Specialist Topics
19.10 Consent of landlords
The vast majority of, if not all, modern commercial leases contain a provision that the consent of the landlord must be obtained for any assignation thereof or sub-lease or that the lease is granted in favour of the tenant ‘(but excluding sub-tenants or assignees without the prior written consent of the landlord, which consent etc.)’. This provision may appear in either the destination or the burdens clauses of the lease. If it is contained in the burdens clauses, it will (as appropriate) appear either in the preamble or in the burdens text of the relevant burdens section entry.
If the requirement is contained in the destination, it will be reflected in full in both the proprietorship section and the burdens section of the title sheet. In the proprietorship section it should be disclosed as part of the destination, rather than by way of a separate permanent note. Since such clauses are normally found in modern commercial leases, the likelihood is that the inclusion in the burdens section will be catered for by way of the copy in certificate procedure (see Requirements for Use).
However as a breach of such a provision falls outwith the scope of the Keeper's indemnity, registration officers need not seek evidence that the appropriate consent has been taken. See Rights of pre-emption .
Section 17 of the 1974 Act permits the creation of interposed leases. These allow a landlord to grant a lease of land already leased for a longer or shorter period than, or of the same duration as, the existing lease, but subject to the existing lease. This is presumably equivalent to a sale or lease of the right to collect the rent and enforce the conditions in the existing lease for a term of years.
From a practical point of view, where one or more of the affected interests is registered in the Land Register, the result will be that:
Because of the inherent complexity of such transactions, all instances of interposed leases should be referred to a senior caseworker.
19.12 Variation of lease – incorporation of additional subjects
Where the tenant acquires additional ground from the landlord, this should normally be dealt with by way of a separate lease of the additional ground (or by renunciation of the existing lease and the grant of a new lease of the larger area). However, there is a school of thought which suggests that it is permissible to vary the existing lease so as to incorporate the additional ground. The Keeper may, therefore, be asked to accept for registration deeds which purport to increase the area of ground affected by a registered leasehold title. Such deeds may be styled deeds of variation (although they differ in intention from deeds of variation of the leasehold conditions) or minutes of extension (although they differ in intention from minutes of extension of the duration of the lease).
In the absence of conclusive authority supporting the validity of such deeds, the Keeper is entitled to exercise discretion as to whether he accepts them. Each request should be judged on its individual merits.
Where the Keeper agrees to accept such a deed, he will do so on the basis that it has the same effect as a new lease of the additional ground, on the same terms as the original lease and for the remaining duration of that lease. It follows that such deeds can only be accepted if the original lease still has more than 20 years to run. If the remaining term of the original lease does not exceed 20 years, the variation or extension will be treated as effectively a short lease of the additional ground; it cannot therefore be given effect to in the tenant’s title sheet, nor noted in the landlord’s title sheet if the latter interest is registered, nor can the deed be recorded in the Sasine Register.
Any requests to accept a deed purporting to increase the extent of the subjects of a registered leasehold title should be referred to a senior caseworker, who will, if necessary, seek the advice of Legal Services.
When a lease is continued by tacit relocation, the original lease is not regarded as having terminated; the relocation is considered as simply an extension, on a year-to-year basis, of the existing lease.
The law does not presume that a lease automatically expires at the specified termination date; instead, the presumption is that if neither the landlord nor the tenant has intimated a desire to terminate, by sending the other a notice to quit; both parties wish the lease to continue, and it is therefore automatically extended (for one year at a time in the case of registrable leases) until formally terminated by either party.
It therefore follows that, in the absence of the appropriate evidence of termination, a title sheet for a registered leasehold interest should not be cancelled, nor should the details of the relevant lease, as an overriding interest, be removed from the landlord's title sheet.
Whenever a title sheet is cancelled, a plans registration officer should cancel the title plan on the DMS.
Sections 4 and 5 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 provide forms of protection for tenants against penal enforcement of irritancies in leases. Section 4 makes it mandatory on the landlord to give notice in respect of a termination for non-payment of rent and details the need for the tenant to comply with any notice served in order to obtain protection. Section 5 makes similar provisions in respect of irritancies not relating to monetary breaches. Both sections therefore cover the possibility of termination resulting from all forms of breaches.
