduce title in the security deed where, for example, they have a right to the property as a beneficiary of the deceased registered proprietor through a midcouple granted by the executor, however they do have to register their interest as proprietor. Because of the vulnerability of the right in security where the granter does not complete their title as explained in the foregoing paragraph, if the granter of the standard security does not make up title indemnity will be excluded in respect of the granting of the standard security.

The exclusion of indemnity should be in the following terms and be shown in both the land and charge certificates:

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss arising as a result of the granter of the foregoing security not having completed title by registration of their interest in land and that the security therefore has only the limited effects provided for in section 12(2) of the Conveyancing and Feudal Reform (Scotland) Act 1970.

Details of the granter of the standard security should not be added to the proprietorship section of the title sheet, instead a note should be added to both the charges section of the title sheet and also the charge certificate narrating the links in title as produced to the Keeper; e.g.

Note: The entitlement of AB to grant the said standard security is founded on Confirmation of [registered proprietor] with docket endorsed thereon nominating said AB as the party entitled to the subjects in this title.

If the appropriate links/midcouples are not produced then the application cannot proceed, even subject to the foregoing exclusion, and the application will be cancelled.

In circumstances where a standard security covers multiple properties and the granter of the deed is not proprietor of one (or more) of the properties the submitting agent should be advised that the standard security will only be registered against the properties that the granter is proprietor of. The foregoing guidance on situations where the granter has a title to a property or properties but has chosen not to register their interest as proprietor should be applied as necessary.

For the avoidance of doubt, the above guidance does not apply in respect of an improvement/repairs grant or notice of grant when it is acceptable that the party in receipt of the grant does not correspond with the registered proprietor.

9.8 Standard security over the registered subjects and other subjects

Where the security subjects are more extensive than the subjects in the title sheet (i.e. the security is over other subjects also), the entry will be:

Standard Security [for £ …] by said AB to CD (desig) over the subjects in this title and other subjects

The charge certificate cover also requires to be amended to read:

The within-mentioned Charge has been registered against the subjects in the above title and other subjects

In this situation, the registration officer should advise the agents of the need to create the creditor’s real right in respect of the remainder of the subjects, by recording the deed in Sasines and/or submitting an application for registration against the other affected title number(s) as appropriate. If the remaining subjects are in the Sasine register then a copy of the deed should be bound into the charge certificate so that the original can be presented for recording.

9.8.1 Standard security over part of registered subjects

The general rule in registration of title is that anything entered or noted in the title sheet affects the whole subjects in the title sheet unless there is an express statement to the contrary. Therefore, if a security is over only part of the subjects, that part will require a separate reference on the title plan to identify it (except where a verbal description is appropriate, for example in a tenement), and the entry in the charges section should identify the part affected, e.g.:

Standard Security [for £ .… ] by AB to CD (desig) over the part tinted pink on the title plan [or over the north house on the top flat …]

Note: The charge certificate cover also requires to be amended to read:

The within-mentioned Charge has been registered against part of the subjects in the above title

9.9 Subjects added to the title

Where additional subjects are added to a title, separate plan references will normally be required to distinguish the separate areas. Where there are subsisting securities or charges over the original subjects, a footnote will be added to each of the existing entries to make this clear, e.g.:

Note: The above Standard Security affects only the part tinted pink on the Title Plan [or the north house on the top flat].

When there is an existing Improvement/Repairs Grants or other notice of grant the text of the entry should amended to reflect that the grant only affects part of the subjects.

9.10 Standard securities and the Consumer Credit Act 1974

Some creditors, normally those specialising in second mortgages, may apply for registration of a postponed credit agreement incorporating a standard security.

Such deeds will be acceptable where:

the standard security is the primary deed, with the consumer credit agreement annexed to it; or

the standard security is in gremio of an agreement

Such deeds will not be acceptable where the standard security is contained in a schedule annexed to the credit agreement and the agent should be informed that a credit agreement is not a registrable transaction. The standard security would have to be submitted as a deed on its own.

9.10.1 Schedule of conditions of loan

Some standard securities are accompanied by a schedule giving conditions of the loan. Such schedules will normally be referred to in the standard security, but may or may not be described as ‘annexed to’ the deed and may or may not be physically attached to the standard security. If the schedule is described as ‘annexed to’ and/or is physically attached to the standard security, it should be included in the charge certificate, but no mention of it need be made in the charges section entry or the certificate page of the charge certificate.

See Examination of Title at Schedules and annexations which explains the circumstances where the schedule requires to be subscribed. Registration officers should particularly ensure that any clause which is required by statute to be included in the standard security (see Standard security above) forms part of the subscribed deed.

9.11 Discount standard securities

see Miscellaneous Registrations under Council House Sales at Discount Standard Securities.

9.12 Standard securities by Limited Companies and Limited Liability Partnerships - confirmation of Date of Registration

A security by a registered company (or a limited liability partnership 'LLP' or other company designed as being incorporated under the Companies Act but which does not have limited or LLP in their name) must be registered in the Register of Charges kept by the Registrar of Companies within 21 days of its date of registration in the Land Register.

For the remainder of this part of the manual as it concerns registration of securities with the Companies Registrar, the registration officer should read "company" as including "LLP" or any other company incorporated under the Companies Act. For the avoidance of doubt a limited partnership is not the same as a limited liability partnership ('LLP').

If the security is subsequently withdrawn from the Land Register, after its registration in the Register of Charges, the registration in the Register of Charges is ineffective and has to be cancelled. A fresh registration in the Register of Charges then has to be made after the security is re-presented in the Land Register. To prevent such problems, the Keeper has agreed to confirm the date of registration in the Land Register if a company security is involved and a confirmation is requested (see below). In paragraph 5.48 of the Registration of Title Practice Book (second edition) agents are advised that the applicant should not request confirmation in a separate letter, but instead, at the top of the first page of the application Form 2, the applicant should write ‘confirmation is required’. The Keeper has undertaken to provide this service for the benefit of the legal profession but, as there is no duty to provide such a service, no liability is accepted for a failure to do so. (Please note that the confirmation of date of registration service is not available for standard securities over standard securities, see below Standard securities over standard securities).

Note that Companies House have advised that as long as the fundamental details of the charge (company name, creditor, amount secured, property secured) do not change, and the security retains its original registration date in the land register, then it would not have to be re-presented to Companies House. An example of what they consider an incidental change that does not require re-presentment is a correction to a testing clause. It remains the case that if an application to register a standard security is cancelled the registration date is lost and it will have to be re-presented to Companies House.

If it is clear from the contents of an application that the charge is granted by a company which does not meet any of the criteria set out in the following sub-sections, which indicate the circumstances when the charge requires to be registered in the Register of Charges, then the registration date will not be confirmed. If this fact is not clear and the agent has requested that we confirm the registration date then this should be done and an L19 issued.

To allow the agent to register the charge at Companies House within the statutory 21 days, confirmation must be issued to the applicant within a few days of receipt of the application by the Keeper. Accordingly, such applications should be treated with utmost priority. If for any reason confirmation has not been issued within 2 weeks of the date of the application, the registration officer should confirm the date of registration by telephone and fax the L19.

Confirmation cases must be prioritised and dealt with immediately. The agent needs to know that the application will not be rejected. When the security accompanies a title, which will usually be the case, it will be necessary to check that the borrower’s title is also acceptable.

In the case of a first registration, a plans registration officer will have to check that the subjects can be identified on the OS map. The search sheet should be checked and the closing note added. For Transfers of Part and Dealing with Whole applications the subjects must be adequately described. See guidance at 9.2.3 for general guidance on acceptable methods of description.

The confirmation officer must check that there are no other defects in the application that would lead to rejection of the application, albeit there may be a need to raise requisitions at a later stage. The officer can then issue a form L19, noting this on the title workdesk. The case can then be settled in the normal way.

If a defect is identified in the application a requisition should be raised separate to the L19 confirmation letter. Issuing a separate requisition removes the need to change the L19 to include the Keeper's authority for raising the requisition, the timescale for response and the consequence of non-compliance. The L19 already includes a statement that confirmation of the date of registration is subject to compliance with any requisition; retaining that statement allows for further requisitions to be raised at a later stage of the process.

The requirements to be fulfilled by the company, and the implications for registration in the Land Register, will depend on (a) where the company granting the standard security is registered and (b) when the charge is created.

In the exceptionally unusual circumstance of a security being registered with Companies House prior to its registration in the Land Register the application should be referred to a senior caseworker. As stated above the 21 days begins from the date of registration, "within" 21 days does not include before its creation and accordingly the provisions of the relevant section of the legislation have not been complied with.

9.12.1 Companies registered in Scotland

The various enactments of legislation affecting company charges have provided that any security granted by a company must be registered with the Registrar of Companies within 21 days of the date of creation of the charge.

For charges created from 6 April 2013 the provisions are contained in section 859A of the Companies Act 2006, with the effect of non compliance covered in subsequent sections.

Between 1 October 2009 and 6 April 2013 section 878 of the 2006 Act contained the relevant provisions, while for charges created prior to 1 October 2009, equivalent provisions in section 410 of the Companies Act 1985 apply. The date of creation of a charge by way of a heritable security over registered property is the date of registration of the security in the Land Register.

Failure to register the charge in the Register of Charges will render the security void against a liquidator, or a future administrator of the company and any creditor of the company. Because of this the Keeper must be assured that a heritable security, or any charge, created by a company has been registered in the Register of Charges within the 21 days. The evidence necessary to prove this is the certificate of registration of charge issued by the Registrar of Companies, or a certified copy thereof, which certifies the date of registration in that register. From 6 April 2013 the certificate will contain the name and number of the company that granted the security and the date the certificate is "given" by Companies House, together with the unique reference code allocated by Companies House to the charge; as this detail is insufficient to satisfy the Keeper that the requirements for registration with Companies House have been complied with further information must be supplied in a supporting letter.

The letter enclosing the Companies House certificate should include the Land Register title number and application number, and an assurance that the certificate relates to the standard security as submitted for registration with the Keeper and the date of registration at Companies House. If there is more than one security with the application then the letter of assurance should clearly identify which deed the certificate relates to. While the letter may not explicitly state the security that the certificate relates to if it is otherwise clear from the nature of the application (i.e. there is only one standard security affecting the subjects and the letter contains details of the property, title or application number), then it should be accepted that the agent will only be submitting the certificate for that security. Any areas of doubt should be referred to a senior caseworker.

Alternatively it is possible for the agent to obtain a print of charge particulars from Companies House website; this provides full details of the parties, date of creation by registration with the Keeper, date of issue of certificate and brief details of the property. Submission of this printout removes the requirement for this detail to be included in a covering letter.

If the certificate and letter (or printout of charge particulars) are submitted, and proves that the charge was registered within 21 days of the date of receipt by the Keeper of the application for registration of the standard security, registration may proceed with full indemnity. The letter and certificate must be archived (and also any printout of charge particulars). For applications relating to securities created prior to 6 April 2013 only the certificate will be required as this will include sufficient information to uniquely identify the charge.

