Burdens Section
10.53.3 Amount has significance for other conditions
In some titles, maintenance obligations for common areas are assessed on the basis of proportions of the feuduty or other annual monetary payment. Where the annual payment has been redeemed but the amount formerly payable affects the interpretation of other conditions disclosed in the title sheet, the amount will be disclosed in a note in the following style:
‘Note: A proportion of £xx of the feuduty [etc.] of £xx payable under the above Feu Charter [etc.] was allocated on the subjects in this title and has been redeemed’.
10.54 Allocation of annual payment in deed inducing registration
Where the DIR contains an allocation made under a power of allocation in a prior writ, it can be argued that the allocation is not effectively made at the date of entry under the transfer. The reasoning is that at that date intimation has not been made to the superior. On this argument, compulsory redemption does not take place on the transfer which contains the allocation; instead, it takes place when the subjects are next transferred for value. In such a case, if no redemption receipt is supplied, the payment provisions rather than the redemption money will be entered as a burden, unless the application form declares that there are no annual payments. If question 5(d) on the Form 1 is answered in the negative, the settler should requisition evidence that the annual payment has been redeemed by means other than those envisaged in section 5 of the 1974 Act.
If the payment provisions are included, this should be flagged up as a next application note when completing the case. At the time of the next transfer for value, if the settler is satisfied with evidence that redemption has taken place, the entries in the burdens section should be amended to remove references to feuduty, taking account of the provisions detailed elsewhere in this chapter.
10.55 Research area files and common burdens entries
Research area files have been prepared on the assumption that, since first registration is normally induced by a transfer for value, all whole or allocated feuduties etc. will have been redeemed at or before first registration. Particulars of these feuduties etc. are therefore not disclosed in common burdens entries. First registration may, however, take place in certain circumstances without a transfer for value (e.g. voluntary registration). Settlers handling research area cases should therefore ensure that redemption has taken place. If redemption has not taken place, the obligation to pay will have to be edited in when using the relevant stored or model burdens entry by NAP.
Settlers should also check that, in the circumstances outlined in paragraphs Allocated proportion redeemed and Amount has significance for other conditions, the relevant element in the research area file contains an appropriate note as regards allocation and redemption. If it does not, consideration should be given to returning the file to NAP for possible amendment.
If a redemption receipt for cumulo feuduty is submitted with an application to register subjects falling within a research area and the research area burdens entries disclose details of the obligation to pay feuduty &c. then the research area file and a copy of the redemption receipt should be returned to NAP for consideration.
If a redemption receipt is submitted with an application to register subjects falling within a prior registration and this contains burdens entries which disclose details of the obligation to pay feuduty &c. the application should be referred to the team leader to decide what action should be taken. This will depend on whether the redemption receipt is for the cumulo feuduty or only part.
Entries that relate solely to payment of feuduty (e.g. Memorandum of Commutation) can be omitted but it will be more convenient not to amend the text of existing burdens entries which also disclose other burdens. A footnote in terms of Allocated proportion redeemed and Amount has significance for other conditions. should be added to the entry disclosing the apportionment. It may also be necessary to add next application notes to existing titles that will require amendment to reflect the redemption of a cumulo feuduty.
It is not uncommon in a conveyance of part of a feu for the granter to oblige himself and his successors to free and relieve the grantee and his successors of the obligation to pay feuduty. In such a case, particulars of both the feuduty and the obligation of relief are set out in the burdens section.
An obligation of relief, however, only remains relevant while the feuduty remains payable. If redemption has taken place both the obligation to pay and the obligation of relief should be omitted or deleted, as the case may be.
The compulsory redemption provisions of the 1974 Act relate only to the payment of feuduty etc. out of the interest transferred for value. It is possible, therefore, for the immediate feuduty to have been redeemed while over-feuduty remains payable. In terms of section 6(3) of the Land Registration (Scotland) Act 1979, the Keeper is not bound to enter in the title sheet particulars of an over-feuduty, although he has discretion to do so. However, in terms of section 12(4)(a) the Keeper remains liable in indemnity for loss arising from an omission to enter an over-feuduty.
An over-feuduty which comes to the settler’s attention should normally, therefore, be disclosed in the burdens section, unless the immediate superior is an organisation which is known to have adopted a policy of redeeming over-feuduties. The decision as to whether an over-feuduty will be disclosed is one which should be referred to a senior caseworker. The referral must be in writing and should inform the senior caseworker of:
10.58 Implications for Registered Titles to Superiorities
When a title is registered to an interest in land which is either wholly the superior's interest or a mixed fee, a schedule of feus is inserted in the property section of the title sheet. This schedule contains inter alia details of any feuduty still exigible from the individual feus. After registration of the superiority or mixed fee title, in the event of any feuduty being redeemed, the title holder should make application to register that event. If, however, the redemption takes place in connection with a transaction which leads to the registration in the Land Register of a dominium utile title, the redemption must be reflected in both the dominium utile and the superiority title sheets.