With regard to settling procedures it should be noted that irritancies do not become effective without a court decree of extraordinary removing, unless the tenant is willing to remove. Therefore, in the absence of a decree, evidence that the tenant has vacated the premises must be submitted before the tenant's interest is removed from the register. Due consideration must also be given to the position of sub-tenants and heritable creditors when a head lease is irritated. absorptions are settled by senior RO1s.
When a lessee's interest under a lease or sub-lease has been irritated by the landlord, the procedure for recalling the affected land certificate and any charge certificate is exactly the same as that for requisitioning a second security charge certificate in a power of sale transaction and is set out in Effects of Power of Sale .
Section 5 of the Leasehold Casualties (Scotland) Act 2001 places a further restriction on the ability of landlords to irritate certain types of lease. In any lease granted
the irritancy clause is rendered void from 10 May 2000. In any case where the current tenant has taken entry on or after 10 May 2000 and the lease falls within the above criteria, any irritancy clause contained in the lease may therefore be omitted from the burdens section of the title sheet. The procedural implications are discussed in Irritancy clause.
This is a rule of general application to obligations in Scots Law. Where the same person in the same legal capacity becomes both the debtor and the creditor in such an obligation, that obligation is said to be extinguished confusione. In relation to leasehold property, where the same person in the same legal capacity becomes both landlord and tenant in the same lease (e.g. by succession or by disposition or assignation as appropriate), there is now a generally accepted presumption that confusio operates to extinguish the lease, unless the proprietor acts in such a way as to rebut that presumption. It is settled that a lessee who obtains a feu of his leasehold need only look thereafter to his feu charter for his rights and obligations.
Notwithstanding the foregoing, agents differ in their ways of dealing with property where their client has acquired both leasehold and feudal titles. Many continue to dispone the subjects and assign the lease, while others dispone the subjects omitting the assignation of the lease and not excepting the lease from warrandice.
The intention of the agents will normally be evident from the application for registration, but it will on occasions be necessary to obtain written confirmation from them as to the intended position. Where doubt exists, the case should be referred to a senior caseworker for consideration.
Where it is considered that a lease has been extinguished confusione but that third party rights exist in relation to some of the conditions of let, a burdens entry should be prepared which shows the affected conditions (see Leasehold Titles - Burdens Section Entries - Styles of Preambles).
19.13.4 Termination of lease – effect on subsidiary interests
When a registration officer is considering whether to give effect to an application to terminate a lease (or another application which presupposes the termination of the lease), the effect of such termination on subsidiary interests must be borne in mind. For example, the tenant may have granted a standard security or a sub-lease. In some cases, there may be a presumption that the subsidiary interest continues (e.g. where a head lease is voluntarily renounced, a sub-tenant may be able to continue to hold his or her sub-lease on the same terms as tenant of the head landlord). In some cases (e.g. where the head lease is irritated), the termination of the lease may have the effect of terminating the subsidiary interest. In other cases (e.g. where the tenant wishes to renounce the lease, but there is an undischarged standard security over it), the existence of the subsidiary interest may restrict the potential for termination of the lease.
In all situations where termination of a lease is being considered and there are subsidiary interests extant on the register, the case must be referred to a senior caseworker, who will if necessary seek the advice of Legal Services.
19.14 Leases of shootings and fishings
It has long been the established practice of this agency not to accept for recording or registration in the property registers leases of shootings (‘game leases’). This practice was based on decisions in former case law to the effect that a lease of shootings was not binding on a singular successor of the landlord, and operated as ‘a mere delegation of personal privilege, not capable of being made real’.
That position has been altered by an opinion of Lord Davidson, to the effect that a long lease of shootings qualified as a probative lease of ‘lands and heritages in Scotland’ within the meaning of section 1 of the Registration of Leases (Scotland) Act 1857 and could have been registered under that Act in order to make it binding upon singular successors of the landlord.
