S11.7 Ranking of Standard Securities

Ranking is the order of preference given to two or more recorded heritable securities granted over the same subjects. All ranking clauses validly created in Standard Securities will be minuted, whether specific (i.e. “shall rank postponed to St. Sec by said A to B, recorded …”) or more general (i.e. “shall rank in accordance with the provisions of section 72(5) of the Housing (Scotland) Act 1987”).

If a debtor has granted more than one heritable security over the same subjects and defaults in payment of any of these securities, the ranking accorded to each security becomes of practical importance. A creditor who ranks preferred to the other creditors can satisfy their debt fully out of the proceeds of the sale of the subjects before any other creditor can begin to satisfy their claim. Where, however, creditors rank pari passu (i.e. equally) each can satisfy themselves from the proceeds of the sale, but only in proportion to the extent of the debt owing to them.

Ranking depends on:

(1) The date on which the writs are recorded in the Sasine Register.

Formerly by the Titles to Land Consolidation (Scotland) Act 1868 (Section 142) and the Land Registers (Scotland) Act 1868 (Section 6), the ranking of writs depended on the date and hour of their presentment. By the Land Registration (Scotland) Act 1979 (Section 7(4)), as from 6 April 1981, ranking depends only on the date of presentment. Thus, in the absence of any special clauses to the contrary, all writs recorded on the same day, whether received by post or presented personally, rank pari passu.

(2) Whether any ranking clauses are contained in writs.

(3) Whether any Ranking Agreement has been recorded.

Ranking Clauses may have the effect of:

(I) Making the writs affected rank pari passu irrespective of the date of their presentment and of whether any of the writs are yet on record or not.

(II) Postponing the ranking of one security to another.

(III) Giving prior or preferred ranking to one security over another.