Crofting

Crofting tenure occurs only in the Counties of Argyll, Inverness, Ross and Cromarty, Sutherland, Caithness and Orkney and Shetland. The current legislation regulating crofting is to be found in the Crofters (Scotland) Act 1993 (‘the 1993 Act’). In essence, crofting involves the tenancy of agricultural land, usually with a pertinent dwellinghouse, on a rolling year to year lease. It is noted that there is no requirement for such a lease to be in writing. The consequences for Land Registration are set out in the following paragraphs.

As a crofting tenancy is based on a one year lease, it is not capable of constituting a registrable interest in land. As such, a title sheet can never be created for a crofting tenancy.

34.3 A Crofting Tenancy is an Overriding Interest Capable of being noted on the Landlord’s Title Sheet.

Section 28(1) of the 1979 Act specifies that a crofter’s tenancy is an overriding interest, and so may be noted on the landlord’s title sheet. Attention is drawn to Overriding Interests which look at the general topic of overriding interests. In short, a crofting tenancy must be noted if it is disclosed in a document accompanying an application for registration of the landlord’s title.

It may be noted in other circumstances, namely when a specific application is made to note it, or if it is disclosed in any other application, or if it otherwise comes to the Keeper’s attention, but will only be so noted if satisfactory evidence of its constitution is submitted. Such evidence should comprise either a copy of the lease or, where there is no written lease, a statement by the landlord affirming the existence of the croft.

Any crofting tenancies that are noted as an overriding interest should appear in a schedule of crofts within the burdens section of the title sheet. The actual entry in the schedule will be determined by the information provided by the applicant. Very often no written lease will exist or, where a lease does exist, it may be in very rudimentary terms and may not accurately reflect the occupied extent of the croft. Consequently, no attempt should be made to locate or plot tenanted crofts on the landlord’s title plan. The following example is a style of entry and schedule that should be used:

Burden Entry Number 4: Those parts of the subjects in this title to which the entries in the schedule below relate are subject to crofting tenure within the meaning of the Crofters (Scotland) Act 1993:

Entry number	Description of croft	Tenant
1.	0.65 hectares forming croft number 12 on the Estate of Kilmuir	Donald McDonald
2.	Croft 3 Eileananabuich, in the Township of Eileananabuich	Marion McDonald

Under the 1993 Act, crofters are given statutory rights to buy both their croft agricultural lands and also the dwellings pertaining thereto. Unless the subjects that are purchased are formally decrofted, they will remain subject to the controls contained in the 1993 Act. It is as regards a crofter’s right to buy, that most problems will arise. The practical implications for legal settlers are as follows:

In most cases, it will be possible to determine whether or not the subjects in respect of which registration is sought comprise a former tenanted croft, from either the deed inducing registration or, where the application is in respect of a re-sale of the former tenanted croft, the foundation deed. The subjects will invariably be described as the ‘croft of’ or the ‘area of croft land’ or some variation thereof and it will be indicated that the purchase is under the 1993 Act or earlier crofting legislation.

Similarly, it may be disclosed in the application form, or in an accompanying letter, that the subjects are a croft within the meaning of the 1993 Act. Where it is clear that the subjects do comprise a croft within the meaning of the 1993 Act, the title sheet should indicate that the registered interest is subject to various crofting regulations. Accordingly, legal settlers should enter a note in the following terms in the property section of the crofter’s title sheet:

Unfortunately, the situation can arise whereby subjects are referred to as a croft (or croft land or croft house) in the title deeds, but no mention is made of the 1993 Act or earlier crofting legislation, in either the deeds or elsewhere in the application. In those circumstances, it will not be apparent whether the subjects are a croft in the strict legal sense, and so subject to the 1993 Act, or simply an area of land or a dwellinghouse whose owners, either past or present, have simply chosen to call a croft.

Where the latter applies, the subjects will not be subject to any of the crofting regulations and consequently it would create an inaccuracy in the title sheet if the aforementioned note were to be added. It is, therefore, important to establish whether or not any subjects that are described in the title deeds as a ‘croft’, are in fact a croft in the strict legal sense. If this cannot be ascertained from either the title deeds or the application (i.e. if there is no reference to the 1993 Act or earlier crofting legislation) clarification should be sought from the applicant’s agent before deciding whether to omit or include the aforementioned note.

The only circumstance whereby the aforementioned note need not be shown, or can subsequently be removed, is where the subjects have been decrofted. Decrofting is an administrative process carried out by the Crofters Commission that frees ground from the restrictions imposed by the 1993 Act, and is evidenced by the grant of a decrofting direction by the Commission. When faced with a decrofting direction, care should be taken to ensure that the whole of the subjects in the title have been decrofted, as it is common practice to decroft part only of a croft. In such cases the note (The subjects in this title comprise a croft as defined in the Crofters (Scotland) Act 1993) should be amended as appropriate, e.g.

