S13.3 Leases: Criteria for Registration

In terms of Section 3(3) of the Land Registration (Scotland) Act 1979, once an area has become operational, registration is essential in order to obtain a real right in a lease or transmission thereof taking effect after the operational date. Any transfer of a Lease, whether for valuable consideration or not is registerable and cannot be recorded in the Register of Sasines. Section 2(3) applies, however, and a heritable security, liferent or incorporeal heritable right over a Lease will not induce a First Registration. A deed creating or dealing with such an interest may still be recorded if the Lease itself is not registered.

The requirements of a registrable Lease are:

(i.) It must be probative;

(ii.) Its term must exceed 20 years, or be capable of being renewed, without any subsequent agreement, so that its total duration exceeds 20 years; and

(iii.) A rental must be stipulated (but it may be illusory).

Only LONG LEASES are registerable, i.e. the term exceeds 20 years. Also, in order that a Lease may be shown as an overriding interest on a Title Sheet, it must exceed 20 years in its term.

In many cases, the term of the Lease is quite clear e.g. 99 years or 999 years, but care must be taken regarding those Leases with a term just on the 20 years. If the period of the Lease is expressed by reference to the term day (e.g. Whitsunday 1989 to Whitsunday 2009) the period does not exceed 20 years because convention dictates that the entry and ish (in the case of Leases, this means the end of the period) on a term day is taken to occur at noon on each of these days. However, if the period is expressed by reference to calendar date, (e.g. 15th May 1989 to 15th May 2009, the period does exceed 20 years as convention dictates that the whole of the days defining the period are included.

The Land Tenure Reform (Scotland) Act 1974, amongst other things, prohibited the creation of new feuduties and set up the machinery for the redemption of existing ones. It was feared, however, that this might cause a massive switch to leasehold tenure by developers, then virtually perpetuating the feuduty system by another name. Whilst Leases over Commercial and Industrial Properties were allowed to continue, new long Leases i.e. over 20 years are prohibited over wholly domestic or residential properties.

NOTE: This does not apply to Leases created before the 1974 Act nor Leases where the term is extended after the Act.