22~2

A calling-up notice ceases to have effect (for the purpose of the power of sale) 5 years after (a) the date of the notice, if there has been no offer or exposure to sale of the security subjects (or a part of them), or (b) the date of the last offer or exposure.

A notice of default will cease to be authority for the power of sale on the expiration of 5 years from the date of the notice, even if the debtor has failed to comply with the requirements in it.

In the unlikely event that a time-expired notice is submitted with an application, an exclusion of indemnity is called for.

Evidence of the service of a calling-up notice or notice of default can be either:

In the case of an acknowledgement, the registration officer should check that it conforms with the statutory format of Form C of Schedule 6 to the 1970 Act. In particular, the acknowledgement must be signed and dated. The form is as follows:

‘I, A.B., above named, hereby acknowledge receipt of the foregoing Notice of (Calling-up), (Default) of which the foregoing is a copy of the notice.

Dated this day of……………………………………………………………..

(To be signed by the person on whom notice is served, or by his agent, who will add his designation and the words Agent of the said A.B.)’

In the case of a certificate by the server, the registration officer should check that it conforms with the statutory format of Form D of Schedule 6 to the 1970 Act. In particular, the certificate must be signed and, if the notice was served by post, a postal receipt should be provided. The form is as follows:

‘Notice of (Calling-up), (Default), of which the foregoing is a copy, was posted (or otherwise, as the case may be) to A.B. on the ……………………..day of …………………..

(To be signed by the creditor, or by his agent, who will add his designation and the words Agent of the said A.B. and if posted the postal receipt to be provided.)’

In the usual case, the creditor, or an agent acting for the creditor, serves the calling-up notice or notice of default. However, circumstances can arise in which the creditor's capacity or freedom of action is constrained by other factors. Some special cases are listed below:

Persons Serving	Proper Practice
A person who is incapax	The notice should be in the name of the ward (the incapax person) acting through the curator bonis and by the curator for his or her interest.
Attorney	The notice should be by the constituent (the person who granted the power of attorney) and signed by the attorney.
Liquidator	The notice should be by the company (in liquidation) and the liquidator.
Several creditors	1. If the creditors are joint owners of the security, they must all concur. The notice should be given by or on behalf of all. 2. If each of several creditors is entitled to a specified part of the secured sum, the notice should show that each creditor requires payment to him of his own share. Separate notices by each creditor may be used.
Trustee in sequestration	The notice should be by, or on behalf of, the trustee.
Trustees	The notice should be by, or on behalf of, all of the trustees or, if appropriate, an acting quorum.
Young person under 16	The notice should be by, or on behalf of, the legal representative acting for the young person. (The legal representative is a person with parental rights and responsibilities in relation to the young person.)

Failure to observe proper practice is a major defect which probably nullifies the power of sale procedure or at least opens it to challenge. Exclusion of indemnity is normally called for.

The general rule is that notice is given to the person(s) last infeft and appearing on record as proprietor.

If there is an ex facie absolute disponee, service on that party is necessary since they will appear on the record as proprietor, but in addition service should be made on the true owner.

In relation to notices of default, if the debtor is not the proprietor, notice should be served on both the debtor and the proprietor.

Persons to be served	Proper Practice
Bankrupt	Notice should be served on the bankrupt and his or her trustee in sequestration (unless the trustee has been discharged).
Company removed from Register of Companies	Notice should be served on the Lord Advocate.
If not known whether the person is alive	Notice should be sent to the Extractor of the Court of Session.
Non-entitled spouse	Notice should be served on any non-entitled spouse who has occupancy rights.
Partnership	Notice probably need only be served on a majority of the infeft trustees, but in practice all are served. Notice should also be given to the firm itself, at the same time.
Person last infeft is deceased	Service should be made on the person's representative or the person entitled to the subjects in terms of the last recorded/registered title. Normally that means the executor or the person entitled to succeed under a special destination in the title. If the deceased left no representatives, the creditor should serve a notice on the Lord Advocate.
Superior or proprietor of mixed estate	Notice should be served on the owner last infeft in the superiority or mixed estate and appearing on the record as proprietor. If there are any feuars whose feu rights are not valid against the security, notice should also be served on them, since their property may be sold by the creditor.
True proprietor	If the creditor knows that the person appearing on the record is not the real owner of the subjects, notice should be given to the true proprietor also. Note: This rule would probably apply in a competing titles situation.
Trustee under trust deed for creditors	Notice should be served on the granter(s) of the trust deed and the trustee.
Trustees	Notice need only be served on a majority of the infeft trustees. (But see Partnership above, in the case of trustees of a firm.)

Failure to observe proper practice is a major defect which probably nullifies the power of sale procedure or at least opens it to challenge. Exclusion of indemnity is normally called for.