As an alternative to receiving a paper copy of the certificate of registration of charge the Keeper may receive and electronic copy; this is because the Registrar of Companies emails an electronic version of the certificate to the submitting agent. The Keeper will accept the electronic version if the initial email from Companies House is forwarded and the covering email from the agent includes sufficient detail, as outlined above, to satisfy the Keeper as to which security the certificate relates.

The Registrar of Companies counts the first day following registration of the deed with the Keeper as the start of the 21 days (e.g. standard security registered with Keeper on 30 May and registered with the Registrar of Companies on 20 June is acceptable). If presented outwith 21 days the Registrar of Companies will return the copy of the deed, without issuing a certificate, and advising that a court order would be required instructing the Registrar of Companies to accept a late registration. In these circumstances the Keeper would require the certificate of registration, covering letter and a certified copy of the court order.

If this certificate and supporting letter/charge printout are not produced, the Keeper cannot register the security with full indemnity. If the company went into liquidation the creditor under the security might not be able to enforce it and on failing to do so would have a claim against the Keeper unless indemnity had been excluded (for exclusion note see Exclusion of indemnity below).

9.12.2 Execution of the Certificate of Registration of Charge

The Registrar of Companies issues a certificate of registration of charge to the agent which in turn is forwarded to the Keeper to demonstrate that the charge has not been rendered void. The legislation provides that the certificate of registration of charge 'shall be signed by the registrar or authenticated by the registrar's official seal'. The current practice is simply to seal the certificate. No signature accompanies the seal.

The current provisions are contained in section 859I(5) of the Companies Act 2006; between 1 Oct. 2009 and 6 April 2013 the relevant section of the 2006 Act was 885(5) (repealed) and the Companies Act 1985 included similar provisions in section 418(2) (also repealed). Previously the practice as regards authentication for all such certificates was to be signed on behalf of the Registrar of Companies.

9.12.3 Requisitioning the Certificate of Registration of Charge

When a form L19 is issued by a confirmation officer to the agent under paragraph 9.11.1 above, to confirm the date of registration of the standard security, the agent is also requested to exhibit the certificate of registration of charge and supporting letter to the Keeper. If no response whatsoever has been received by the Keeper within 60 days of the date of the L19 letter, or only one of either the certificate or letter have been produced, the legal registration officer should proceed to complete registration of the standard security with an exclusion of indemnity (see Exclusion of indemnity below). No additional requisition is required. The case may require to be placed in standover for the full period to pass if no other requisitions are required.

If it is not apparent from the casebag that an L19 was issued, and it is clear from the application that registration of the charge at Companies Register was required, either in terms of Companies registered in Scotland above or Companies registered outwith Scotland below, a requisition should be raised in the normal manner.

9.12.4 Error in security deed

On the registration of a charge in the Companies Register a copy of the security creating that charge is lodged with that Register.

Problems have arisen when it has been discovered subsequent to the lodging of the copy security deed in the Companies Register that the security deed requires to be amended. It is not an option for the security deed to be significantly amended and the original date of registration in the Land Register to be retained as the deed would be at variance with what has been presented to the Companies Register. If an agent requests the return of a deed for amendment after it has been registered with Companies House they should be advised that the application for registration in both registers may have to be cancelled and the process re-started.

This requires some clarification of what is a significant change. The Keeper's view is that as a testing clause is not a statutory requirement but rather speaks to the ex facie validity of a deed then any amendment to the testing clause is not a significant change, even if it is to add designations of parties executing the deed (e.g. director, secretary or address of witness). Conversely any alteration to the actual execution, including adding the signature of a witness, or to the text of the body of the deed prior to the testing clause will be considered as a significant change. If at the time of confirming the registration date of a company security it is identified that such an amendment is required then it should be highlighted to the agent that if application for registration at Companies House has already been made then this may have to be cancelled and re-presented. It should be noted however that the Keeper is entitled to rely on the submission of the certificate of registration of the charge as evidence that the statutory requirements have been complied with.

Note that this is similar to the situation for applications that had been created prior to 6 April 2013 where Companies House had advised that as long as the fundamental details of the charge (company name, creditor, amount secured, property secured) do not change, and the security retains its original registration date in the land register, then it would not have to be re-presented to Companies House.

If there is a significant amendment required to the security deed after the deed has already been submitted to Companies House then the application to register that deed must be cancelled, the registration date is lost, and the amended security deed will have to be re-submitted for registration and re-presented to Companies House.

9.12.5 Companies registered outwith Scotland

9.12.5.1 Position for charges created prior to 1 October 2009

'Overseas Company' with place of business in Scotland

An 'overseas company' in this context means a company registered outwith Great Britain. For the avoidance of doubt, this would mean that companies incorporated in the Isle of Man, the Channel Isles, Northern Ireland or the Republic of Ireland are overseas companies.

The considerations in the preceding paragraphs apply to incorporated companies registered in Scotland (section 878 of the Companies Act 2006, or formerly section 410(5) of the Companies Act 1985 applies). Prior to 1 October 2009, these provisions also applied to companies registered outside Great Britain which have a place of business in Scotland (section 424 of the 1985 Act applies). ‘Great Britain’ in this context includes England, Wales and Scotland, but not the Isle of Man, the Channel Isles, Northern Ireland or the Republic of Ireland. In terms of the 1985 Act, a ‘foreign’ or 'overseas' company which has a place of business within Great Britain was required to re-register in either England and Wales or Scotland and was allocated a company number by Companies House. The company then had to comply with the provisions of the 1985 Act and register any charges in the Register of Charges in Scotland or in England and Wales.

Company registered in England and Wales

Where a company is registered in England and Wales but is granting a heritable security over property in Scotland, the security must be registered with the Registrar of Companies in England and Wales within 21 days of the date of creation of the charge. In terms of section 398(4) of the 1985 Act this is the date on which the deed is presented for registration. If the Keeper has confirmed the date of registration of the standard security but the certificate of registration of the charge has not been submitted within 60 days then indemnity should be excluded. For the avoidance of doubt, it is not necessary to register it also with Companies House in Scotland.

'Overseas Company' with no place of business in Scotland

In cases where the company is an overseas company, that is incorporated outside Great Britain and which does not have a place of business in Scotland, a certificate of registration of charge will not be available. Companies registered in the Isle of Man, the Channel Isles, Northern Ireland and the Republic of Ireland are included in the definition of overseas companies.

The legal registration officer should:

- Check whether the agent has submitted a letter confirming that the company does not have a place of business in Scotland; if no such letter has been submitted, seek written confirmation from the agent that the company does not have a place of business in Scotland. The agent may be able to submit a written response from the Scottish Companies Registrar refusing to register the charge for this reason. This would also be acceptable to the Keeper, providing that it clearly states that the company does not have a place of business in Scotland. In either of these cases, the security can be registered without an exclusion of indemnity. If at the time of registration the agent requested confirmation of the registration date then indemnity should be excluded as outlined below without further requisition.
- Provide instructions that such letters are archived.

A letter from Companies House, or anyone else, advising that a security had been noted in the ‘Slavenburg Register’ does not constitute a Certificate of Registration of Charge, however it is acceptable as evidence that the charge did not require to be registered in the Register of Charges. The ‘Slavenburg Register’ was a non-statutory register kept by Companies House where a note was made of foreign companies who attempt to register charges, but were rejected on the basis that the companies were not registered in Scotland nor had a place of business in Scotland - the Slavenburg Register was closed on 1 October 2009.

If the agent can neither confirm that the company has no place of business in Scotland nor provide a certificate of registration of charge, an exclusion of indemnity should be entered in the charges section and in the charge certificate in respect of the charge. A suggested style is:

Note: Indemnity is excluded in terms of section 12 (2) of the Land Registration (Scotland) Act 1979 in respect that evidence has not been produced to the Keeper that the granter of the above Standard Security has no place of business in Scotland for the purposes of section 424 of the Companies Act 1985 and in respect of any loss which may result from failure to register the said Standard Security in terms of sections 410 and 424 of the said Act.

9.12.5.2 Position for charges created on and after 1 October 2009

9.12.5.2.1 Companies registered in England and Wales or Northern Ireland

The previous Companies Act of 1985 applied to Great Britain, but the Companies Act 2006 applies to the United Kingdom, that is it now extends to include Northern Ireland (but not the Isle of Man, Channel Isles or Republic of Ireland).

Where a company is registered in England and Wales or Northern Ireland but is granting a heritable security over property in Scotland, the security must be registered with the Registrar of Companies in the part of the United Kingdom where the company is registered, within 21 days of the date of creation of the charge. (The date of creation of a charge by way of a heritable security over registered property is the date of registration of the security in the Land Register.) A certificate of registration of charge should be submitted by the agents. In the absence of a certificate of registration of the charge, then indemnity should be excluded using the form of exclusion provided below at Exclusion of Indemnity. For the avoidance of doubt, it is not necessary to register the security with Companies House in Scotland.

If there is an error in the standard security deed, the considerations in previous paragraph on errors applies.

9.12.5.2.2 'Overseas Companies'- applications on and after 1 October 2009 but before 1 October 2011

An 'overseas company' is a company incorporated outside of the United Kingdom. The United Kingdom consists of Scotland, England, Wales and Northern Ireland and thus excludes the Isle of Man, Channel Isles and the Republic of Ireland. If your application is on or after 1 October 2011, see below at 'Overseas Companies'- applications on and after 1 October 2011.

The Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009, which came into force on 1 October 2009, provided that overseas companies which have re-registered in the UK are required to register charges with the Registrar at Companies House.

In terms of the Overseas Companies Regulations 2009 an overseas company that opens a UK establishment is required to register particulars with the Registrar. The term “UK establishment” means either

- a branch within the meaning of the EEC 11th company law directive [the directive refers to branches, but does not define the term ‘branch’]; or
- ‘a place of business that is not such a branch’

Unlike the position for UK companies, which register either in England and Wales or Scotland or Northern Ireland, from 1 October 2009 where an overseas company re-registers in the UK it will be a 'UK registration’, no matter at which office of Companies House they register. The overseas company will be allocated a company number by Companies House. The overseas company then had to register any charges in the Register of Charges complying with the provisions of the 2006 Act for companies.

An overseas company is, in terms Regulations 8 and 9 of the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009 only required to register a charge with the Registrar at Companies House if the company is registered in the UK. If it is clear from the format of the application that the company has re-registered (e.g. the deed or application form quotes a UK company number) then any charge requires to be registered at Companies House and indemnity should be excluded if the certificate of registration of charge is not submitted.

The particulars of an overseas company are not registered 'unless and until they are on the register and accordingly available for public inspection'.

If the company has fulfilled the requirements of Regulation 8 on the day that the charge is created, then the charge must be registered at Companies House within 21 days of its creation and a certificate of registration of the charge should be submitted by the agents. In the absence of a certificate of registration, indemnity should be excluded.

