Misc. Registrations

Crofting

34.4.6 Right to Buy: ‘Discount’ Security in Favour of Landlord

Circumstances in which a ‘Discount’ Standard Security may be Granted.

Crofters are permitted to buy their agricultural land at a reduced price and any subsequent disposal by the crofter within a five year period may give rise to a duty to repay the difference between the reduced price paid and the then market value to the landlord. That duty arises only where the Land Court has ordered the landlord to sell the croft land and in doing so has also ordered the crofter to grant a standard security in favour of the landlord to secure this payment. It is noted that no similar provision exists as regards purchase of the croft house.

Although the concept is similar to the discount standard security granted in council house purchases, two important differences should be noted:

1. The security strikes at disposals within a five year period.
   
   
2. There is no statutory alteration to the ranking of these securities. In contrast to the position with council houses where the discount security always ranks postponed to a security for the purchase or improvement of the subjects, a discount security in favour of a former landlord will simply rank according to its date of registration.

Procedure for Entering ‘Discount’ Security in Title Sheet.

How is discount Security affected by section 19/45 securities?

If it is declared in gremio of a standard security that it is granted under the terms of section 14(3) (or 13(4)), that declaration should be reflected in the entry of the standard security in the charges section as follows:

If it is not disclosed in gremio of the standard security, but revealed elsewhere in the application (e.g. on the application form or the backing of the deed) a note in the following form will be added to the entry in the charges section:

If a standard security granted in favour of the former landlord is not stated, either in the deed or elsewhere, to be in respect of sums which may become payable etc., no enquiry should be made of the applicant. The standard security should be treated as a straightforward loan security.

Removal of ‘Discount’ Security.

If the five year period has clearly elapsed without any disposal of the property, the Keeper will not insist upon a formal discharge being registered, and the security may be removed from the title sheet at the time of the next dealing or on separate application being made. It is stressed that this instruction only applies to those securities expressly granted in terms of section 14(3) (or 13(4)) of the 1993 Act). Where a security in favour of the former landlord is not granted under those provisions, as in the example in the immediately preceding paragraph, a discharge will be required before the security can be removed from the title sheet.

34.4.7 Right to Buy: Pre-emption Rights

There are two possible scenarios concerning pre-emption rights, namely:

1. Sale by landlord to tenant in pursuance of Land Court order.

Section 17(3) of the 1993 Act disapplies any rights of pre-emption in relation to sales of crofts in pursuance of a Land Court order. There is, unfortunately, no judicial authority on the point that determines whether this has the effect of disapplying the pre-emption right for all time or simply for the particular transfer to the crofter. In the absence of any judicial authority, the Keeper’s approach is to assume the latter. Accordingly, any pre-emption rights should be disclosed in the burdens section of the title sheet. The next transfer should then be counted as the first where that is important for determining whether a pre-emption right can continue to be exercised (see Rights of pre-emption on the general topic of pre-emption rights).

2. Sale by landlord to tenant in pursuance of voluntary agreement.

Where the sale is by the agreement of landlord and tenant, the normal rules regarding pre-emption apply (see Rights of pre-emption on the general topic of pre-emption rights).

34.4.8 Right to buy: common grazings

Any application in which the crofter acquires rights in, or a purported title to, common grazings should be referred to Legal Services.

34.5 Transfer of Crofting Estates (Scotland) Act 1997

Section 1 of the above Act enables Scottish Ministers to transfer their crofting estates to approved bodies. Scottish Ministers may also transfer any interests in mineral, sporting or other rights relating to crofting estates. By virtue of Section 5, any right of pre-emption affecting the property being disposed of by the Secretary of State is permanently extinguished. Thus, in contrast to the position outlined in Right to Buy: Pre-emption Rights, pre-emption rights should not be disclosed in the burdens section, where it is clear the transfer of crofting interests is being made under the 1997 Act.

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