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Draft Title Conditions (Scotland) Bill Consultation Paper

Chapter 1 - Real Burdens: General

26. Part 1 of the Bill is about the general rules which apply to real burdens. In the main it simply restates the current common law. It sets out the law in the form of a code, which will make the law easier to interpret and apply in future. In some places, however, the Scottish Law Commission have found the existing law unsatisfactory and difficult to operate. They have therefore suggested some enhancements to the law, and some changes to it.

The Executive agrees with the Commission that putting the law into a straightforward form will simplify the process of conveyancing. It will make it easier to use the property registers.

27. Part 1 of the Bill defines real burdens. It sets out the circumstances in which they can be created; it clarifies what their content can be; it makes some provisions as to who can enforce them; and it specifies how they can be discharged. Sections 1 to 3 of the Bill deal with the definition and characteristics of burdens. The definition of real burdens includes pre-emptions, but excludes redemptions and reversions. This specific point is discussed in Chapter 8 of this Consultation Paper.

Registering against both benefited and burdened properties

28. Sections 4 and 5 cover the creation of burdens, and largely restate the common law. Section 4(2)(c) is an important innovation. Real burdens have to be registered in the property registers, but it is common for them only to appear in the title of the burdened property. In future, the deed creating a burden will have to identify and be registered against the benefited property also. This will make it much easier to establish what the benefited property is, and therefore who can enforce a burden.

29. This section should be read in conjunction with section 112, which makes it clear that in future a deed creating a new burden will not be registrable against one property only: it will have to be registrable against both properties. This may mean a small amount of extra work for conveyancers. But the result is that it will be clear to all concerned with a property what the conditions applying to it are, what conditions it might benefit from, and who can enforce the conditions.

Content of burdens

30. The Commission have proposed that the basic rules on minimum content of burdens should remain unchanged. The relevant deed must set out the terms of the burden which must be framed in such a way that successors to the original parties can understand the nature and extent of the obligation. The Commission have, however, recommended a substantial change and a significant clarification to the existing law on the incorporation of extrinsic material. These are set out in sections 5(a) and 5(b) respectively.

31. Under the existing law, the full terms of a burden must be shown in the deed and then reproduced in the property registers. There must be no extrinsic material. But many purported burdens do contain extrinsic references. An example is the numerous burdens which refer to rateable value. The full terms of the burden are not shown in the deed - it is necessary to find out what the rateable value was. The common law seems to indicate that these burdens may be invalid. The Commission have proposed, in section 5(a), that it should be permissible in future to refer in burdens to statutes, public registers and public records which are readily available to the public, in order to remove the need to repeat the terms of these public documents at length in deeds imposing burdens.

32. The Executive is concerned that this proposal may cause difficulties. There would inevitably be a temptation for conveyancers to import more references to other documents in future deeds imposing burdens. While there may be economies of time and cost in drawing up deeds which refer to provisions in statute, or to a document in a public register, rather than setting out the desired provisions at length, there may be practical disadvantages and possibly greater costs caused to those who wish to establish the full terms of burdens in the future. An enquirer may not have easy access to statutes (particularly secondary legislation) or public registers and records, perhaps because he lives in a remote place. There may also be additional costs associated with accessing certain public registers. Local authorities may not be in the habit of making old records such as the valuation roll readily available for public scrutiny. There are also more technical problems. In the case of references to statute, an enquirer will have to determine whether the provision is still in force or has been amended. Which provisions were in force on what date? Can future statutory amendments be imported into current deeds imposing burdens? The current system has the great advantage that the complete terms of burdens must appear on the face of the deed and thus in the property registers.

33. The Commission have also proposed that this change should be retrospective. This would mean that it would apply not only to future burdens but also to those which already exist. This would remove any doubt as to whether the burdens are enforceable. There are circumstances, however, in which a purchaser may have been advised before buying a particular property that a burden was unenforceable and may have proceeded with the purchase only because of that understanding. The Commission argue that in spite of this the public interest in the adequate maintenance of property is such that these purported burdens imposing an obligation to contribute to the cost of maintenance and apportioning that cost should be enforceable. The Executive acknowledges the importance of such burdens. But the Executive is concerned that to extend the principle of retrospection to all burdens may cause difficulties where the effect of the change will be to impose a new set of rules on property.

34. Section 5(b) is the second area where a change is proposed. Some titles set out an obligation to pay a cost, but do not specify what the cost is as the cost is not yet known. An example of this type of burden is the way in which many modern developments set out mechanisms for the collection of service charges which will include the costs of cleaning and maintenance of the common facilities. Specifying the exact figures in advance is not possible as the costs of maintenance and of service charges change each year. It is not clear whether burdens of this sort are enforceable under the common law. The Commission have recommended that it should not be necessary to specify the amount payable towards an obligation to pay maintenance and other costs provided that some method is stipulated for calculating liability. So the failure to specify the costs would not nullify the burden.