There are two circumstances when a certificate of registration of charge cannot be produced:

- The company has not yet re-registered (e.g. title to their UK establishment is being registered on the same date as the charge).
- They do not own property that falls within the definition of an establishment.

In such instances, the legal registration officer should:

1. Seek written confirmation from the agent either

- that the company was not registered in the UK on the date of registration of the standard security, and
- if it was not so registered, confirmation that it did not have to have been registered as at that date.

In the alternative, the agent may be able to submit a written response from the Companies Registrar refusing to register the charge for this reason. This would also be acceptable to the Keeper, providing that it clearly states that the company was not registered in the UK on the date of the application for registration in the Land Register. In either of these cases, the security can be registered without an exclusion of indemnity.

Note that for charges created on or after 1 October 2009 Companies House will no longer accept them to the Slavenburg Register, which is effectively closed.

2. Provide instructions that such letters are archived.

If the agent can neither confirm that the company is not registered in the UK nor provide a certificate of registration of charge, an exclusion of indemnity should be entered in the charges section and in the charge certificate in respect of the charge. A suggested style is:

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss which may result from failure to register the above standard security in terms of Regulation 10 of the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009.

If there is an error in the standard security deed, the considerations in Error in Security Deed above at 9.12.4 apply.

9.12.5.2.3 'Overseas Companies'- applications on and after 1 October 2011

From 1 October 2011, an overseas company with a UK establishment which has registered at Companies House will no longer require to register with the Registrar of Companies charges created by the company over its UK property, as was the position set out in Overseas Companies- applications on and after 1 October 2009 but before 1 October 2011.

Where an overseas company grants a standard security which is presented for registration in the Land Register on or after 1 October 2011, the Keeper will not require to see a certificate of registration of charge issued by the Registrar of Companies. The applicant should not ask the Keeper to confirm the date of registration of such a security. The applicant should also make it clear in the application that the granter of the security is an overseas company.

9.12.6 Limited Company acting as Trustee

In this situation the Keeper does not require to see a certificate of registration of charge on the basis that they are not acting in a capacity of the principal; the Keeper will however confirm the registration date if requested to by the submitting agent.

9.13 Major Ownership Schemes - Standard Securities by Company nominees

In major ownership schemes it is common practice for the purchaser and the company’s nominee to grant separate standard securities to the same creditor over their respective pro indiviso shares. Since the company’s nominee acts for a limited company, the standard security by the nominee is regarded as if it were granted by the company itself. Therefore the standard security should be registered in the Register of Charges within 21 days of the date of registration in the Land Register.

On occasions staff at Companies House have mistakenly rejected such applications for registration. The Registrar of Companies, however, has confirmed that registration of standard securities by company nominees in the Register of Charges is necessary.

Such standard securities will be dealt with in the same way as any other standard security by a limited company. If, after 60 days, no certificate of registration of charge has been produced, an exclusion of indemnity will be entered in the charges section (see paragraph 9.13 below Exclusion of indemnity).

Shared (Major) ownership schemes are dealt with more fully in Miscellaneous Registrations under Shared ownership schemes.

9.14 Exclusion of indemnity

In terms of section 6(1)(f) of the 1979 Act the Keeper may require to exclude indemnity under section 12(2) in respect of a matter entered in the Charges Section (Rule 6(1)(c)); the exclusion of indemnity note should also be added to the charge Certificate. The most likely occasion which will give rise to an exclusion of indemnity in the charges section is the failure to submit evidence of registration of the charge in the Register of Charges. The appropriate style of note will depend on (a) where the company is registered and (b) when the standard security is created.

9.14.1 Companies registered in Scotland

For standard securities registered prior to 1 October 2009:

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss which may result from failure to register the above Standard Security in accordance with section 410(2) of the Companies Act 1985.

For standard securities registered on or after 1 October 2009

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss which may result from failure to register the above Standard Security in accordance with sections 878 and 889 of the Companies Act 2006.

9.14.2 Companies registered in England and Wales

For standard securities registered prior to 1 October 2009, the exclusion of indemnity note should be as follows:

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss which may result from failure to register the above Standard Security in accordance with section 395(1) of the Companies Act 1985.

For standard securities registered on or after 1 October 2009, the exclusion of indemnity note should be as follows:

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss which may result from failure to register the above Standard Security in accordance with sections 860 and 874(1) of the Companies Act 2006.

(The above style of exclusion of indemnity should also be used where the company is registered in Northern Ireland and the charge is created on or after 1 October 2009)

9.14.3 Overseas companies

For standard securities registered prior to 1 October 2009 (see above at Position for charges created prior to 1 October 2009), where the company had a place of business in Scotland-

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss which may result from failure to register the above Standard Security in accordance with section 410(2) of the Companies Act 1985

For standard securities registered after 1 October 2009 but before 1 October 2011 (see above at 'Overseas Companies'- applications on and after 1 October 2009 but before 1 October 2011) -

Note: Indemnity is excluded in terms of section 12(2) of the Land Registration (Scotland) Act 1979 in respect of any loss which may result from failure to register the above standard security in terms of Regulation 10 of the Overseas Companies (Execution of Documents and Registration of Charges) Regulations 2009.

9.14.4 Removal of exclusion of indemnity

If, at a later date, the certificate of registration of charge, or evidence that the charge did not require to be registered in the Register of Charges, is submitted to the Keeper, along with a duly completed form 2 and fee, the exclusion of indemnity can be removed from the charges section and the charge certificate.

9.15 Standard securities over standard securities

To take advantage of varying interest rates world-wide, some lenders will seek to raise money abroad and offer in security their interest in standard securities registered inter alia in Scotland. These securities are usually over a few hundred securities and are invariably by a company. Although RoS cannot refuse such deeds they should not be encouraged.

The registration dates for such securities will generally not be confirmed, nor will RoS entertain the examination of draft deeds (whether the agent is willing to pay or not); however as the security has to be registered with Companies House a certificate of registration of the charge should still be submitted. If not submitted it should be requisitioned as no confirmation letter (advising that failure to submit the certificate will result in an exclusion of indemnity) will have been issued.

Agents should be informed that only one charge certificate will be issued and that will only be after the completion of the last application. The agent should also be made aware that each of the individual securities their client's security has been granted over is open to withdrawal, discharge, cancellation or may be extinguished by power of sale procedure or have indemnity excluded prior to registration.

An alternative scenario is for a standard security to be taken over another single standard security; this scenario provides the exception to the fore mentioned policy on not confirming such securities. This situation is becoming prevalent as house builders introduce schemes where payment of part of the purchase price is deferred for a period but a security is obtained to cover the requirement to pay the sum at the future date. If registration of the principle security has not been completed that deed will also require to be examined for acceptability for registration prior to issuing the letter of confirmation.

Where the standard security is over the interest in another security the entry for the second security in the Charges section should be in the following style:

Standard Security [for £x] by said (creditor in prior standard security) to AB financial institution (designed) over the Standard Security in entry y.

The charge certificate for the standard security over the heritage will be prepared as normal and there will be no mention of the second charge secured against this interest.

The charge certificate for the standard security over a standard security will require the following changes to be made:

The statement on the cover will be amended to read:

The within mentioned Charge has been registered against the Standard Security by (initial debtor) to (initial creditor) over the subjects in the above Title, registered dd mmm yyyy.

The fly sheet will show the title number and the property address.

On the certification page the description of the subjects should be amended to:

Standard Security by (initial debtor) to (initial creditor) over [description of subjects], registered dd mmm yyyy.

The registered proprietor of the subjects will be the initial creditor and AB Financial Institutions will be named as the registered creditor in the heritable security attached.

The first standard security is not noted in a schedule as it is over a different interest (i.e. the heritage), nor should a copy of the first security be bound into the second security's charge certificate. The fact that changes have been made to the format of the charge certificate should be highlighted by means of a "non-public" next application note.

In the event of part of the secured subjects being sold and disburdened of the primary security then the secondary security will not affect the disburdened subjects.

If the primary standard security is discharged or extinguished by some other means (e.g. exercise of power of sale), the secondary security will fall and the entry relating to it will be removed from the title sheet.

Any problems with such applications should be referred for further guidance.

9.16 Syndicated (Mezzanine) loans

Syndicated loans are a means whereby a number of banks combine to lend to a borrower under a single loan agreement. These are usually encountered in connection with international companies where a single financial institution is either unable or unwilling to lend large sums of high risk money on its own.

Syndicated loans are usually arranged by one financial institution which generally is, but need not be, also the principal lender. Such an institution is usually referred to as the arranger and agent for the syndicate. Given the fluctuating nature of the syndicate membership, individual members are not usually disclosed in any documents other than the unregistered loan agreement itself and any subsequent variations. In standard securities it is therefore usual for the arranger and agent to be named and designed, with the only reference to the syndicate members being as those who were a party to the loan agreement and any variation thereof. On the face of the standard security therefore what is disclosed is a named agent for principals whose identity is undisclosed.

Standard securities in respect of syndicated loans are acceptable in the Land Register and may take different forms. One such form is for the deed to state that the arranger is holding the security as trustee for the undisclosed members of the syndicate; another is that the arranger is acting as agent for the syndicate. If the relationship between the arranger and the syndicate is a trust one, this would provide for trust law to apply. The position differs in an agent-principal relationship, which affects third parties differently. The Keeper does not generally disclose relationships of the latter type in the Register.

Where the arranger is designed as being the trustee for the syndicate this will be reflected in the entry in the charges section; when the arranger is designed as being agent for the syndicate the entry should only name the arranger and not reflect that they are acting as an agent. An arranger may also be designed as trustee and agent; in such cases only the trustee capacity should be reflected in the charges section.

The law of agency does not supersede s.11 of the Conveyancing and Feudal Reform (Scotland) Act 1970 or s.3(1)(a) of the Land Registration (Scotland) Act 1979 in that the real right in security vests in the grantee; any contractual or personal rights between an agent and principal exist off-register and should not be disclosed.

9.17 Ranking of heritable securities - the basic rule

In the absence of explicit ranking provisions, the basic rule is that standard securities granted over the same interest will rank according to their dates of recording or registration (section 7 of the 1979 Act applies). Therefore, generally, securities and charges will rank according to the date order in which they are entered in the charges section.

Ranking is of considerable importance to creditors because it regulates the order in which their loans are paid off in the event of the debtor failing to meet his obligations. If the debtor defaults, the first-ranking creditors will be in a better position to recover their debt, or part of their debt, than later creditors. For example, suppose A had granted the following securities:

1 Standard Security to B, registered 17 May 1992

2 Standard Security to C, registered 7 February 1993

3 Standard Security to D, registered 7 February 1993

B ranks prior to C and D. C and D rank postponed to B. C and D rank pari passu to each other, i.e. they rank equally, the securities being registered on the same day. If A defaults, C and D would only be paid anything after B’s loan has been repaid in full. If there was not enough to repay C and D in full, they would share what funds were available pro rata, i.e. according to the amount of their loans. This applies regardless of which of the creditors exercises a power of sale.