In the light of this decision, the Keeper feels bound to accept for registration any lease of shootings which meets the usual statutory requirements for registration. The same principle applies in the case of a lease of trout fishings, with such leases also being accepted for registration provided they meet the same statutory requirements.
Any application to register a lease of shootings or fishings (other than salmon fishings which are established as a separate tenement) should be referred to the Legal Services for guidance.
It is emphasised that this instruction relates only to leases of shootings or fishings. There is considerable doubt whether a right to shootings or fishings (other than salmon fishings) can exist as a separate tenement, divorced from ownership of the land; any deed purporting to convey shooting or fishing rights separately from the land over which the rights are to be exercised should also therefore be referred to the Legal Services.
19.15 Completion of title sheet
The particulars entered in the property section of a title sheet for the tenant's interest in a lease differ only marginally from those entered in the property section of a dominium utile title. The entry under the heading ‘Interest’ is ’Tenant’.
The land affected by the registration is identified on the title plan by one of the methods described in First registration mapping principles, and the subjects are described by reference to the plan in exactly the same way as in a proprietor's title, using expanded verbal descriptions where necessary, and setting out exclusions of indemnity etc. However the grant of a lease does differ from the conveyance of property. When drafting the rights and conditions in a property section of a lease this distinction should be borne in mind and care should be taken not to inadvertently create a right of property when only a condition or right of use is created in the lease. In particular, a leaseholder assigning or sub leasing property cannot grant a servitude right and no reference or cross reference to servitudes should be included in the property section. (See also 19.15.4)
Parts removed from the
title sheet are greened out or set out in a schedule of exceptions. Parts sub-let
are edged in yellow, and schedules of sub-leases and the appropriate explanatory
notes are entered in the property section in the same way as they are in a property
title. The major difference is that after the description and specification
of conditions but before any notes of exclusion of indemnity, removals or sub-leases,
short particulars of the lease under which the subjects are held are inserted
in the following style:
SHORT PARTICULARS OF THE LEASE UNDER WHICH THE SUBJECTS ARE HELD
| Parties | Date of Registration (or Recording) | Term |
| Ardgowan Estates Limited to James Smith | 9 Jun 1981 [GRS (Renfrew) 21 MAY 1959] | 60 years from Whitsunday 1981 |
Where the subjects in the title are not the whole subjects in the lease, that fact will not be apparent from the property section any more than is the fact that the subjects in a dominium utile title are not the whole subjects in a feu.
The main significance of that fact, however, is in connection with liability for payment of rent and performance of any other conditions of tenure. These liabilities will be set out in the burdens section, just as they are in a feudal title.
Registrations of Floor Level Commercial Premises
Applications to register floor level commercial premises are often leasehold and are, in the main, dealt with using copy in certificate procedure (see Requirements for Use) with site plan method used on the title plan. Delays in mapping these applications generally stem from the poor quality of the plans submitted which fall into one of the 4 following categories:
Where categories 1 and 2 apply, as necessary, a supplementary plan will be prepared and put with the title plan.
Where the plan referred to cannot safely be used to prepare the title plan or as a supplementary plan, and is deemed to be demonstrative only, as in the case of category 3 plans, a colour copy of the plan will be made for inclusion in the land certificate with the copy lease. It is implied, but not expressed, that the Keeper will take no responsibility for the accuracy of the deed plan. The property section will require to reflect this, e.g.
Close consultation will be required between the plans and legal registration officers to resolve any ongoing difficulties, especially as regards category 3 and 4 applications.
The plans registration officer will require to set up a separate backup file with appropriate notes on the DMS when dealing with commercial development of this nature so that extents on any given floor level may be cross-checked as registrations arrive, in order to ensure no overlap exists. In category 3 cases, where the plans registration officer is unable to ascertain whether or not an overlap exists, the legal registration officer must be alerted to clarify the situation with the applicant. In category 4 cases, where there is no deed plan, plans and legal registration officers must take care to ensure that the verbal descriptions of the parts leased do not indicate an overlap.