When a dominium utile title is first registered, the plans settler will advise in a title note on the LRS if the superiority title is registered. If the dominium utile title is being issued on the basis that the feuduty has been redeemed, the settler must check the superiority title sheet and – if necessary – delete the feuduty from the appropriate entry in the schedule of feus. A public next application note should be created for the superiority title, noting the change. If a redemption receipt has been submitted, this should be added to the archive for the superiority title.
The same situation may exceptionally arise in a dealing. If the feuduty is one to which the compulsory redemption provisions apply, but at the time of the first registration the feuduty was not already redeemed, the feuduty will be deemed to be redeemed at the first dealing implementing a sale. In that event, the dealings settler must ascertain from the DMS whether or not the superiority title has been registered. If it has, the legal settler must amend the superiority title sheet etc. as narrated above.
Legal examiners may be aware that Part 3 of the Feudal Abolition (Scotland) Act 2000 contains provisions relating to the extinction of feuduty. These provisions do not come into effect until an ‘appointed day’ which has yet to be set. Instructions concerning the extinction of feuduty will be provided after the appointed day is set.
A right of pre-emption created in a feu writ or disposition imposes on the feuar or disponee an obligation to give the superior or disponer the first offer to purchase, should he decide to sell his subjects. (This differs from a right of redemption – see Rights of redemption). Normally the offer is at the highest price which the seller could obtain on the open market, but some rights of pre-emption stipulate a fixed price or a price to be set by an independent valuer. These rights are seldom encountered in practice; they are unwelcome from the feuar’s point of view, because they complicate selling or borrowing and may deter a potential purchaser or lender. They are also easily overlooked and a seller could become liable for such an omission.
Most rights of pre-emption are or have been created where either the granter has a ‘paternal’ interest in the property and its surrounding area or the sale is to a ‘sitting tenant’ at a price considerably less than the market value.
10.61 Current Statutory Position
The statutory limitations in exercising a right of pre-emption are governed by section 9 of the Conveyancing Amendment (Scotland) Act 1938, as amended by section 46 of the Conveyancing and Feudal Reform (Scotland) Act 1970 and section 13 of the Land Tenure Reform (Scotland) Act 1974.
The present position is as follows:
10.61.1
(a) Superiors (no matter when their rights were created) and
(b) other persons whose rights were created in deeds executed
after 1 September 1974
These parties are subject to certain restrictions on the exercise of their rights of pre-emption. Notwithstanding the actual terms of the clause of pre-emption, the opportunity to exercise the right is restricted to a single occasion. If the person in right of the pre-emption does not accept the offer to sell back within 21 days of its being made, the right of pre-emption is forfeited permanently.
10.61.2 Persons whose rights were created in deeds (other than feu grants) executed on or before 1 September 1974
The restrictions in the previous paragraph do not apply and the right is exercisable on each occasion of sale.
The person in right of the pre-emption may choose not to exercise their right to purchase by (a) taking no action within 21 days (40 days for deeds covered in the immediately preceding paragraph), (b) declining the offer in writing, or (c) consenting to the waiving of their right to purchase in gremio of the disposition of the subjects to a third party.
A right of pre-emption is a burden and therefore any breach thereof would be outwith the scope of the Keeper’s indemnity. For this reason, no evidence need be sought that the right to exercise the pre-emption has been waived and indemnity will not be excluded. However, the right will be included in the burdens section unless there is clear evidence that the right no longer subsists.
10.62.1
(a) Superiors (no matter when their rights were created) and
(b) other persons whose rights were created in deeds executed
after 1 September 1974
In this situation, where the titles reveal that there have been one or more sales (excluding the DIR) since the creation of the right of pre-emption, then without further enquiry the condition may be omitted from the burdens section. If the DIR is the first sale since the creation of the right of pre-emption, the right will be omitted from the burdens section on production of
(b) a letter
from the selling agents, producing the offer to the
person entitled to the right of pre-emption; proof of
posting; and confirmation that there was no response
within the 21 day period set by the Act
OR
(c) formal waiver (or consent in gremio of the disposition) by the person entitled to the right of pre-emption.
If no such evidence is produced, it need not be requisitioned; the settler should simply include the right of pre-emption in the burdens section.
However, these instructions do not apply to titles which are subject to a recurring right of pre-emption – see recurring rights of pre-emption, nor do they apply where a statutory transfer overrides the right of pre-emption – see Highland Council v Patience and Others (1996 GWD 40-2294, The Times 9 January 1997).
10.62.2 Persons whose rights were created in deeds (other than feu grants) executed on or before 1 September 1974
In this situation, the right will be included in the burdens section unless the applicant produces a recorded or registered deed in which the person entitled to the right of pre-emption waives and discharges the right for all time coming. Evidence of declinature of the right in one or more individual sales will be ignored, since the right continues to be exercisable on future sales.
10.62.3 Recurring rights of pre-emption
In an endeavour to preserve certain properties as sheltered housing, some developers have endeavoured to use a recurring right of pre-emption as a means of ensuring that subsequent sales can only be to persons who meet the developers’ criteria for the use of the facilities in the development. Typically, the right of pre-emption is created in a deed of conditions, by way of a clause along the lines of the following:
There are doubts as to the competency of this type of recurring pre-emption clause and it probably has no effect in law. However, settlers will deal with such clauses in the following manner: