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Land Reform (Scotland) Act 2003: Part 2
Community Right to Buy: Guidance

2 GUIDANCE FOR LANDOWNERS

2.1 The landowner

1. As a landowner, you play a fundamental part in the Community Right to Buy process. This is because, in order for a community body (CB) to purchase land under Part 2 of the Land Reform (Scotland) Act 2003 ("the Act"), you must be a willing seller, that is, you wish to voluntarily dispose of the registered land. It is therefore for you to determine when your land is sold, how much land you wish to sell and how the land for sale is lotted.

2. Section 40(1) of the Act provides that the owner of the land can also be any creditor in a standard security having a right to sell the land.

2.2 Registrable land

3. A CB can apply to Ministers to register an interest in any land other than excluded land. Section 33 of the Act describes eligible land as "registrable land", appearing to Ministers to be rural, and provides for an order to be made to identify land excluded from the Community Right to Buy. "The Community Right to Buy (Definition of Excluded Land) (Scotland) Order 2004" lists excluded settlement areas and provides for copies of maps detailing excluded land to be made publicly available at the Offices of the Scottish Executive Environment and Rural Affairs Department at the address in Annex E. The Scottish Executive Library and local Agricultural Area Offices with registrable land in their area also hold copies of the maps (see Annex E for details). The set of maps is known as "The Community Right to Buy (Definition of Excluded Land)(Scotland) Order 2004: Definitive Maps", and should enable you to easily determine whether or not your land is registrable. For the purposes of this legislation, excluded settlements are settlements of over 10,000 population, as defined by the General Register Office for Scotland (GROS). Excluded land also includes the foreshore areas adjacent to excluded settlement areas.

4. Section 47(3) confirms that only registered land may be purchased under the Act. However, as you may be lotting your land for sale, you may wish to consider discussing your proposed lotting arrangements with the CB. Under the terms of the legislation, the CB is only entitled to purchase the registered land included in the lot and, if you wish to sell additional land in the same lot, you may wish to consider selling that additional land to the CB by agreement or alternatively re-lotting the land. Otherwise the sale of all the land in the lot containing registered land will be delayed until the valuation (or subsequent appeal) is complete.

5. Registrable land also includes salmon fishings and mineral rights. In accordance with section 53 of the Act, a CB may apply to register an interest in these ancillary rights as long as it is at the same time registering, or has already registered an interest in, or already owns the land to which those rights relate.

2.3 Register of Community Interest in Land (RCIL)

6. If Ministers approve the CB's application to register an interest, all documents relating to the application will be copied onto the RCIL. This will include your written views on the CB's proposal. The Keeper of the Registers of Scotland is responsible for maintaining the RCIL and will ensure that the Register is made available for public inspection at all reasonable times and free of charge. However, a charge may be made for any extracts requested from the Register. The Register can be viewed by anyone in person at the Registers of Scotland Offices, at the address in Annex E, or through the RoS website at

http://rcil.ros.gov.uk/RCIL/default.asp?category=rcil&service=home

7. Section 36(2) of the Act details the information which must be held on the RCIL, and Scottish Ministers will instruct the Keeper to enter information on the RCIL at various stages in the Community Right to Buy process. Additional information may be entered onto the Register if Ministers so instruct.

2.4 The registration process

8. Following receipt of a CB's application to register an interest in your land, Ministers will, under section 37(5)(b) of the Act, send a copy of the application and supporting documents to you, indicating that you have 21 days in which to provide your views. Failure to provide comments within this time will be taken as you having no objection to the registration. At this stage, the CB's application details will be entered in the RCIL and a prohibition will be placed on the land contained in the application under section 37(5)(e). This will prevent you from disposing of the land which is the subject of the application until a decision on the registration has been made. Any transfer in breach of this prohibition will be of no effect.

9. Under section 37(9), Ministers will then seek views, again within 21 days, from the CB on your response. Ministers will consider all views received before the deadlines prior to reaching a decision on whether the land should be registered. Under section 37(17), you will then receive confirmation of Ministers' decision, a statement of their reasons and information on the effect of the registration. If Ministers decide to approve the application, they will direct the Keeper to register the interest on the RCIL.