35. The Commission have again recommended that this change in the law should be made retrospectively. Although this second proposal may not in fact change the existing law, it will remove the current uncertainty.

Title to enforce

36. Section 7 of the draft Bill deals with the right to enforce burdens. Section 7(2) proposes a change to the current law. At present a person has title to enforce only if he is the registered owner of the benefited property. The Scottish Law Commission's view is that this rule is too narrow. It excludes non-owning occupiers such as long-term tenants for whom the burden may be important. There may also be legitimate and sensible reasons why a proprietor has not registered his title. As a result, the Commission propose that title to enforce should be extended to 'owners' who have yet to register their title, tenants, life renters, heritable creditors in possession, and non-entitled spouses under the Matrimonial Homes (Family Protection) (Scotland) Act 1981. If the benefited property is held as common property, each co-owner should have a separate title to enforce.

37. The Commission recognise that this proposal might result in a larger number of people being able to enforce a burden. They conclude that this does not impinge unfairly on the burdened proprietor, as the obligation has not changed.

Interest to enforce

38. A benefited proprietor cannot enforce a real burden unless he has interest to enforce as well as title to enforce. He has to be able to demonstrate that his (benefited) property does in fact benefit from the burden and would suffer from the proposed breach. The question of interest is specific to each particular burden and the circumstances in which enforcement is sought. If a court is deciding whether a benefited proprietor has interest to enforce, it will do so against the background of a specific breach.

39. In determining whether a benefited proprietor has interest to enforce, the Courts have found two considerations to be particularly important. The first is the distance between the benefited land and the burdened land and the second is the extent of the breach - in other words, whether the benefited property would be prejudiced by the actual breach. A breach of a burden which prohibited building in a garden would as a general rule be more prejudicial to the benefited property if the breach were to be the building of a two-storey extension rather than the building of a small conservatory. It is likely that the benefited proprietor would find it easier to establish interest to enforce in the case of the two-storey extension and if his own land was close to the burdened land.

40. The Commission have recommended that there should be a statutory restatement of interest to enforce. There were differing views during their own consultation as to whether it would be helpful to have a statutory definition, or whether it would be better to leave the courts to interpret the common law in the light of the particular circumstances of individual cases. The Commission concluded, however, that the question of a statutory definition of interest to enforce should be seen in the light of the over-arching reform of real burdens. If the law on real burdens as a whole is to be put onto a statutory footing, it would be very odd to leave out a definition of interest to enforce. The draft Bill therefore contains a definition of interest to enforce in Section 7(3).

The Executive agrees that a definition of interest to enforce should form part of the restatement of the law on real burdens.

41. The definition of interest to enforce which appears in the Bill is that a person has interest to enforce if

• In the circumstances of any case, failure to comply with the burden is resulting in, or will result in, material detriment to the value or enjoyment of the person's ownership of, or right in, the benefited property; or
• The real burden being an affirmative burden created as an obligation to defray, or contribute towards, some cost, he seeks (and has grounds to seek) payment of, or as respects, that cost.

The Executive agrees with the second part of this definition. There can be no reasonable objection to a definition of interest which is based upon a cost which a burdened proprietor has agreed to be liable for.

42. The first part of the definition hangs upon the phrase 'material detriment'. The Commission have considered this with great care. In their Discussion Paper, they covered very fully the various possibilities. They sought the views of others on the use of the word 'detriment' and on whether that word should be glossed in any way. They thought that the addition of the word 'material' might raise the threshold for interest to enforce too high. In that case, the definition would not be a re-statement of the law, but an enhancement of it. The Commission canvassed the possibility of a definition which instructed the courts, in assessing detriment, to take account of the distance between the benefited and burdened properties, and the seriousness of the breach. In the event, however, the Commission decided that the general phrase 'material detriment' would be of most assistance to the courts.

Sections 8 to 13

43. Sections 8 to 13 make a number of useful clarifying reforms to the laws on real burdens. They cover the question of whom a burden can be enforced against, and various questions regarding liability and the division of properties.

The Executive agrees with these clarifications.

Terminating burdens

44. The remainder of Part 1 deals with the methods of terminating burdens. Some of it, for instance section 15, on acquiescence, (the disappearance of a burden after the benefited proprietor has ignored a breach) is essentially a development and clarification of the existing law. Other sections introduce reforms.

The Executive agrees with the provision on acquiescence and with the other minor clarifications in sections 14 and 17.