Where it is not possible, or practical, to reference the exception on the title plan, a verbal description of the excepted area, based on the terms of the Decrofting Direction, should be used.

34.4.4 Right to Buy: Automatic Disburdenment of Standard Security by the Former Landlord over Croft Land.

Under section 19(4) of the 1993 Act, any subjects purchased under the right to buy provisions are automatically disburdened of any prior standard security granted by the former landlord, without the need for a formal discharge or deed of disburdenment. Before omitting such a standard security from the purchasing crofter’s title sheet, settlers’ will require a written statement from the seller’s solicitor confirming that the transaction was within sections 12 to 18 of the 1993 Act.

34.4.4.1 Right to Buy: Outstanding Notice of Payment of Grant.

Section 42 provides for the payment of loans or grants by the Secretary of State for Scotland (now Scottish Ministers) for erecting, repairing or improving crofts. A loan will be secured by a standard security whereas securing the provisions relating to payment of a grant will be achieved by recording or registering a Notice of Grant; this will contain conditions to subsist for a specified period. Any outstanding grant should be disclosed on the Title Sheet reflecting the terms of the deed, e.g.

Notice of Payment of Grant of £xxxx by Secretary of State for Scotland to [crofter], in terms of the Crofters (Scotland) Act 19?? and the Crofters etc. Building grants (Scotland) Regulations [year], in respect of the subjects in this title (or in respect of ….. … part of the subjects in this title) containing conditions to be observed for yy years from dd mmm yyyy, recorded GRS (Inverness) …….

The said regulations provide for repayment of the grant in the event of breach of the conditions; if the grant is still outstanding at the time of de-crofting then it should be shown as a prior ranking charge to any security being registered. Any instances where a grant is being registered subsequent to a security to any party other than the Scottish ministers or Highlands and Islands Enterprise should be referred through the usual channels to consider the ranking implications.”

34.4.5 Right to Buy: Standard Securities in favour of Scottish Ministers and Highlands and Islands Enterprise

Section 19(3) of the 1993 Act alters the normal rules on ranking of securities. The section provides that where a tenant crofter has received lending to fund improvements to the croft, from either the Scottish Ministers or Highlands and Islands Enterprise (HIE), and then subsequently buys his croft, either of those bodies may obtain a standard security from him. Regardless of the date of registration of such a standard security, these securities rank prior to any other security. If both bodies take security, the Scottish Ministers’ rank prior to Highlands and Islands Enterprise.

The Keeper is not in a position to know whether such a section 19(3) security is likely to be forthcoming, for, in virtually all cases, they will not be submitted for registration until some considerable time after the application for registration in respect of the purchase of the croft. However, this only becomes an issue if another standard security is submitted for registration. In that event, and in the absence of any evidence to the contrary, the Keeper must guard against the possibility of a security to Scottish Ministers or HIE being presented at a later date.

Insert the following footnote to the entry for the ‘other’ standard security:

Two notes will accordingly be required in the Charge Certificate. In addition to the customary note regarding ranking, a further note, as per note 2 in the following example, will be required. For example:

Similarly, if HIE register a section 19(3) standard security, the above footnote should be entered after the entry for it in the Charges Section, as it will rank postponed to a later section 19(3) security in favour of the Scottish Ministers. The style of security should include the section of the 1993 Act under which it is granted.

The above note (i.e. Note 2 in the above example) may be omitted if evidence is submitted from both Scottish Ministers and HIE that no section 19(3) standard security will be forthcoming. Legal settlers need not requisition such information.

If a section 19(3) standard security is submitted prior to any other security, no such note will be required in the event that a subsequent security is registered. The section 19(3) security will have prior ranking by virtue of its earlier date of registration.

It should be noted that Scottish Ministers are authorised by section 45 of the 1993 Act to grant loans, supported by a standard security, to owner-occupier crofters for a period of up to 7 years after the date of purchase. Section 45 standard securities are affected by the ranking provisions in section 19(3). However, as Scottish Ministers are the heritable creditor, they will be in a position to confirm whether or not a section 19(3) security will be forthcoming. The legal settler should, therefore, enquire of the agent whether any such security will be forthcoming. If advised that no such security will be forthcoming the note detailed above can be omitted. These securities are bound by the normal rules of ranking. It should be apparent from the text of the security whether it is being granted in terms of section 19 or section 45. If it is not, clarification should be sought from the ingiving agent. The guidelines relating to the section 19 (3) ranking provisions apply equally to ‘discount’ standard securities.

Provision is made in schedule 5 of the 1993 Act for standard securities granted by Scottish Ministers to be discharged by means of a certificate as opposed to a formal discharge.