NOTICES OF POTENTIAL LIABILITY FOR COSTS

1. Introduction

The Tenements (Scotland) Act 2004 (hereinafter referred to as 'the 2004 Act') came into force on 28th November 2004.

From a registration perspective, the major innovation is the introduction of a new form of deed that is capable of being recorded in the General Register of Sasines or registered in the Land Register of Scotland. This is the 'notice of potential liability for costs'. The 2004 Act makes provision for the registration of this notice in respect of a flat or flats in sections 12, 13 and Schedule 2 of the Act.

In addition to this, the 2004 Act amends section 10 of the Title Conditions (Scotland) Act 2003 ('the 2003 Act'), to make a similar provision allowing registration of notices against the title to burdened properties in terms of that Act. This is also called a notice of potential liability for costs. For registration purposes, the handling of the two types of notice is the same.

These instructions set out background information on the legislation and registration requirements and procedures.

Table of Contents

2. 2004 Act notices - statutory material

2.1 Background

Section 11 of the 2004 Act provides rules for determining when a flat owner's liability arises to contribute to certain costs, such as those of common repairs or a communal insurance premium. Normally when a payment has become due, liability lies with the owner of the flat at the time and does not transmit to successor proprietors. Section 12 of the 2004 Act introduces a new rule. In addition to the present owner, an incoming owner may also become severally liable for these costs if a 'notice of potential liability for costs' is registered in the relevant property register 14 days before the date on which the new owner acquires the flat.

2.2 Form and Content of the notice of potential liability for costs (tenement)

The notice must be in, or as near, as may be in, the following form given in Schedule 2 to the 2004 Act:

NOTICE OF POTENTIAL LIABILITY FOR COSTS

This notice gives details of certain maintenance or work carried out or to be carried out in relation to the flat specified in the notice. The effect of the notice is that a person may, on becoming the owner of the flat, be liable by virtue of section 12(3) of the Tenements (Scotland) Act 2004 (asp 11) for any outstanding costs relating to the maintenance or work
Flat to which notice relates. [This must describe the flat in a way that is sufficient to identify it. Where the flat has a postal address, the description must include that address. Where the flat has been registered in the Land Register, the description must make reference to the Title Number of the flat or the larger subjects of which it forms part. Otherwise, the description should normally refer to and identify a deed recorded in a specified Division of the Register of Sasines.]
Description of the maintenance or work to which the notice relates. [The maintenance or work is to be described in general terms.]
Person giving notice. [The name and address of the person applying for registration of the notice ("the applicant") or the applicant's name and the name and address of the applicant's agent. Agency guidance will encourage agents to also enter here a statement that the applicant is either owner of a flat in the tenement or the manager of the tenement.]
Signature. [The notice must be signed by or on behalf of the applicant. As explained later, the execution must be self-proving.]
Date of signing.

2.3 Who may register a notice of potential liability for costs (tenement)?

An application for registration of a notice may only be made by (or on behalf of) one of the following:

the owner of the flat against which the notice is to be registered;
the owner of any other flat in the tenement;
any manager of the tenement. 'Manager' is defined as 'any person appointed to manage the tenement.'

2.4 When notice of potential liability for costs (tenement) may be recorded or registered against more than one flat

A notice of potential liability for costs (tenement) may be recorded or registered in relation to more than one flat so long as it is in respect of the same maintenance or work. However a single notice cannot narrate different work or maintenance applying to different flats.

2.5 How long does the effect of a notice of potential liability for costs last?

The notice will expire at the end of a period of 3 years beginning with the recording date, unless it is renewed by being recorded again before the end of that period.

2.6 Is there a facility for discharging a notice of potential liability for costs?

The 2004 Act does not make any provision for the discharge of notices or clearing them from the register. Until further instruction is given, any enquiries regarding this or situations in which a purported discharge is presented should be referred to sasine RO1 referral officer.

3. Registration practicalities - 2004 Act notices

3.1 Form and content of notice

Notices must be in, or as nearly as may be in, the statutory form. Minor variations from the style in format and layout are therefore acceptable. However, a notice will be rejected if it does not include the minimum content required by the statute (and detailed at 2.2 above.)

3.2 Whether applicant entitled to seek registration

It must be ascertained that the person giving notice is owner of the particular flat, or of another flat in the tenement, or is manager of the tenement. The necessary confirmation may be given within the text entered in the 'person giving notice' section of the notice as discussed at section 2.2. If so, this may be accepted without further question.

However if no such confirmation is given, it must be obtained. It is acceptable to telephone the agent. Assuming confirmation of the position is given a note should be added to the Computerised Search Sheet - e.g. 'agent confirms person giving notice is owner of a flat in this tenement' or 'agent confirms party giving notice is manager of this tenement.' The Keeper simply requires the applicant or their agent to state that the applicant is owner of a flat in the tenement or manager of the tenement. Evidence such as deeds or minutes of meetings appointing factors is not required and need not be examined.