10. Where you are not the owner of the land to be registered, or if any part of the land to be registered is not owned by you, or is subject to a standard security, you should inform Ministers immediately of that fact. In relation to a standard security, you should read sections 37(5)(c) and (6) of the Act.

11. The CB may already have discussed its proposals with you, and you may be expecting to receive the documents mentioned above. Your right to appeal to the sheriff against Ministers' decision to accept the registration is detailed at Annex C of this guidance.

2.5 Implications of a registered interest in land

12. Following approval of a CB's application, a further prohibition under section 40(1) will come into effect and you will be prohibited from transferring registered land until the registration no longer applies. Unless the CB requests deletion of their registered interest or refuses the opportunity to exercise its right to buy the land, or Ministers believe that the registration should not have been approved in the first place, the registration is valid for 5 years from the date of Ministers' approval. Any transfer carried out during this time would be of no effect. The only exception to this is a transfer which is exempt under section 40(4) of the Act. This is referred to further in section 2.6 below.

13. If the registration is to continue, the CB must apply to Ministers to renew its interest under section 44 of the Act. As with an initial registration, you will then be invited by Ministers to offer your views on the CB's application for renewal. If Ministers approve the renewal application, the registration will last for a further
5 years from the expiry date of the previous application. Renewal is required on a
5-yearly basis.

14. If there is more than one CB with a registered interest in your land, each CB will be given the opportunity to consider whether it wishes to proceed with its right to buy the land. If two CBs wish to proceed with the right to buy the same piece of land, and can demonstrate the required community support, it will be for Ministers to decide which one proceeds with the purchase.

15. If you feel that you can demonstrate financial loss as a result of not being able to sell your land on the open market, please see the compensation guidance at section 2.11 below.

Deletion of interest

16. If at any time the CB decides that it wishes its registration to be deleted or to relinquish its right to buy, section 54(1) requires it to inform Ministers in writing of that fact. On receipt of this information, Ministers will direct the Keeper to delete the community interest from the Register and will notify you of the deletion. Alternatively, if, under section 45 of the Act, Ministers are satisfied that the CB or its registration has changed to the extent that it would not have been approved in the first place, Ministers shall direct the Keeper to remove the registered interest, after having first sought views from both you and the CB.

17. Following any deletion of interest, you are free to market the land for sale, unless another registered interest applies, for example, where there is more than
one registered interest on the land or a subsequent registration is approved.

2.6 Notification of intention to sell or transfer land

18. If you decide to dispose of land which is subject to a CB's registered interest, you are required under section 48(1) of the Act to inform the CB, or CBs, and Ministers of the proposed transfer. The form of notification is prescribed under section 48(2) and is contained in Schedule 4 of the Community Right to Buy (Forms)(Scotland) Regulations which accompany the Act.

19. Under section 49 of the Act, Ministers will then, within 7 days, invite the CB to confirm in writing, within a further 30 days, whether it wishes to exercise its right to buy. You will receive a copy of this notice under section 49(5). It is from the CB's confirmation at this point that the 6 months to raise the necessary funding and conclude the sale, under section 56(3), applies. Failure to conclude the transfer within this period (or within 2 months of the determination of any appeal, or longer if agreed between you and the CB) will result in the CB's right to buy being extinguished and its interest being removed from the Register.

20. If no confirmation is received within the 30 days from the CB on whether it wishes to exercise its right to buy, its right to buy will be extinguished and the registration will be removed from the Register. Ministers will inform you of this fact and you will then be free to dispose of the land as you wish, unless another CB submits a late application.

