Burdens Section
10.63 Statutory transfers and rights of pre-emption
In certain situations, transfers which are required to be made under a statutory provision will override a right of pre-emption. Those provisions which are known to the Keeper are noted below.
10.63.1 Housing (Scotland) Act 1987
A public sector housing body whose title is burdened by a right of pre-emption may disregard the clause of pre-emption on the occasion of a sale to a tenant who has exercised his statutory right to buy. In other words, the housing body is not required to offer the property first to the person entitled to the right of pre-emption. However, this does not mean that the right of pre-emption is extinguished, even if it is a right of pre-emption whose exercise is restricted to a single occasion. When the purchasing tenant wishes to sell the subjects, the right of pre-emption will be effective and the property must first be offered to the person entitled under the pre-emption.
On the sale by the housing body to their tenant, the right of pre-emption will therefore normally be included in the burdens section. Provided it has not been waived or discharged for all time coming in a formal recorded or registered deed, it can be omitted only if
(b) there have been one or more sales (excluding the DIR) since the creation of the right of pre-emption.
On a subsequent sale by the former tenant, if the right of pre-emption is one whose exercise is restricted to a single occasion, it may be removed 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 retain the right of pre-emption in the burdens section. Likewise, if the right of pre-emption was created in a deed (other than a feu grant) executed on or before 1 September 1974, the right should be retained in the burdens section even if evidence of the declinature of the right is produced; in that situation, only the production of 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 will be sufficient to enable the right to be removed from the burdens section.
10.63.2 Highland Council v Patience and Others (1996 GWD 40-2294, The Times 9 January 1997)
The above case concerned the effect of a clause of pre-emption in the title of a housing authority whose tenant claimed the right to buy under the Housing (Scotland) Act 1987. The clause in the authority’s title, which was a Feu Charter, was in the following terms:
The House of Lords, allowing an appeal, found that
(b) on a proper construction of the provisions of the Housing (Scotland) Act, a secure tenant can exercise his or her right to purchase regardless of a right of pre-emption in the title of the landlord.
The main elements of their Lordships’ reasoning were, respectively
(b) that the history of the legislation showed that Parliament’s purpose was that every tenant in the public sector who fell within the scope of the statutory requirements should have an unobstructed right to purchase the house he or she occupied. Although other elements of the decision hinged on the continuing contractual nature of the feudal relationship, the Keeper takes the view that the decision holds good for dispositions as well as feu deeds.
The procedures which apply as a result of this judgment are set out in Council House Sales: Burdens.
10.63.3 Church of Scotland (Properties and Investments) Order Confirmation Act 1994
Under the above Act, all heritable property in Scotland which was vested in or held by the Church of Scotland Trust was transferred to and vested in the Church of Scotland General Trustees with effect from 1 January 1995. Such vesting did not constitute infeftment, and the transfer may therefore be given effect to by way of (e.g.) a notice of title deducing title through the Church of Scotland (Properties and Investments) Order 1994.
Section 24 of the Act provides that a transfer to the General Trustees under the Order will not form the occasion for the exercise of a right of pre-emption. Such a transfer will not normally induce first registration in the Land Register. However, where it gives rise to a dealing and the burdens section of the title sheet includes a right of pre-emption, the right of pre-emption should simply be retained.
On a first registration of a property which has previously been the subject of a transfer under the Order, if the title is subject to a right of pre-emption and the number of sales since the creation of the right is a factor in deciding whether to omit it, then the settler should not include the transfer under the Order when counting the number of relevant sales.
See also Transfers to Housing Associations — monetary obligations
A right of redemption in a feu writ (as distinguished from a right of redemption in favour of the debtor inherent in a heritable security) gives the superior and his successors the right to re-acquire the feu. The terms of the right are set out in a clause of redemption. It is usually exercisable either on the occasion of some certain event which is bound to occur or on some specified date, on payment of a fixed price or a price determined by an arbiter.