These basic ranking provisions operate automatically, therefore:

no separate notes are required on the title sheet to explain the situation, as the ranking is apparent from the dates of registration;

any prior or pari passu securities over the same interest will however be shown in the schedule to the charge certificate (see Schedule of prior and pari passu charges).

9.17.1 Ranking and withdrawal of standard securities

If a standard security that forms part of an application for registration has to be returned to the presenting agent for amendment, when it is returned to the Agency it still is processed as part of its original application notwithstanding that it may now be dated after the date of registration. Because of this, the returning of securities that form part of Land Register applications to agents does not have the same consequences for the ranking of securities as it did in the Sasine Register. If an application containing a security has to be cancelled and there are subsequent pending security applications, the registration officer dealing with the cancellation must inform the presenting agent that there will be a change to the ranking of the securities as a consequence of the cancellation.

9.17.2 Express ranking provisions

In terms of section 7(1) of the 1979 Act, the basic rule of ranking according to dates of recording or registration can be varied by express agreement between the different creditors, by which they agree amongst themselves the priority of their securities. That agreement will be reflected either by a ranking clause in one or more of the relevant standard securities, conform to Note 5 to Schedule 2 of the 1970 Act, or by an express ranking agreement (see 9.17.8 below) which it is appropriate to register. (Registration officers should consider the terms of the information in ‘Subject to’ clauses at section 9.17.11 below when deciding whether a security contains a proper ranking provision or not. A clause stating the security is subject to another does not create any ranking, however many such clauses include both "subject to" and "shall rank …." phrases; as such they may affect the ranking provisions and should be referred in any case of doubt). Thus, irrespective of the dates on which the deeds are registered, the following may be achieved:

- Each security may contain a ranking clause stating that it is to rank pari passu, i.e. equally, with the other. If each deed contains such a clause there is no need for the creditor in one security to consent in gremio of the other deed. If one of the security deeds has already been registered without such a clause, then the creditor in that security can consent in gremio of the second security which contains the pari passu ranking clause, in order to achieve the desired result.

- A Clause of Postponement contained within the security which is to be postponed will achieve the desired ranking.

- Priority ranking can be achieved either by (a) the insertion of a clause of priority ranking in the prior security and a clause of postponement in reciprocal terms in the postponed security or (b) the consent of the postponed creditor in gremio of the security containing the clause of priority ranking.

9.17.3 Notes to be entered in the charges section

Ranking provisions will be entered in the form of a footnote to the security entry. The procedure and the style of the note will be determined by:

- the date of registration of the other security(ies); and

- which deed(s) contain(s) the ranking provisions.

Example 1

Where two (or more) securities are registered simultaneously and the deeds contain straightforward reciprocal ranking provisions the charges section entry will be in the following terms:

- Entry 1 Standard Security for £40,000 by said AB to CD (desig)
  Note: The above standard security ranks prior to the standard security in entry 2.

- Entry 2 Standard Security for £5,000 by said AB to EF (desig)
  Note: The above standard security ranks postponed to the standard security in entry 1.

Example 2

Where two (or more) securities contain reciprocal ranking provisions as above, but are not registered simultaneously, the entry in respect of the first registered security will remain silent as regards the ranking provisions until the registration of the other security(ies). The footnotes will then be added as above.

Example 3

Where only the first standard security contains a straightforward ranking clause and the second one is silent, the notes will be as follows:

- Entry 1 Standard Security for £40,000 by said AB to CD (desig)
  Note: The above standard security ranks postponed to (or prior to or pari passu with) the standard security in Entry 2

- Entry 2 Standard Security for £5,000 by said AB to EF (desig)
  Note: The above standard security is affected by ranking provisions contained in the standard security in Entry 1

Example 4

Where only the second standard security contains the ranking provisions and the first one is silent, the notes will be reversed:

- Entry 1 Standard Security for £40,000 by said AB to CD (desig)
  Note: The above standard security is affected by ranking provisions contained n the standard security in Entry 2

- Entry 2 Standard Security for £5,000 by said AB to EF (desig)
  Note: The above standard security ranks postponed to (or prior to or pari passu with) the standard security in Entry 1

In examples 3 and 4 above, the notes will only be added on the registration of the second security. All of the above examples presuppose that the provisions of the ranking clause are simple and straightforward. In example 4 the consent of CD would be necessary for the second security to rank prior to the first.

Example 5

It is fairly common for deeds to contain more complex ranking clauses (or ‘dual ranking’), providing that one security should rank prior to another but only to a certain extent, with advances above that amount then ranking pari passu with or postponed to the second security. No attempt shall be made to reflect the exact terms of the ranking in the charges section. Notes in the following general terms will be added.

Where both standard securities contain complicated ranking clauses in reciprocal terms, each will have the following note added after the entry:

- Note: The above standard security contains ranking provisions affecting the standard security in Entry ….

Where only one of the securities contains a ranking provision, then the note after that entry will be in the terms above, and the following note will be added after the other entry:

- Note: The above standard security is affected by ranking provisions contained in the standard security in Entry ….

These notes will only be added when the second standard security is registered.

Instructions regarding the notes for the charge certificate and the schedule are set out in Form of a charge certificate.

9.17.4 Removal of notes regarding ranking

Where a security is discharged and ranking provisions affect it, the note(s) referring to the ranking provisions entered after the other security entry(ies) will need to be deleted or amended.

9.17.5 Schedule of prior and pari passu charges

The term ‘charges’ is used instead of ‘heritable securities’. In terms of Rule 6(1) of the 2006 Rules, this covers all registrable matters that fall to be entered in the charges section.

9.17.6 Effect of ranking clause in one of two or more securities registered on the same day

Where two or more securities are registered on the same day and the intended prior ranking security is for a set amount, has no provision for further advances and the ranking clause in the postponed security makes it clear that it is to rank postponed to the full amount in the first security the entries in the charge certificate will be as follows:

- in the charge certificate of the first security no mention will be made of the second security because it is postponed; and

- in the charge certificate for the second security details of the first security will be shown in the schedule of prior and pari passu charges.

The appropriate ranking notes will be placed after each of the entries in the charges section (see above at Notes to be entered in the charges section).

9.17.7 Dual ranking

When the prior ranking security is for £X and further sums, but the other security recorded on the same day contains a ranking clause postponing it to the amount of £X only, such a ranking clause creates a dual ranking situation. The result is that up to the amount of £X the first security has prior ranking over the second security, but as regards any further advances it does not have prior ranking, because the ranking clause does not cover these further sums. Unless there are express provisions stating otherwise, the two securities will then rank pari passu. In such cases of complex ranking, the situation is reflected by showing the other security in the schedule of prior and pari passu securities annexed to the charge certificate for the first security. Both charge certificates will therefore contain a note indicating the existence of a schedule, unless the charge certificates have previously been issued, in which case they will not be updated.

The schedule annexed to the charge certificate for the first security will contain details of the second security, for example:

Standard Security by A to B, registered ………, subject to the ranking clause therein.

The appropriate notes should be entered after each security entry in the charges section (see above at Notes to be entered in the charges section).

9.17.8 Ranking agreements

Ranking provisions can also be agreed in a separate document such as a ranking agreement. The Keeper’s policy is to register the effect of such a deed in the charges section by simply referring to the document in a note after each of the affected securities:

Entry 1 Standard Security for £40,000 by said AB to CD (desig)

Note: The above Standard Security and the Standard Securities in Entries 2 and 4 are affected by ranking provisions contained in Ranking Agreement registered 24 Dec 1999

Similar notes will be added after entries 2 and 4. The schedule for each standard security’s charge certificate will contain details of each of the other standard securities.

The following note regarding ranking will be instructed for inclusion in the charge certificate:

Note: There are no heritable securities ranking prior to or pari passu with the above mentioned heritable security appearing on the Register affecting the subjects, except as stated in the schedule annexed and subject to the provisions of the Ranking Agreement registered dd mmm yyyy.

A ranking agreement, or similar deed, if submitted for registration, must be accompanied by either a separate application form on behalf of each creditor or a single application form signed on behalf of all the creditors.

A deed of postponement is a unilateral deed and as only one party’s real right is affected by this deed (the granter’s) only a single application form is required, even though ranking notes may be required against more than one entry. A separate deed containing ranking provisions should not be bound into the charge certificate for any of the affected standard securities.

9.17.9 Statutory ranking

A standard security granted in favour of a statutory body may affect the conventional ranking of existing securities. Therefore, where a security is granted under any Act, other than the Housing (Scotland) Act 1987 (see Miscellaneous Registrations at Council House Sales under Discount Standard Securities) .a senior caseworker must be consulted before any charge is registered and charge certificate issued. If the Act in question does provide for preferential ranking of the security then the senior caseworker will instruct which notes should be entered in the charges section and in the schedules on the charge certificate/s if appropriate.

There are also specific provisions relating to the ranking of standard securities when registering a croft being bought under right to buy legislation by the former tenant crofter, for fuller information see Miscellaneous Registrations, Crofting.

9.17.10 Ranking of fixed and floating charges

A ranking agreement or similar type deed may provide for the ranking of both fixed and floating charges. A floating charge is an overriding interest, as defined in section 28(1)(f) of the 1979 Act. The particulars of the floating charge will therefore require to be taken from the deed and noted in the charges section, in terms of section 6(4) of the 1979 Act and Rule 6(2) of the 2006 Rules. It should not be given an entry number or date of registration, as it is not being registered. The noting should be in similar terms to the following:

Bond and Floating Charge by said AB Limited in favour of the Royal Bank of Scotland plc dated ………. and registered in the Register of Charges ………

When the company is divested of the subjects, the note of the floating charge will be removed from the title sheet, provided the charge has not crystallised (i.e. attached to the property) on the appointment of a liquidator or receiver. Such an appointment should be apparent from the answer to the relevant question on the application form. If the granter of the floating charge is not proprietor of the subjects then the floating charge should not be noted.

A floating charge will not give a specific description of the subjects; instead it will incorporate a general phrase such as "the whole property and undertaking" of the company and this covers both present and future heritage. If the floating charge is restricted to moveables it would not cover heritable subjects and therefore not fall to be disclosed on the title sheet. However as a floating charge will only be noted on the title sheet if it comes to the keeper's attention as part of an application (e.g. in a ranking agreement) it should be assumed that the drafter of the document has already ascertained that it is sufficient in its terms to affect heritable property.

Prior to the transfer of the subjects the floating charge can be removed from the title sheet on application (on form 5) by an agent supported by evidence of registration with Companies House of a memorandum of satisfaction of the charge. If the memorandum relates to partial satisfaction then it will need to be clear that the subjects in the title are released.

As the details of the floating charge are being noted as an overriding interest the details are not carried forward to any charge certificate schedule being created for a fixed security.

9.17.11 ‘Subject to’ clauses

It is a long-standing and consistent policy of the Agency that a ‘subject to’ clause is not recognised as having the effect of a ranking clause and must, therefore, be disregarded when priority of registration is being considered, however it is important to read the whole clause to ensure that a phrase including the word "subject to" does not go on to provide explicit ranking provisions.