3.3 Requirement for self-proving execution

The notice must be signed by or on behalf of the applicant. In addition, in terms of section 6 of the Requirements of Writing (Scotland) Act 1995 it must be self-proving. This will normally mean that one witness should attest the subscription of the notice and that the name and address of that witness should be provided in the deed.

3.4 Recording Fee

A Miscellaneous Event fee of £80 is payable. A single fee of £80 applies to any one notice irrespective of the number of search sheets affected and even if the notice relates also to flats with titles registered in the Land Register.

3.5 Summary of key points

It should be checked:

that the property description gives a postal address as well as description by reference (or other sufficient description);
that name and address (or agents' address) of the person giving notice has been completed;
that the applicant is entitled to register (see section 3.2); and
that the requirement for self-proving execution is met.

Note The Keeper will not check or pass any comment upon the description of the maintenance or work to which the notice relates.

3.6 Style of Minute

Notice of Potential Liability for Costs in terms of section 12 of the Tenements (Scotland) Act 2004 by [party] in respect of costs relating to maintenance or work described therein as [enter description of maintenance or work contained in the Notice*] in relation to [description of flat(s) to which Notice relates] dated [date of signing.]

* The description of work or maintenance will normally be short and, if so, should be narrated at length in the minute. However descriptions which extend to more than three or four sentences should not be reproduced at length. In that situation the minute should read …in respect of costs of maintenance or works described at length therein …

4. 2003 Act Notices

4.1 Background

The 2003 Act notice procedure applies to work or maintenance costs becoming payable in the context of the relationship between burdened and benefited proprietors in a real burden. It operates in the same was as 2004 Act type to make successor burdened proprietors severally liable

4.2 Form and content of notice of potential liability for costs (Title Conditions)

The notice must be in, as near as may be, the following form given in Schedule 1A to the 2003 Act:

"NOTICE OF POTENTIAL LIABILITY FOR COSTS

This notice gives details of certain maintenance or work carried out in relation the property specified in the notice. The effect of the notice is that a person may, on becoming the owner of the property, be liable by virtue of section 10(2A) of the Title Conditions (Scotland) Act 2003 (asp 9) for any outstanding costs relating to the maintenance or work.

Property to which the notice relates: [This must describe the property in a way that is sufficient to identify it. Where the property has a postal address, the description must include that address. Where title to the property has been registered in the Land Register of Scotland, the description must refer to the title number of the property or of the larger subjects of which it forms part. Otherwise, the description should normally refer to and identify a deed recorded in a specified division of the Register of Sasines.]
(see note 1 below)

Description of the maintenance or work to which notice relates:
[the maintenance or work is to be described in general terms]

Person giving notice: [The name and address of the person applying for registration of the notice ("the applicant") or the applicant's name and the name and address of the applicant's agent. Agency guidance will encourage agents to also enter here a statement that the applicant is either (1) owner of the burdened property, (2) owner of the benefited property or (3) a manager of either or both of benefitted and burdened properties]

Signature: [The notice must be signed by or on behalf of the applicant.]

Date of signing:"

4.3 Registration instructions

Whereas in the context of the 2004 Act type of notice, only an owner of a flat in the tenement or a manager of the tenement might seek registration, in the 2003 Act type registration is limited to:

The owner of the burdened property
The owner of the benefited property
A manager of either or both properties

The instruction given at section 3.2 applies subject to that modification.

The style of Minute is as follows:

Notice of Potential Liability for Costs in terms of section 10 of the Title Conditions (Scotland) Act 2003 by [party] in respect of costs relating to maintenance or work described therein as [enter description of maintenance or work contained in the Notice] in relation to [description of property to which Notice relates] dated [date of signing.]

In respect of the instruction at section 3.5, burdened properties will not necessarily have a postal address.

In all other respects the instructions given in part 3 apply to 2003 Act type notices in the same way as they apply to 2004 Act type notices.

GLA 01919 (No.1) 03 Nov. 2006
NOTICE OF POTENTIAL LIABILITY FOR COSTS in terms of Section 12 of the
Tenements (Scotland) Act 2004 by NEWTON PROPERTY MANAGEMENT LIMITED, in respect of costs relating to maintenance or work described therein as general repairs, maintenance, insurance and management, in relation to Flat
1/2, 58 GARDNER STREET, GLASGOW. Dated 1 Nov. 2006.

5. Discharging a notice

The 2004 Act does not make any provision for the discharge of notices or clearing them from the register. Notices expire 3 years after registration but can be renewed by recording again before the end of that period.

They run for 3 years and seem incapable of being Discharged. Letter of Satisfaction can be noted in Land Register but not in Sasines.

However: DISCH. OF NOTICE OF POTENTIAL LIABILITY FOR COSTS
See:
MID 03291 (No.2) 04 Jun. 2010
DISCH. by CHARLES WHITE LIMITED, - of Notice of Potential Liability For Costs (recorded 8 Dec. 2009), - over 6/1 GREAT CANNON BANK, PORTOBELLO, EDINBURGH. Dated 26 May 2010.

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