The courts have held that, once a redemption is available or comes into effect, the right to exercise it is valid against not only the original feuar, but also against his singular successors. In terms of section 12 of the Land Tenure Reform (Scotland) Act 1974, a right of redemption or reversion of land (other than the right of the lessor to the reversion of a lease) created in a deed executed after 1 September 1974 can only be exercised within 20 years of the date of its creation. The provision in section 12 relates only to rights of redemption which are exercisable on the happening of a definite event which is bound to occur (e.g. death) or in the option of the superior; other such rights (e.g. a right exercisable in the event that the subjects cease to be used for a particular purpose) are not affected by section 12. It should also be noted that the section does not affect rights of redemption created on or before 1 September 1974.
A right of redemption is, therefore, a condition of tenure that will always be entered in the burdens section of a title sheet, irrespective of its terms appearing to be obsolete or obscure or currently unenforceable due to changing circumstances. It will be omitted only where evidence of its formal discharge is submitted.
10.65 Third Party Rights (Jus Quaesitum Tertio)
Land that has been feued comprises two different interests; the superiority interest (dominium directum) and the property interest (dominium utile). Similarly, land that has been leased comprises both the interests of the landlord and the tenant. Separate interests are also created in a contract of ground annual (e.g. by feu contract or contract of ground annual or lease etc.). The feu writ invariably contains burdens on that interest which are enforceable by the proprietor of the higher interest. These burdens ‘run with the lands’; they are enforceable by the successive proprietors of the higher interest against the successive proprietors of the lower interest.
However, the principle of confusio applies to such burdens. This is a general principle of Scots Law, whereby the same party in the same capacity cannot be both creditor and debtor in the same obligation. If it happens that the same party in the same capacity becomes infeft in both the higher and the lower interest, it is possible for the interests to merge. In the case of feudal tenure, this may happen by way of consolidation (whether by minute of consolidation or by prescription – but see Feu writs) or by way of resignation (i.e. by disposition ad perpetuam remanentiam). In the case of leasehold tenure, confusio may operate automatically when the same party becomes infeft in the second interest (but see Leases ).
When the interests merge, the general rule is that the burdens in the original grant of the lower interest are totally extinguished. The result is that no entry for the feu contract, contract of ground annual etc. is required in the burdens section of the title sheet. However, this general rule is subject to one significant exception. Consideration must be given as to whether any third parties (owners of adjoining ground etc.) may have a right to enforce these burdens or conditions. The situation arises most commonly when the superiority and dominium utile interests in subjects are consolidated. Similarly, it arises when the ground annual created in a contract of ground annual has been discharged or redeemed or when a lease has been extinguished or renounced. The difficulty for the settler lies in deciding whether all the burdens set out in the feu contract, contract of ground annual, etc. are enforceable only by the superior or ground annual holder etc. as the case may be and are, therefore, extinguished or whether some or all could be enforceable by third parties and to that extent are not extinguished.
10.66 Determining whether third party rights subsist
The answer to the question of whether or not a third party has the right to enforce the burdens imposed in a deed will depend on whether the deed itself, either expressly or by implication, indicates that it is intended that a jus quaesitum tertio (a right of enforcement by a third party) is to be created. This question has been productive of much confusing and contradictory litigation and it is impossible to lay down a general rule that will apply in all cases. To confuse matters further, regardless of whether a third party right is created expressly or impliedly there are certain burdens in which no third party right can exist. Similarly, even where a deed excludes the creation of third party rights there are other burdens which, by their very nature, indicate the existence of a third party right. The following paragraphs, however, attempt to give a broad outline of the law and indicate the action which should be taken in the various circumstances which can arise.
The case where a jus quaesitum tertio is expressly created in a deed is comparatively rare but should be easily recognised and in such a case, subject to what is said in Third Party Rights, all the burdens should be edited in. The clause which expressly creates the jus quaesitum tertio should also be edited in. A clause creating such a jus quaesitum tertio will typically run along the following lines:
It is obviously more difficult to decide whether to include burdens where a jus quaesitum tertio is, or appears to be, created by implication. As a general guide it can be assumed that the intention was to create a jus quaesitum tertio if the following conditions are met:
Where the above conditions are met, either individually or together, the burdens, subject to what is said in Third Party Rights, must be edited in to the burdens section of the title sheet. In so doing the clause or clauses conferring a right on the grantee to enforce the burdens on adjoining titles and/or taking the superior or granter of the contract of ground annual bound to impose similar conditions in feus etc. of adjoining ground must also be included.