When a prior heritable security is already registered (or recorded), and, because of its earlier date of registration (or recording), will rank prior to a second security, there should be inserted before the warrandice clause of the second security, in terms of Note 5 to Schedule 2 of the 1970 Act, the following clause:

‘But the security hereby granted is subject to [the prior security]’.

The warrandice clause should have been altered accordingly. These qualifications are in the nature of a warning to the creditor in the new security that a prior security exists. They are not regarded as affecting the ranking of the securities.

If two securities are received on the same date, one of which contains a ‘subject to’ clause, they shall be treated as pari passu securities. There is no need to advise the presenting agents that the securities will be treated in this way.

In instances where one of the securities is in favour of a building society the Keeper's former policy was to give the presenting agent the opportunity to withdraw the non building society security and re-present it on a later date; this should not be continued. The practice was to assist the building society achieve a prior ranking in terms of the Building Societies Act 1986. Where the building society has de-mutualised this is no longer appropriate and the successor company to the building society has the same standing as any other creditor. The said Act does not contain any provisions as to the standing of a building society security if they don't achieve prior ranking; as the securities remain valid whether or not the creditor is entitled to, and achieves, prior ranking is an off register matter and accordingly not for the Keeper to police.

9.18 Undertaking in deed inducing registration

Where part of the consideration in the deed inducing registration is a personal undertaking of the grantee to repay the sum outstanding in an existing heritable security:

there will be no discharge

the security will be entered in the charges section (or if registered, will remain in the charges section)

there will be no cross reference to the disposition in the charges section

reference to the undertaking will be made in the proprietorship section under ‘consideration’ (see Proprietorship Section)

9.19 Disposition and deed of variation

When two or more individuals hold title in the Sasine Register, a transfer between them for valuable consideration will induce first registration of the subjects or a pro indiviso share thereof. This situation often arises on marriage or on the break-up of a marriage. It is Agency policy to encourage voluntary registration of any remaining share. Where the parties have previously granted a standard security in joint names, it is likely that the creditor will want the person acquiring the whole property to undertake the whole obligations contained in the standard security. This is normally done by a deed of variation. It must be stressed that, in circumstances such as these where the security has not previously been registered, the Keeper will not accept an application to register the variation unless the security is registered as well. Applications to register a variation of an unregistered security will be rejected. Therefore, separate application Forms 2 are required for both the standard security and the deed of variation in such a situation.

9.19.1 Entry in charges section

The entry in the charges section for the standard security will narrate the original party/ies to the security. Any party/ies not named in the proprietorship section will have to be designed. The variation will be entered in the form of a note e.g.:

Standard Security … by said A and B (desig) ….

Note: The personal obligations in the above Standard Security have been undertaken by said A in terms of Deed of Variation registered …

The above note will only be added to the charge certificate if the applications for registration of the security and the variation are being dealt with at the same time; otherwise the note will only be shown in the charges section. The deed of variation should not be bound into the charge certificate.

9.19.2 Variations

The details of a standard security can be varied after it has been granted. The only conditions that cannot be varied are the ones relating to powers of sale, foreclosure and procedure on redemption. Section 16 of the 1970 Act provides for securities to be varied by way of a deed of variation unless that variation could appropriately be effected by way of an assignation, discharge or restriction, or if the alteration involves an addition to or extension of the interest in land contained in the security.

A standard security can also be varied at the time it is granted, e.g. to depart from some of the standard conditions set out in the 1970 Act. If this is the case there is no need for a Form 2 to be submitted for the variation and no mention of it should be made on the title sheet or charge certificate.

Most creditors state in their terms and conditions that they must be a party to any variations of their securities but many variations are presented to the Keeper without any evidence of the involvement of the creditor e.g. subscription. In these circumstances, the presenting agent should be contacted to ask for written confirmation that the creditor did not wish to be a party to the deed.

Where a deed of variation is presented for registration after the security it is varying has been registered, it will be the subject of a separate application and have to be accompanied by a Form 2, Form 4 and the appropriate fee. The deed should be checked to see that the parties are correctly named and designed and that the subjects are correctly referred to. As required by section 4(2)(d) of the 1979 Act the description of the subjects must include the title number. If the deed is acceptable, a note should be entered under the appropriate entry in the charges section. If the variation relates to a matter referred to in the title sheet entry then the note will give short particulars of the variation e.g.:

‘Note: The amount secured by the above Standard Security was increased by £5000 to a total sum of £45000 conform to Variation registered (date)’

If the variation relates to a matter not referred to in the entry in the charges section e.g. the rate of interest or personal obligation, then the note will merely record the fact that a variation has been registered:

‘Note: Variation of the above Standard Security was registered (date)’

Only if the variation is being registered as part of the application to register the security, or in an application being processed at the same time as the security application, will the note also be added to the charge certificate. In this instance the charge certificate should be updated accordingly, however the deed of variation should not be bound into the certificate.

Details of a variation of a prior ranking charge will not be shown in the charge certificate schedule

Where a variation is submitted for registration of a security or charge that has been recorded in the Register of Sasines but not registered in the land register, the variation cannot be registered. For a variation to be able to be registered the security itself must be registered. In these circumstances the presenting agent should be contacted and asked for a separate Form 2 and abated fee to enable the registration of the security. See also above at Outstanding heritable securities.

9.20 Deeds granted by receivers – prior standard securities

In the event of a limited company going into receivership, standard securities granted by the company do not automatically fly off following a conveyance of the company’s property by the receiver. This is also the case where the creditor in the standard security is the same as the creditor in the floating charge. Standard securities granted by the company, whether they rank prior to, pari passu with or postponed to the floating charge, must be disclosed in the title sheet of anyone purchasing from a receiver unless:

a discharge for each outstanding standard security is submitted;

the creditor in the outstanding standard security consents in the conveyance by the receiver to the effect of either discharging the security or disburdening the subjects of the security; or

the authorisation of the court has been obtained to sell free of the security(ies). Section 61(1) of the Insolvency Act 1986 provides that, where a receiver wishes to sell any property of the company in receivership over which there is a standard security or diligence and the receiver is not able to obtain the consent of the creditor, the receiver may apply to the court for authority to sell the property free of the security or diligence. Where the sale is carried out in accordance with the authority of the court, the registration of the conveyance by the receiver has the effect of disencumbering the property of the security. The authorisation of the court must be examined before any securities are removed from the title.

See also Insolvency etc at Deeds by Receivers .

9.20.1 Deeds granted by company in administration- prior standard securities

In the event of a limited company going into administration, unless the administrator has a court order under which they are expressly enabled to dispose of the heritable property of the company as if it were not subject to existing standard securities, then as is the case for receivers (sometimes called administrative receivership in Scotland) in the paragraphs above, the standard securities do not 'fly' off. Unless the registration officer has examined a court order (which might be any court order appointing the administrator but may be a separate order obtained after commencement) making this provision, or the creditor(s) consent in the conveyance by the administrator to the effect of discharging the security or disburdening the subjects of the security, then a discharge should be submitted for each outstanding security.

9.21 Ex facie Absolute Dispositions

See Miscellaneous Registrations under Ex facie Absolute Dispositions .

9.22 Notices of grant

Under various Acts of Parliament, the Scottish Ministers, local authorities and some other public bodies are empowered to make grants to owners/proprietors for a wide range of purposes including improvement, repairs &c to their land and property. Every Act, under which a grant is made, states the conditions under which the grant is payable or recoverable and stipulates the period for which these conditions will subsist. These grants, particularly in respect of their recovery provisions, are regarded as a form of debt affecting the registered interest and in terms of Rule 6(1)(b) of the 2006 Rules therefore fall to be entered in the charges section of the title sheet.

The current legislation governing grants is the Housing (Scotland) Act 2006 and any grant after 1 April 2010 should be in terms of that Act, except for few limited circumstances when the grant application was in process prior to that date. For registration purposes if a grant is received referring to earlier legislation the submitting agent must be asked to confirm that this is correct. The conditions relating to a grant under the 2006 Act apply for a period of 10 years.

Notices of grant under the Housing Acts are always entered in the schedule of prior and pari passu charges to be included with any charge certificate being issued because the Act under which they are made will almost certainly have provided for the creation of a prior ranking charging order to recover the grant in case of default.

In respect of local authorities, Section 193 of the Local Government (Scotland) Act 1973 allows for the execution of notices of grant by way of a stamp or facsimile of the signature of a proper officer. Attestation by one witness, or alternatively sealing with the seal of the local authority, is also required. (For a fuller explanation, see Examination of Title at Authentication - Local Authorities.)

9.22.1 Outstanding notice of grant in Sasine Register

Registration officers on examining the search sheet may encounter a Notice of Grant recorded in the Sasine Register affecting the subjects of the application for registration. If such a Notice of Grant is still outstanding (i.e. where the period for which the conditions apply has not expired and further no notice of repayment, notice of cessor or notice specifying observance of the conditions is no longer required has been received, it must be shown in the Charges Section and in the schedule to any Charge Certificate.

The style of the entry will be similar to the following:

Notice of Payment of (Improvement/Repairs) Grant of £500 by ……….. Council to ……….., under the Housing (Scotland) Act 1987, in respect of the subjects in this title (or in respect of ….. … part of the subjects in this title) containing conditions to be observed for 5 years from ………., recorded GRS (Renfrew) …….

Notice of Grant [of £xxx] by [name authority making grant} to ……….., in accordance with the provisions of section ?? of the Housing (Scotland) Act 2006, in respect of the subjects in this title (or in respect of ….. … part of the subjects in this title) containing conditions to be observed for 10 years from dd mmm yyyy.

The name of the relevant Act can only be narrated if the Registration Officer has sight of the deed itself. If the deed is not submitted with the application, the details of the grant will have to be taken from the Sasine minute. As the details of the relevant Act will not have been minuted in Sasines it will not be possible to narrate them in either the entry in the Charges Section or the Charge Certificate schedule. For the avoidance of doubt Registration Officers should not requisition any notice of grant that has been recorded in the Sasine Register.

9.22.2 Notice of Grant submitted for registration

When a notice of grant is submitted for registration, it will be entered in the charges section in a style similar to that in the immediately preceding paragraph, but the date of registration will need to be entered. The format of the grant is not prescribed but will need to conform to the following criteria:

- Include reference to the appropriate section of the Housing (Scotland) Act 2006 containing the conditions that are to apply;
- Subjects must be described by reference to the title number;
- The deed should be self-proving;
- If a second notice is registered in respect of the same grant that must refer to the registration date of the original notice.

If these criteria have not been met the application should be cancelled.

Registration Officers should be aware that the person to whom the grant may have been made need not be the registered proprietor of the subjects in question.