45. Section 16 makes an alteration to the law on prescription. The law already provides that if a burdened proprietor breaches a burden, and the benefited proprietor takes no action, the burden will fall (to the extent of the breach) in 20 years. That is called negative prescription. The qualification that the burden will only fall to the extent of the breach is of course important. A burden might stipulate that there should be no building in a garden. The owner might ignore it and build a shed. The benefited proprietor might take no action, and after 20 years his right to object to the shed would have been lost through prescription. If the owner wished to replace it with another shed he would be free to do so. But he would not be free to build a double storey extension. The Commission have now proposed that the relevant period for prescription should be reduced to 5 years. The effect of the transitional provisions is to extinguish with immediate effect enforcement rights in respect of breaches which are 5 years old at the time of the appointed day.

46. Sections 18 to 22 introduce a completely new process for removing burdens. The Commission believe that there should be an easier way to remove burdens which have become outdated. They have therefore recommended a sunset rule which would apply to old amenity burdens. (Other types of burden, such as burdens covering maintenance of common facilities, would not be subject to a sunset rule).

47. The sunset rule would provide that where a burden is more than 100 years old, the owner of the burdened property should be able to serve a notice of termination on the owner of the benefited property. If the owner of the benefited property does nothing, the notice can be registered with the effect that the burden would be discharged. He may, however, apply to the Lands Tribunal for renewal of the burden. The effect of this proposal is to reverse the roles of the parties in a case that goes to the Tribunal. At present the owner of the burdened property goes to the Tribunal if he wants to have the burden removed. In future, if he received a termination notice, the owner of the benefited property would go to the Tribunal if he wanted to save his burden. If he did nothing, the burden would be removed.

48. The Commission considered an automatic sunset rule, which would have removed all burdens over a certain age, which could have been 100 years or some other figure. That would clearly have been a very radical approach, which would have removed many burdens. In the event, however, the Commission decided that too many valuable burdens would have been lost, and they opted for the more selective approach described above.

The Executive agrees that there are too many burdens which have become outdated because of changes in the nature of the property or because of changes in social habits. It therefore supports the Commission's objectives. The Executive generally welcomes the concept of the sunset rule, but it has some doubts about its detailed workings (in particular the notification procedures), and about the extent to which it would be used in practice. These are discussed below.

49. If the principle of the sunset rule is agreed, there are several points of detail to be considered. The most important of these is who should be notified of the proposed removal of the burden. The Bill provides that the procedure should work as follows:

• The owner of the burdened property should serve a notice of termination on the owner of any benefited property within 4 metres of the burdened property. If there are benefited properties further away, an advertisement should be placed in a newspaper circulating in the area.
• The owner of the benefited property would have a minimum of 8 weeks in which to apply to the Lands Tribunal to keep the burden.
• If no application is made, the owner of the burdened property could send the paperwork to the Registers of Scotland. The register will be amended and the burden will be removed.

50. The reason for the 4 metre rule is the belief that if the closest neighbours do not wish to save the burden then it is unlikely that those further away would wish to do so. It is important to note that what is suggested is not that all neighbours within a 4 metre radius should be served with a notice - it would only be those within a 4 metre radius who had title to enforce. In other words, the owner of the burdened property would still have to find out who had benefited property. He would have to serve the notice on anyone who had benefited property which was within 4 metres. But he would not have to serve a notice on neighbours within 4 metres whose property was not a benefited property.

51. Owners of benefited property which is more than 4 metres away from the burdened land would not receive a notice. They might not even know that the burden was being removed. They therefore might not have an opportunity of seeking a renewal of the burden. They would have no right of appeal.

52. If there is to be a sunset rule, that clearly means that some time limit has to be set. The Commission have recommended a period of 100 years.

Unopposed applications to the Lands Tribunal

53. In considering the proposals for the sunset rule, the Executive would be grateful if consultees could consider it alongside the provisions for dealing with unopposed applications to the Lands Tribunal which are made in Part 9 of the Bill (section 92).

54. The way that this would work is as follows. The owner of the burdened property would, as at present, simply apply to the Tribunal. If the application was not opposed, the Tribunal would not be obliged to consider the application on its merits, but must just grant it.

55. Allowing the Tribunal effectively to fast track unopposed applications may diminish the attractiveness of the sunset rule - a point which was acknowledged by the Commission. The sunset rule is designed as a speedy way of extinguishing obsolete burdens. But it is arguable that the normal process of applying to the Tribunal is faster, and indeed, if the application is not opposed, much faster.

56. The advantage, however, for the burdened proprietor in proceeding by means of the sunset rule provisions is that he can issue the notices without going to the Tribunal, and this may be more attractive and economical.

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