Exempt transfers

21. Section 40 of the Act sets out the legislative details of the effect of a registered interest. For so long as the community interest in the land is registered, the owner of the registered land, and any creditor in a standard security having the right to sell that land, is prohibited from transferring the land, or taking any action with a view to a transfer, unless the transfer is specifically exempt under Section 40(4). If section 40(4) is invoked, and a transfer is completed, the CB's registration will remain and the prohibition on the registered land will apply to the new owner. The right to buy may then be "triggered" on the action of the new owner. If you are to transfer land under section 40(4), you are required under section 43(2) of the Act to incorporate a declaration of exemption in the transfer document. The deed should detail which exemption provision applies in order to disapply the prohibition contained in section 40(1). If your exemption relates to a transfer under section 40(4)(a) (a gift), 40(4)(e) (between companies in the same group), or 40(4)(h) (in relation to partners in a firm or trustees in a trust), the deed must confirm that the transfer does not form part of a series of transfers where the main purpose or effect is to avoid the requirements or consequences of the Act. If you intend to transfer registered land under section 40(4), you should inform the Land Reform Branch. There is no legislative requirement to do so, but this would help to keep the RCIL up-to-date and avoid you being contacted in future about the land.

22. Action with a view to a transfer, as described in section 40(1)(b) of the Act, would be action such as verbal notification to another party that you intend to sell the land.

Transfers in breach of the Act

23. If you transfer, or attempt to transfer, the land subject to a CB's registration without informing Ministers and the CB, you will have breached the prohibition in sections 37(5)(e) or 40(1) of the Act. The CB is then entitled to apply to the Lands Tribunal for Scotland under section 50 to buy the land as if you were informing Ministers of the intention to sell under section 48(1). Where a breach has taken place, particular attention should be paid to section 58(5) and (6), which allows the Lands Tribunal for Scotland to take the necessary steps to transfer the land to the CB. A transfer in breach of the legislation is of no effect.

2.7 Late applications

24. Section 39(1) of the Act provides timescales between which a CB's application to register an interest will be considered as a "late application". While late registrations are expected to be submitted only in exceptional circumstances, this will most commonly be after you advertise your land for sale on the open market, or have otherwise advertised for sale. If section 39 applies, subsection (2) requires you to inform Ministers of that fact on receipt of a copy of the CB's application sent under section 37. However, the CB may not be aware that you have taken steps to dispose of land contained in its application, and it may then be required to provide further information to Ministers demonstrating that, in addition to meeting the criteria set out in section 38:

25. Ministers shall, within 30 days of receiving a late application, send notice to you and to the CB of their decision on whether the application has been approved. Reasons for the decision taken by Ministers will be provided.

2.8 Valuation of land

26. Following receipt of confirmation that the CB wishes to exercise its right to buy the land, Ministers will appoint an independent valuer within 7 days. The aim of the independent valuation is to ensure you receive a fair price, at market value, for the property. What is meant by market value is set out at section 59(6) and (7) of the Act. The valuation will consist of the value of the land and any moveable property included in the sale, and a brief statement will provide reasons for the valuation figure. For example, if an apparently higher or lower figure is intimated on account of a particular feature of the property, the valuer may provide a general reason for that assessment, rather than detail the specific issues, for example relating to the condition of the property or the work required to rectify any problems. You should therefore consider whether a separate valuation is required for your own purposes. The valuer will take account of the known existence of any person who would be willing to buy the land at a price higher than others would be expected to pay. This reflects market value and ensures the land and any moveable property included in the sale are transferred at a fair price. It is not the purpose of the legislation to allow CBs to purchase land cheaply and at a financial loss to the seller. Where the CB is buying only part of the land to be sold, the amount of any depreciation in the remaining land included in that lot will be compensated.

27. The valuer will act on behalf of Scottish Ministers and not for any other party involved in the purchase and, under section 60(1), will seek your written views on the value of the land and any moveables prior to intimating the valuation price. The CB will also be consulted. The valuer has 6 weeks to provide Ministers, you and the CB with an assessment of the value of the land, or longer if agreed by Ministers under section 60(3).

28. Ministers will meet the costs of their appointed valuer. You may also appoint your own valuer, but these costs will not be met by Ministers.

29. An appeals procedure is available should either the landowner or the CB be unhappy with the valuation. This is detailed at Annex C. If the valuer attends an appeal hearing on behalf of Ministers, the Scottish Executive will meet the costs. However, if you invite the valuer to appear as an independent witness, any costs must be met by you.

2.9 Ballot

30. Sections 51(2) and 52 of the Act and the accompanying Community Right to Buy (Ballot)(Scotland) Regulations 2004 detail the requirements for the CB's ballot prior to applying to Ministers to exercise its right to buy your registered land.