On completion of the registration no charge certificate is issued but the deed should be stamped "Registered

9.22.3 Notice of repayment or notice of cessor of conditions

Where the conditions of the grant cease to apply before the expiry of the stipulated period, a notice of repayment or a notice of cessor of conditions may be drawn up and registered. Registration of such a notice will have the effect of terminating the grant and the entry will be removed from the title sheet.

9.22.4 Crofting

Section 42 of the Crofters (Scotland) Act 1993 provides for the payment of loans or grants by Scottish Ministers for erecting, repairing or improving crofts. Full details are included in chapter 34 - Crofting

9.22.5 Expiry of the period of conditions

The conditions of grant will cease to apply after the expiry of the stipulated period. The relevant entry will only be removed from the title sheet, however, on the next occasion that the title sheet is being updated.

For crofting grants guidance is given in section 34.4.5.1.

Regarding notices of application of conditions under Schedule 3 of the Agriculture Act 1967, the 1967 Act imposed conditions for 40 years. However, subsequent legislation (section 33(1)(a) of the Agriculture Act 1970) firstly reduced the period to 15 years and then (section 10 (5) of the Agriculture (Miscellaneous Provisions) Act 1972) retrospectively reduced the duration of conditions to 5 years. Therefore any existing notices can be held to have expired after 5 years, even if the notice itself provided for a 40 or 15 year period.

9.23 Statutory charges (Charging Orders)

Under various Acts of Parliament, the Secretary of State for Scotland, the Scottish Ministers and local authorities may make orders charging or burdening land and property with repayment of loans or recovery of grants made, or expenses incurred, by them in respect of building works, improvements, water supply, etc. Such orders are known as absolute orders or charging orders and both usually provide for the repayment of a capital sum, often by instalments. In terms of Rule 6(1)(b) of the 2006 Rules, they fall to be entered in the charges section of the title sheet.

As the specific Act under which the order is made will make provision for the conditions which will apply, it is important that the Act is narrated in the entry. In any case, as with grants, whether it is an outstanding order from the Sasine Register or whether a new order submitted for registration the charge is entered in the charges section, no charge certificate is issued, the deed is stamped ‘Registered’ and the Act under which the charge is granted will make provision for how the charge will rank in accordance with other charges, for example, a Repayment Charge under the Housing (Scotland) Act 2006 has priority over most other encumbrances, the exceptions being certain other statutory charges which rank in accordance with date of registration (for example charging orders under the Health and Social Services and Social Security Adjudications Act 1983, see 9.23.4 below).

For guidance on the effect of power of sale applications on Charging Orders, see section 22.5.

9.23.1 Execution of Charging Orders

Charging orders may be executed in accordance with section 193 of the Local Government (Scotland) Act 1973 (see Examination of Title at Authentication - Local Authorities), but this does not apply to orders under the Health and Social Services and Social Security Adjudications Act 1983, for which see below at Execution of Charging Order under HASSASSA

9.23.2 Examples of styles for the entry in the charges section:

Absolute Order by Secretary of State for Scotland under section ……. of the …… ……… Act {insert year}.. – Charging the subjects in this Title with payment of a yearly sum of £ ….. , payable half yearly, for …. years from …………..[date].

Charging Order by …………… Council in exercise of powers conferred by …………….. Act {insert year}… - Charging the subjects in this Title [or the area …… on the Title Plan] with payment of an annuity of £ …… payable on ……[date] in every year for …. years commencing ……. [date].

Repayment Charge by …… Council in exercise of powers conferred by section … of the Housing (Scotland) Act yyyy, CHARGE the subjects in this Title [or describe as appropriate] with a repayable amount of £xx, payable in thirty equal annual instalments on the same date every succeeding calendar year.

9.23.3 Discharge of Orders

Absolute Orders, Repayment Charges and Charging Orders may be discharged in whole or in part. The creditor may grant a discharge of absolute order, or order of release, or receipt.

Any of these deeds will be given effect to by removing the charge from the title sheet, if it discharges the order in full, or by amendment of the entry if it discharges the subjects to a certain extent (as in a partial discharge of a standard security).

9.23.4 Charging orders by Local Authorities under the Health and Social Services etc Act 1983

Sections 21 to 24 of the Health and Social Services and Social Security Adjudications Act 1983 (HASSASSA) were brought into effect by subordinate legislation on 12 April 1993. These sections gave local authorities in Scotland, England and Wales powers to recover charges for residential accommodation from the assets of residents. Previously local authorities had no means of recovering such charges, if a resident was unwilling or unable to pay, and would merely rank as an ordinary creditor on the estate of the resident after his or her death.

Only one of the new powers is relevant to the work of Registers of Scotland. Section 23 provides that a local authority in Scotland, England or Wales may record or register a charging order over any one interest in land in Scotland owned by a resident.

The legal registration officer should note:

- if a resident owns several properties in Scotland, only one property can be made subject to the charge;

- a charging order is competent even where the resident only owns a pro indiviso share of property (e.g. a husband and wife situation);

- a charging order is also competent when the resident has not recorded or registered their title as proprietor (i.e. has right to the property or a share therein based on a midcouple or link in title). The order will then include a clause of deduction of title if it is to be recorded in the Sasine Register, or the links in title will require to be submitted in the case of a registration in the Land Register;

- a charging order under this legislation is similar to a standard security in some ways. It ranks in the same way as a standard security, i.e. according to the date of registration, unless there is an agreement stating otherwise. However, it cannot be assigned.

9.23.5 Execution of Charging Order under HASSASSA

A charging order under this Act could not be executed before 16 July 1993. To be accepted for recording or registration, a charging order or discharge must conform (or as nearly as circumstances permit, conform) to the prescribed statutory form in the schedule to the Charging Order (Residential Accommodation) (Scotland) Order 1993 (SI 1993/1516), which is as follows:

We (name of local authority), in exercise of the powers conferred upon us by section 23 of the Health and Social Services and Social Security Adjudications Act 1983 ("the 1983 Act"), hereby make a charging order over All and Whole (describe the security subjects) being an interest in land held by (name and designation of debtor) in respect of any debt due or to become due by the said (name of debtor) to us in respect of the provision by us of accommodation for the said (name of debtor), all in terms of the said section 23, together with any interest thereon as specified in section 24 of the 1983 Act as amended (details of any amendments)

In the case of a charging order by a Scottish local authority, it must be executed as a deed. Orders under HASSASSA merely executed in terms of section 193 of the Local Government (Scotland) Act 1973, purporting to bear the signature of the proper officer (or facsimile thereof), which is permitted in documents such as notices of grant, are not acceptable for recording or registration. (For further information on execution under section 193 see above at Notices of grant and also see Examination of Title at Authentication - Local Authorities.)

Prior to 1 August 1995, the order had to be executed in terms of section 194 of the Local Government (Scotland) Act 1973. This required that a deed to which a local authority was a party had to be sealed with its common seal and subscribed by two members of the council and the proper officer (whether attested by witnesses or not) or, alternatively, the deed was executed in a manner provided for in a local act. After 1 August 1995, the order must be executed in terms of section 3 and Schedule 1 and 2, paragraphs 1 and 4 of the Requirements of Writing (Scotland) Act 1995 (see Examination of Title at Authentication - Local Authorities).

English and Welsh local authorities will still require to execute charging orders or discharges in accordance with the general Scottish law on execution of deeds. As there is doubt as to the exact form such executions should take, any such instances should be referred to a senior case worker.

9.23.6 Recommended style of entry

Charging Order by [local authority] in exercise of powers conferred by Section 23 of the Health and Social Services and Social Security Adjudications Act 1983 – Charging the subjects in this Title [or the area tinted ….. on the Title plan] with payment of the sum of £ …. [with interest thereon] [or all debts due or to become due] by Y [design if appropriate] to said Council in respect of assessed charges for accommodation.

9.23.7 Discharge or calling-up of a Charging Order under HASSASSA

There is provision for the charging order to be formally discharged upon payment being made. The form is prescribed in the 1993 Order.

We (name of local authority), in consideration of £ being the whole amount secured by the charging order aftermentioned paid by (name and designation of debtor or as the case may be) hereby discharge the charging order over All and Whole (describe the security subjects), which charging order was made by us in our favour dated and (recorded in the Register of Sasines for… on…)(or registered under Title No. )

A local authority is able to call up a charging order once the resident has died. If the resident is still alive, the local authority may only call-up the charging order in the event of:

- the resident’s insolvency;

- the sale or transfer of the interest in land;

- the calling-up of any standard security over the same interest.

When an applicant for registration derives title from a local authority exercising a power of sale under a charging order, the legal registration officer should follow the instructions in Specialist Topics - Power of Sale.

9.23.8 Where the resident has alienated the property

Section 21 of HASSASSA contains avoidance provisions intended to defeat a resident’s attempt to avoid the assessed charge by, for example, transferring the property to a family member. The avoidance provisions do not affect the title to the property in any way. Local authorities are not empowered to make charging orders over property already alienated by residents, whether prior to or during their residence in the local authority accommodation. Instead, the party benefiting from the alienation will be personally liable to pay the assessed charge up to the value of the property received.

Thus, if a charging order is presented for registration, but the debtor is no longer the proprietor of the subjects, the order may be ultra vires. In such cases the registration officer should refer the case through normal channels for further advice. If the transfer appears to be at arms length for full market value the agent submitting the charging order should be advised of the fact that the property has transferred and the Keeper intends to cancel their application for registration; they should be provided the opportunity to provide evidence that the transaction is not at arms length and accordingly the charging order could be registered.

If a charging order was recorded or registered prior to the alienation, then the charge is already secured over the property and the local authority would be able to call it up if need be.

For further information on this act see the entry in the Miscellaneous Statutes chapter.

9.23.9 Charging Orders under the Legal Aid (Scotland) Act 1986

Since 26 August 1991 it has not been competent to make charging orders under the above Act, but discharges of such charging orders already recorded or registered may still be submitted.

9.24 Assignations

A creditor’s interest in a standard security can be a valuable asset of the creditor and, like any other asset, can be sold or transferred. The Keeper is given notice of this by application to register an assignation.

In cases where a large number of securities are being assigned by one creditor to another, the assignation will need to be registered against each title affected in each county. If the transfer of the company’s assets affects securities recorded in the Sasine Register as well as registered securities, it is the Keeper’s practice to recommend the use of two assignations, one for subjects in the Land Register and one for recording in the Sasine Register. Although a multiple title number assignation application will be accepted by the Keeper if the Form 2 and Form 4 list all of the affected title numbers, if the opportunity arises presenting agents should be encouraged to submit a separate Form 2 and 4 for each title number. If there is only one Form 2 presented with the application it should be checked in intake and a photocopy of the first page included with each casebag. The deed should also be copied and included in the casebag. In instances where the deed contains a large schedule, listing the particulars of the securities assigned, only a copy of the body of the assignation and the relevant page(s) of the schedule should be placed in the casebag.