The creditor is under a duty to advertise the sale, but that is qualified by another duty to take all reasonable steps to ensure that the price is the best that can be reasonably obtained. That implies that the advertisement must be reasonably adequate, both as to the period of it and to the newspapers or other publications in which it appears. Regard is had to the nature and location of the property and the market for it.

There is no specific standard for what sort of advertisement is reasonable. It is a matter for the registration officer's judgement. However, for assistance, acceptable evidence of advertising includes:

Item (3), on its own, is usually sufficient. Evidence that the property was advertised in a solicitor's office is acceptable if the solicitor offers an estate agency service as a normal part of his or her business.

Failure by the creditor to advertise the property in a reasonably adequate way is a serious breach of duty and opens the power of sale to challenge. If the standard of advertisement falls below a common sense interpretation of what is reasonably adequate, an exclusion of indemnity is probably called for. Borderline cases should be referred to team leaders for decision.

Where a creditor has exercised his right to sell the security subjects, the disposition must show that it is in implement of the sale. Registration of the disposition automatically disburdens the subjects of the creditor's standard security and all other heritable securities and diligences that rank pari passu with, or postponed to, that standard security.

If the security subjects are unregistered, the disposition (under power of sale) will induce a first registration. The registration officer can safely omit the creditor's standard security and any pari passu or postponed securities subsisting in the Sasine Register from the charges section of the title sheet.

In the case of a dealing with whole, the entry relating to the selling creditor's standard security and all entries relating to pari passu or postponed securities will be removed from the title sheet as if they have been formally discharged.

In the case of a transfer of part, the part in question will be removed from the parent title sheet. It will no longer form part of the title over which the selling creditor's standard security and any pari passu and postponed securities are secured.

NB Registration officers should note that rights of prior creditors are not affected by the sale. Their securities remain extant and enforceable until they are redeemed and discharged. To reflect this position, any undischarged prior securities will be:

22.13 Assignation of the selling creditor's standard security in fortification of title

Though it is uncommon, registration officers may come across a disposition under power of sale that contains an assignation of the selling creditor's standard security in fortification of title. Registration officers should not enter details of the assignation in the title sheet. Registration without exclusion of indemnity makes the grantee's title unchallengeable, so the fortification serves no useful purpose.

22.14 Court decrees under section 24 of the 1970 Act as amended by the 2010 Act

In circumstances where the debtor is in default in terms of standard condition 9(1)(b) or 9(1)(c) of the standard conditions set out in Schedule 3 of the 1970 Act - which is to say, where there is a default other than a default in respect of which a calling-up notice is the only possible procedure - the creditor may apply to the Sheriff Court for a warrant to exercise any of the rights available to them upon failure to comply with a calling-up notice (Section 24 of the 1970 Act). These rights include the right of sale. If the default arises because the debtor is insolvent (Standard Condition 9(1)(c)), a section 24 application to the court is necessary before any of the rights arising on default may be exercised. What constitutes insolvency for this purpose is defined in detail in Standard Condition 9(2). If the subjects are used to any extent for residential purposes, the creditor has to make a summary application to the Sheriff court in terms of the new section 24 of the 1970 Act as amended by the 2010 Act, whereby the creditor must also comply with the additional pre action requirements referred to above in paragraph 22.3.

Registration officers should not accept court decrees uncritically, as problems can arise with them. In particular, it is fairly common for title numbers and the recording/registration dates of standard securities to be given incorrectly in decrees. Such errors should be regarded as major defects and indemnity will normally be excluded in consequence. Equally, registration officers should be aware that such decrees are often issued in absentia; and are therefore potentially capable of being challenged for up to 20 years., Where the decree in absentia relates to the remedies on default contained within section 24 of the 1970 Act, the Keeper envisages little risk of challenge of the decree and accordingly registration can proceed with no exclusion of indemnity.

However, in instances where the decree in absentia relates to matters other than the remedies on default contained in section 24 of the 1970 Act there may be a higher risk of challenge and accordingly, decrees in absentia relating to all other matters should be referred to Legal Services in the first instance.

Creditors often take a 'belt and braces' approach and, as well as serving a calling-up notice or a notice of default (or both), they apply to the court for a decree. Where this has happened, the registration officer can safely ignore any defects in the calling-up or default procedure, provided that the decree itself contains no serious errors.

It should also be noted that where the subjects are used to any extent for residential purposes and decree has been granted, section 6 of the 2010 Act provides for a right to seek recall of a decree for repossession but this is limited to just one application where the person seeking recall has made no previous representations to court. Registration officers should therefore check that either this section 6 does not apply or no notice has been given of this right being exercised in terms of this section 6/section 24C of the 1970 Act.