31. Following intimation of the valuation price, the CB is required to ballot the local community in order to demonstrate the necessary support for proceeding with the right to buy at the valued price (or at the price following any appeal decision). The ballot should be conducted fairly and reasonably, with all those balloted having the opportunity for a secret ballot. It is for the CB to demonstrate to Ministers that the ballot was so conducted and, if you are resident in the community and eligible to vote in a local government election, you will be entitled to vote in the ballot. In considering the CB's ballot arrangements, Ministers will pay particular attention to inclusivity. If you are in doubt whether you should have a vote, you should discuss this with the CB or, if this is not possible, with the Land Reform Branch.

32. If you have any objections to the ballot, you should discuss these with the CB conducting the ballot as early as possible, and preferably prior to the CB submitting its ballot results to Ministers, as any unresolved objections may result in a delay to you selling your land. If the CB has already submitted its results to Ministers, you may be able to appeal against the conduct of the ballot, but this may again result in a delay to you selling your land. In either case, you may also wish to discuss your views with the Land Reform Branch.

33. Under section 51(5) and (6), Ministers have 21 days from receiving notification of the ballot result in which to send notification of their decision as to consent to you and to the CB. Ministers shall also direct the Keeper to enter a record of the decision in the RCIL. Where two or more CBs have confirmed that they will exercise their right to buy the land, Ministers have up to 21 days following receipt of such notification in respect of the last of the ballots conducted by those bodies.

2.10 Transferring your land to the community body

34. Section 2.6 above indicates that you have 6 months in which to transfer the registered land to the CB (or 2 months following any appeal decision). You may withdraw from the sale at any time, however, the CB's registered interest and the prohibition on the land will remain and you will not be able to sell the registered land to anyone other than the CB. Unless the registered interest is removed for other reasons, your withdrawal from the sale does not remove the CB's right to buy the land should you wish to sell at a later date.

35. It is expected that, as you are a willing seller and therefore wish to dispose of the registered land, good communication will lead to a successful transfer of the land to the CB within 6 months. However, if there is any unreasonable delay in transferring title to the land by either party, section 57 of the Act allows for the Lands Tribunal to order the responsible party to take remedial action within a stated time. If you are the responsible party, failure to comply with the order will result in the Lands Tribunal ordering you to decline from the sale or transfer the land to the CB. A further failure will result in the Lands Tribunal affecting the transfer on your behalf.

2.11 Compensation

36. Section 63 of the Act provides for any person (other than a CB) who has incurred loss or expense arising from the operation of Part 2, which is additional to costs normally incurred during a transaction of land and any moveable property, to claim compensation. Any person who has incurred loss or expense due to the suspension of a right of pre-emption, redemption or reversion is also entitled to compensation. The circumstances in which compensation is payable are set out in section 63(1) of the Act and the procedures for recovering costs are set out in the Community Right to Buy (Compensation)(Scotland) Regulations 2004.

37. Section 63(3) states that compensation following the exercise of the CB's right to buy is restricted to the 6-month period allowed for the land to be transferred to the CB, and any compensation beyond that period should be resolved between yourself and the CB.

38. Section 64 of the Act allows the claimant to appeal to the Lands Tribunal for Scotland against Ministers' decision on compensation within 21 days of the decision. The Lands Tribunal may substitute its decision on the amount payable for that of Ministers.

2.12 Conclusion

39. This guidance demonstrates that community purchase of land under Part 2 of the Act is no easy option for communities, and it may not suit you either. You may therefore wish to consider selling your land to the community by agreement, without the use of the legislation, and the key to this is communication. However, the legislation provides you with a potential buyer, where otherwise the land may be on the open market for some time.

40. The assistance of a solicitor is recommended at an early stage in the proceedings. While the Land Reform Branch cannot provide legal advice, and it must remain objective at all times as our main role is to provide advice to Ministers at various stages of the right to buy process and on a case-by-case basis, we are here to help you with any queries you have regarding the right to buy process. Our contact details are contained in Annex E.

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