The assignation is given affect to by adding a footnote to the relevant entry in the charges section such as:

‘Note: The above Standard Security was assigned to (New Creditor) (designation) conform to Assignation registered (date)’

Only if the assignation is being registered as part of the application to register the security, or in an application being processed at the same time as the security application, will the same note be added to the charge certificate; in this situation the certification page of the charge certificate should also be amended to show the new creditor as the "Registered Creditor". The assignation is not bound into the charge certificate.

The following creditors generally submit both the standard security in their favour and subsequent assignation to the second party:

Money Partners Loans Limited/Kensington Mortgage Company Limited
Commercial First Mortgage Limited/Colchester Funding Limited
Preferred Mortgages Limited/Oakwood Homeloans Limited

From 22 January 2007, any existing Charge Certificate will not be submitted or updated as a result of an application to register an Assignation.

The original entry for the standard security in the Charges Section should not be amended to delete the creditor's designation.

9.24.1 Partial assignation

Where the creditor only assigns part of the security or charge the footnote should follow the form set out below:

‘Note: The above Standard Security was assigned to (New Creditor) (designation) to the extent of £XXXX conform to Partial Assignation registered (date)’

The original creditor’s designation should not be removed from the entry in the charges section as they retain an interest in the security.

9.24.2 Partial assignation and discharge

A security can be partially assigned and partially discharged by the same deed. The note made against the relevant entry in the charges section in these circumstances would be:

‘Note: The above Standard Security was (a) assigned to (New Creditor) (designation) to the extent of £XXXX and (b) discharged to the extent of £YYYY, all conform to Assignation and Discharge registered (date)’

If there are two or more entries in the charges section of the title sheet and the assigned/partially assigned standard security is shown in a schedule of prior or pari passu charges on another charge certificate there is no need to amend the entry in the schedule as it only needs to show the details of the original charge.

9.25 Discharges

A discharge of an outstanding heritable security submitted along with an application for registration should be accompanied by an application form 2 and will be liable to the relevant fee. If a standard security recorded in the Sasine register has not been discharged by the time the subjects are first registered then the discharge should be submitted for registration; recording in the Sasine register would no longer be competent unless the security also affected additional subjects that remained in the Sasine register.

The discharge does not have to contain full details of the security being discharged provided that (a) the registration officer is satisfied that the discharge relates to the only security by the debtors to the creditors over the title and (b) the title number is shown on the discharge. The officer should ensure that the debtors have not taken out another security to the same creditor or that another security over the title has not been assigned to the creditor granting the discharge. A check of prior applications or retained entries should be sufficient to satisfy the officer of this.

If the security being discharged is only over part of the registered subjects then there will probably have been a tint provided for reference on the title plan. When the security is discharged the registration officer should check to see if this tint is still required and, if not, arrange with a plans officer to have it removed.

A discharge is given effect to by the removal of the entry relating to the security from the title sheet. As the land register is not a historical register there will be no reference on a title sheet to a discharged security or the discharge itself. It has previously been the practice to add a next application note and a note in the following terms to the entry in the charges section when a discharge of a second or subsequent standard security was submitted but the land certificate was not included with the application:

‘Note: The above Standard Security was discharged conform to Discharge registered (date)’

From 22 January 2007, land and charge certificates will no longer be submitted with any application for registration and the note in the charges section is no longer required; if such an entry and note exist in a title sheet being updated then they should be removed, along with any associated next application note.

For reports purposes it remains important that a next application note is created for any discharge that is registered when a land certificate is not being issued. Any next application note relating to the registration of the standard security should remain.

Where a security is partially discharged the details of this must be entered on the title sheet. The note under the entry in the charges section should contain the appropriate details e.g.:

‘Note: The above Standard Security was discharged to the extent of £XXX conform to Partial Discharge registered (date)’

With effect from 22 January 2007, the existing charge certificate will not be returned to the Keeper with the application for registration of the discharge. However when dealing with applications prior to this date which contain charge certificates being discharged, the security deed should be returned to the agent. The procedure for this is as follows:

Tear off and discard the front cover and certification page.
Write ‘cancelled’ beside the entry for the charge certificate on the Form 4.
Renumber the discharged deed to correspond with the numbering of the charge certificate on the Form 4.
Mark the backing of the standard security ‘DISCHARGED’ in pencil.

The plastic binding strip of the certificate should not be removed from the discharged security deed. If there have been variations or assignations bound into the certificate these deeds should be returned to the agent at the same time. If the certificate contained a copy deed or deeds then the copy or copies should not be returned to the agent but discarded along with the front cover and certification page.

9.25.1 Discharge confusione

A standard security will be extinguished if the debtor and the creditor are the same person acting in the same capacity. If such a situation comes to the Keeper’s attention then the security should be removed from the charges section as if it had been formally discharged.

9.26 Change of name of creditor - Common Links

It is common for banks and building societies to change their names, merge with other companies or, occasionally, change status. Because of these changes it is not uncommon for discharges or assignations to be granted by a party who is not the creditor named in the corresponding entry in the charges section. The first time the Keeper becomes aware of such a change, the documentation relating to it will have to be requisitioned and examined before the application can be processed. Details of changes involving some of the larger institutions are listed in Chapter 59 - Common links in title.

The Keeper maintains an index of these changes of name or status, in the Common Links Index, which is maintained by the land register intake section. Any new information received by the Agency relating to changes of name or status should be forwarded to intake section so that the index can be updated. Registration officers can view the Common Links Index through the tools menu on the Land Registration System. If there is any doubt as to whether new information should be added to the index, advice should be sought from a senior caseworker.

When an application is made to register a standard security where the creditor's name has changed between the execution of the deed and the registration date, and the necessary supporting documentation has been examined, a note should be added to both the charges section entry and the charge certificate, e.g.

Note: With effect from 1 November 2011 the assets of Norwich and Peterborough Building Society vest in the Yorkshire Building Society by virtue of Instrument of Transfer of Engagements.

Note: by Certificate of Incorporation on Change of Name dated 11 January 2010 Abbey National plc changed its name to Santander UK plc.

The registered creditor in the charge certificate should be shown as the new company.

An existing entry in the charges section detailing a creditor that the registration officer considers to no longer exist should not be amended unless application is made to register a deed affecting that interest. In that situation the deed should explain the nature of the change and the agent should provide any necessary supporting documentation; a note should be added in accordance with the forgoing examples. It is not for the Keeper to make any presumption that the named creditor is no longer correct as there are circumstances where assets either don't transfer or are split amongst different companies; as at the date of registration of the security the information was correct and accordingly there is no inaccuracy in the register.

9.27 Certificate of Consignation or Declarator

If a discharge of a heritable or standard security in respect of a monetary obligation cannot be obtained because of the absence or death of the creditor the debtor may, under section 18(2)(a) of the 1970 Act, consign the whole amount due in a bank in Scotland on behalf of the person who appears to have the best right to it. Once this has taken place a certificate of consignation can be drawn up by a solicitor and registered on behalf of the debtor. The effect of registration is to disburden the security subjects of the security, (section 18(3)), so the security should be removed from the charges section as if it had been formally discharged.

In the case of a standard security for a non-monetary obligation, section 18(2)(b) of the 1970 Act allows the debtor to apply to the court for a declarator that the obligation has been performed. If the declarator is granted a solicitor can draw up a certificate of declarator which can be registered with the same effect as a certificate of consignation.

9.28 Extract decree (on forfeiture of right of redemption)

Where a debtor in a standard security has defaulted in repayment of the sum borrowed, the creditor, if they have exposed the security subjects for sale and failed to find a purchaser, may apply to the court for a decree of foreclosure. If the decree is granted it can be registered. Registering the decree has the effect of (1) extinguishing the debtor’s right to redeem the security and giving the creditor a right to the security subjects as if they had received a disposition from the proprietor of them at the date of registration of the decree and (2) disburdening the subjects of the creditor’s security and any other securities or charges that rank postponed to it. When processing an application for registration of such a decree the registration officer should remove the creditor’s charge and any postponed charges from the charges section as if they had been formally discharged. Any prior or pari passu charges should still be shown on the title sheet and will remain enforceable until redeemed.

9.29 Adjudication in execution

Registration of a decree of adjudication in execution will, in addition to the relevant entry in the proprietorship section, require an entry to be made in the charges section. This is primarily to establish and regulate its ranking in relation to other securities. The entry should be in the following form:

‘Extract Decree of Declarator and Adjudication in Action at instance of AB (designation) (Pursuer) against the said CD (Defender) - Finding and Declaring ………. and Adjudging the subjects in this Title to the Pursuer. Dated (date) and extracted (extract date)’

Notwithstanding the expiry of the legal (i.e., the period for which the declarator remains effective), an adjudication in execution will still subsist and remain on the title sheet until a decree of expiry is registered or the Keeper is satisfied that prescription has operated to perfect the title. Once this happens the relevant entry will be removed from the charges section as if the security had been formally discharged.

9.30 Charge certificates

A creditor’s right in and to a heritable security (as defined in section 9(8)(a) of the 1970 Act) is made a real right by registration of the security (section 3 of the 1979 Act). The related charge certificate issued to the creditor, conforming to section 5(3) of the 1979 Act, will be accepted for all purposes as sufficient evidence of the facts stated in it (section 5(4) of the 1979 Act).

Normal practice is to issue a separate charge certificate:

for each heritable security secured over a registered interest; and

for each title over which the heritable security is secured

If, however, a creditor holds several registered securities over the same title, or a security over more than one registered title, the Keeper may, on written request, combine these into a single charge certificate. A request for a combined charge certificate must be approved by a senior caseworker.

The security deed which induces the registration will be attached to the charge certificate. Where more than one charge certificate is to be issued in respect of a security, the security deed will be attached to one charge certificate and copies of it will be attached to the other certificates.

Where the security deed is registered in the Books of Council and Session, an extract will be attached to the charge certificate. (Regarding registration in the Books of Council and Session, see Registrable Transactions - Registration In the Land Register and the Books Of Council And Session.)

With effect from 22 January 2007 no other deed will be bound into the charge certificate. Any other deed containing provisions affecting the security, e.g. a ranking agreement or deed of variation, will only be reflected in the charge certificate by means of a note if the application to register that deed is dealt with at the same time as the security deed is being registered and the charge certificate issued. Once the charge certificate has been issued it will not be updated to take account of any subsequent deeds.

9.30.1 Form of a charge certificate

The form of the charge certificate is set out as Form 7 in Schedule 1 to the 2006 Rules. It consists of a front cover and a page detailing the particulars of the certification, with provision for the inclusion of a schedule for the noting of prior and pari passu ranking charges. The front cover contains a printed statement of the indemnity provisions and notes for guidance, and is completed by the insertion of the title number and a short description of the subjects.

The form of the certification page, as set out in the 2006 Rules, comprises:

Title Number - The need to insert more than one title number will only arise where the issue of a combined certificate affecting more than one title sheet has been authorised.

Subjects - A postal address or brief description of the property reflecting that in the A section will be inserted here. This will likewise be the case even where the security subjects form a part only of the subjects. A plan reference will be used only where no other means of identification of the part is available.