In the event of a subsequent overlap being identified, the agent submitting the later application must be informed and the matter resolved (e.g. by submission of a new plan); if the overlap remains unresolved, the later case can proceed, subject to an exclusion of indemnity as regards the overlap area.
In the event of applications for registration of dominium utile interests in a floor level, the criteria for accurate identification of the interests to be registered, either by deed plan or by verbal description, will be more rigorous. The plans and legal registration officers must consult and determine that the description in each case fully meets the requirements of the Land Register.
19.15.2 Proprietorship section
The particulars entered in the proprietorship section of a title sheet for the tenant's interest in a lease are identical to those entered in that section of a dominium utile title.
The following speciality exists, however:
Where the deed giving title to the registered proprietor is the lease itself, the rental (qualified as appropriate), in the absence of any other consideration, should be entered in the ‘Consideration’ column e.g.:
Consideration:
Rent £2500 per annum
(Subject to review)
The full details of the rental provisions will be included in the burdens section entry for the lease.
Inhibitions
The question of whether or not a lease is affected by an inhibition against the tenant hinges on whether or not the lease is adjudgeable, which in turn is determined by whether or not the lease is freely assignable (see Consent of landlords). If the lease contains a stipulation that it cannot be assigned without the consent of the landlord, then that lease is not freely assignable and cannot be adjudged. The general principle is that it will not therefore be struck at by an inhibition against the tenant. Conversely, a lease which can be freely assigned without any requirement for the landlord’s consent is adjudgeable and will be struck at by any future inhibition against the tenant.
The position as regards sub-leases is somewhat unclear, but it is generally thought that inhibitions will strike at sub-leases where there is unfettered power to sub-let. If that view is correct, it would presumably follow that, where the power to sub-let is conditional on the landlord’s consent, the reverse holds good.
It should be borne in mind, however, that this is a particularly complex area of law. For instance, it may be that a lease would be deemed to be freely assignable (and therefore struck at by an inhibition) notwithstanding a stipulation requiring the landlord’s consent, if the stipulation is qualified by such words as: ‘which consent shall not be unreasonably withheld’. Any case in which a tenant becomes inhibited and the registration officer considers that the inhibition may not strike at the interest should, therefore, be referred to a senior caseworker, who will if necessary seek the advice of the Legal Services.
Any case where the landlord or tenant is sequestrated should be referred to a senior caseworker.
The particulars entered in the charges section of a title sheet for the tenant's interest in a lease are identical to those entered in that section of a dominium utile title. However, where a heritable proprietor has granted a standard security over his property and then leases the property in whole or in part, the written consent of the creditor must be obtained to the lease (see standard condition 6 in schedule 3 to the Conveyancing and Feudal Reform (Scotland) Act 1970). A copy of the consent must therefore be submitted with the application for registration of the leasehold interest, or requisitioned if it is not submitted.
Standard condition 6 may also be varied or disapplied to allow the granting of the lease without consent, but again evidence of such variation or disapplication must be supplied.
When such evidence of consent, variation or disapplication has been supplied, the standard security will not be entered in the charges section of the tenant's title sheet. In cases where it is not supplied, registration officers must warn applicants' agents that, unless such evidence is produced, the landlord's security will be disclosed in the tenant's title sheet.
If consent, variation or disapplication of standard condition 6 is not supplied and the standard security is not disclosed in the charges section of the tenant's title sheet, it is considered unlikely that the tenant could pursue successfully a claim upon the Keeper's indemnity, for the latter could rely on section 12(3)(n) of the Land Registration (Scotland) Act 1979, the carelessness of the claimant having caused the loss. The area of concern is that the loss may be suffered by a third party who acts in reliance upon a title sheet for the tenant's interest which does not disclose the risk that the lease is voidable at the instance of a pre-existing heritable creditor of the landlord.
In such cases therefore, the disclosure of the landlord's standard security on the tenant's title sheet should be sufficient to put a third party dealing with the tenant upon enquiry as to whether or not standard condition 6 affects. It is considered unnecessary to exclude indemnity from the tenant's title sheet in respect that such a standard security has been disclosed in the charges section of that title sheet, even although standard condition 6 may render the lease voidable as above described.