Registered Proprietor of subjects - This information reflects the B section and will include the full name (including all alternative names) and address and, where applicable, capacity of the proprietor (e.g. as trustee).

Destinations or any special Act under which the proprietor holds title will only be included where there is an exclusion of indemnity because the destination or statutory capacity casts doubt on the competence of the granting of a heritable security.

Registered Creditor - this should reflect the current creditor at the time of issue of the charge certificate; for example, if an assignation of the security is received with the standard security then the assignee should be shown as the registered creditor in the charge certificate.

This is to certify that the heritable security attached (or of which an office copy is attached) was

Registered on - Date of registration of the charge will be inserted.

to the extent of - This is normally only applicable where the security is granted in favour of two or more creditors to separate extents, or where two or more charge certificates are issued following a partial assignation and the relevant extent will be added to each charge certificate.

NOTE - The footnote to the certification shows whether or not there are any other heritable securities or other charges ranking prior to or pari passu with the charge.

Where there are no prior or pari passu ranking securities, the note will read:

- Note: There are no heritable securities ranking prior to or pari passu with the above mentioned heritable security appearing on the Register affecting the subjects.

If there are prior or pari passu heritable securities or other charges, these are shown in a Schedule of Prior or Pari Passu Charges annexed to the charge certificate. In this case the note will read:

- Note: There are no heritable securities ranking prior to or pari passu with the above mentioned heritable security appearing on the Register affecting the subjects (except as stated in the Schedule annexed).

9.30.2 Amendment of charge certificate cover

The charge certificate cover bears a statement that ‘The within-mentioned Charge has been registered against the subjects in the above title’. This statement must be amended in the following cases:

- Where the security subjects form part only of the subjects in the title, the words ‘part of’ will require to be inserted before the words ‘the subjects in the above title’.

- Where the security is over the subjects in that title and other subjects, after the words ‘the subjects in the above title’, insert the words ‘and other subjects’.

9.30.3 Variations of the Ranking ‘Note’ in the charge certificate

9.30.3.1 Major (Shared) Ownership Schemes

In this type of scheme the developer retains a pro indiviso share of the subjects in the name of a nominee. One practice is for the developer’s nominee and the purchaser to grant separate securities to the same creditor over their respective shares. Strictly speaking separate charge certificates could be issued for both. However, as the securities are usually registered together and the two deeds form effectively one security to the one creditor, the registration officer should instruct one charge certificate with both standard securities bound in. As there are two securities, the ‘Note’ regarding ranking should read:

Note: There are no heritable securities ranking prior to or pari passu with the above mentioned heritable securities appearing on the Register affecting the subjects.

Alternatively the housing association may already hold a security over their whole development and a deed of restriction should be granted releasing the share being transferred from the developer's security; the purchaser is likely to grant a standard security over their share.

Using a sale of a 25% share as an example, if there is no deed of restriction for the developer's security this will be shown as affecting the "the subjects in this title and other subjects" and if the purchaser grants a standard security over their share the earlier security would have prior ranking.

Standard Security by said A Developer to BIG CITY BANK (design) over the subjects in this Title and other subjects.

Standard Security by said Purchaser to MORTGAGES 'R US (design) over said Purchaser's 25% share of the subjects in this Title

Where a Deed of restriction has been granted releasing the share from the developer's security the 1st entry would require a note added in the following style:

A 25% share of the subjects in this Title was disburdened of the Standard Security conform to Deed of Restriction registered (date)

The charge certificate should show:

- Title Number,
- Subjects (from A Section-not amended to xx% pro indiviso share),
- Registered Proprietor from B Section - BOTH Housing Association and individual (pro indiviso shares are not narrated).
- Cover of Charge Certificate should be amended to read "over a xx% share of the subjects in this Title" - NOT "part of "

Provided the developer's standard security has been disburdened in respect of the share being sold there is no counter-ranking between these securities. Any subsequent security would rank in relation to the security over the share being secured.

Major ownership schemes are discussed further in Miscellaneous Registrations - Shared ownership schemes.

9.30.3.2 Sales under the Housing (Scotland) Act 1987

As explained in Miscellaneous Registrations - Council House Sales only the loan for the purchase of or improvement to the house (or sums advanced under a security to which the landlord consents) will have statutory ranking prior to the discount in a sale under the 1987 Act. Any additional sums advanced for other purposes, whether initially or at a later date, even though they may appear to be secured under the prior ranking loan security, will automatically rank postponed to the discount. The discount can be secured by a standard security at any time within the 3 year period.

Therefore, whether a discount security is registered or not, in the case of a sale under the 1987 Act, this restriction on the loan security will be drawn to the attention of the creditor in the footnote to the charge certificate for the loan security:

Note: Subject to the provisions of Section 72 (5) of the Housing (Scotland) Act 1987, there are no heritable securities ranking prior to or pari passu with the abovementioned heritable security appearing on the Register affecting the subjects.

9.31 Standard security over an entailed estate

An entailed estate or any interest therein was excluded by the 1970 Act from being an interest in land over which a heritable security could be created, although it may have been possible to register another older form of security. The Abolition of Feudal Tenure (Scotland) Act 2000 has abolished entailed estates and accordingly any application to register any form of security over such an interest is incompetent.

9.32 Standard security over a lease

The particulars entered in the charges section of a title sheet made up for the tenant’s interest under a lease of the subjects are the same as those entered in that section for a proprietor's title. See also Specialist Topics - Leasehold Interests.

9.33 Effect of compulsory purchase on existing heritable securities

The Acts which give the compulsory purchase powers to local authorities and the Scottish Ministers invariably contain provisions to allow the subjects to be acquired, and later sold on, unencumbered by existing heritable securities. For a fuller explanation see Specialist Topics - Compulsory Acquisition.

9.34 Points to note

When considering the points below, please note that from 22 January 2007 a Charge Certificate can no longer be submitted for updating. Details of subsequent charges can therefore only be included if the application to register the subsequent charge is being processed at the same time as the original security.

No documents other than the charge itself are to be bound into the Charge Certificate.

Only the details of the original security (or charge) will be entered in the schedule. Subsequent dealings affecting the security will not be reflected in the schedule, unless they affect the ranking of that security.

A standard security granted under statutory powers may affect the conventional ranking of any other securities (see section 9.17.9 - Statutory ranking)

A charging order created under statutory powers will be entered in the schedule, even though it may be registered after the date of registration of a security. The charge created by such an order ranks prior to all existing and future securities or charges.

Notices of grant will be entered in the schedule whenever they are created, because the Act under which they have been made will almost certainly have provided for the creation of a prior ranking charging order to recover the grant in the event of default.

Registration officers are reminded that the Act under which a charging order or notice of grant is granted should be narrated in the title sheet and the schedule when the deed is available. However, this will not be possible in the case of an outstanding charge which is recorded in the Sasine Register and details have been taken from the Sasine minute.

Where ranking provisions as regards securities are contained in a separate Ranking Agreement (section 9.16.8), the registration officer should:

make reference to the ranking agreement in a note after each affected entry in the charges section; and

add the appropriate note referring to the ranking agreement to the charge certificate

Styles of entries

Bond for £2000 and Disposition in Security by John Brown to Property Lending Company Limited, recorded GRS (Renfrew) 14 Jul 1969
Standard Security for all sums due by William Brown to Central Bank Limited, recorded GRS (Renfrew) 15 May 1973
Standard Security by William Smith to Royal Bank of Scotland plc, registered 5 Jun 1992, subject to the ranking clause therein – copy attached hereto
Charging Order by ………… Council under section …….. [if available] of the ……………… Act 19…, registered …………
Notice of Payment of Improvement Grant of £…. by ………………Council to William Brown, under the Housing (Scotland) Act 1987 [if available], registered …………

9.35 Pecuniary Real Burdens

A pecuniary real burden was a rarely used method of creating a charge over land. The sum secured was usually an unpaid portion of the purchase price or a sum to be paid toward the cost of forming a road, known as Road Money. Such burdens were almost invariably created by way of a reservation in a conveyance of the subjects. While section 117 of the Title Conditions (Scotland) Act 2003 has formally abolished this as a method of creating a charge over land it is not retrospective and the following instructions are applicable when a pecuniary real burden has been constituted in a deed recorded or registered prior to 28 November 2004.

Although there was usually no separate deed to create such a burden there was no reason why a separate deed would not have been used to create one.

As the definition of a heritable security in the 1970 and 1979 Acts excludes pecuniary real burdens, no charge certificate can be issued in respect of the creditor’s interest. Nonetheless any pecuniary real burden for payment of a capital sum must be entered in the charges section of the title sheet under rule 6(1)(b).

Where the pecuniary real burden has been created in a prior writ it may not be necessary to make an entry in the charges section at all. Cases with existing pecuniary real burdens fall into four broad categories:

The pecuniary real burden was created in a conveyance of the subjects and relates to ‘Road Money’. It is considered highly probable that the obligation will have been fulfilled by the time there is an application for registration. There is almost never a discharge of road money so no entry will be made in the charges section as it would have to remain for ever. Just in case the obligation has not been fulfilled and to avoid losing the burden it will be entered in the burdens section along with any other burdens from that conveyance.

The pecuniary real burden is created by a reservation in a conveyance and is for a portion of the purchase price unpaid. If there has been at least one transfer of the property for full value since the creation of the burden then it is assumed that the unpaid portion of the price will have been repaid and no entry will be made in the charges section. If the only transfer of the subjects since the creation of the burden is the deed inducing registration then the presenting agent should be contacted and reminded of its existence and, unless a discharge is submitted, an entry in the following style should be made in the charges section.

Real Burden for £xxx in favour of CD (design) constituted by Disposition to AB (design), recorded G.R.S. (County) dd mmm yyyy.

The pecuniary real burden is created by reservation in a conveyance of the subjects and does not relate to ‘Road Money’ or a portion of the purchase price. Because of the potential complications the case should be referred to Legal Services.

The pecuniary real burden is created in a separate deed. This is a highly unlikely event and any such case should be referred to the Legal Services.

A pecuniary real burden may also have been created under statutory powers. For example, under the Housing (Scotland) Acts a local authority is entitled to charge owners with a proportion of the cost of demolishing their houses. If the owners are absent or if they are unable to meet this expense, a Notice, which becomes a real burden on the subjects until it is discharged , is registered by the Local Authority. This form of burden will be entered in the charges section in this style:

‘Notice by [Local Authority] of Real Burden of £XXX under [specify Act]’

It should be noted that the liability of a proprietor to repay part of the discount given to them as part of a council house sale could never be imposed as a real burden in a conveyance of the subjects, even before the abolition of pecuniary real burdens.

A pecuniary real burden, like a normal heritable security, can be discharged, assigned or restricted by the creditor or their successors. If an application to register a formal discharge is submitted to the Agency, the entry relating to the burden is simply removed from the title sheet. If an assignation or restriction is submitted, a note will be added under the entry in the charges section. The style of the note will be similar to those used for heritable securities (see section 9.24 - Assignations).

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