Misc. Registrations
Council House Sales
The right of a tenant to purchase his council house was first introduced by the Tenants’ Rights, etc. (Scotland) Act 1980 (the 1980 Act). Various alterations and amendments were made to the 1980 Act until finally a consolidation Act was passed tidying up all the previous legislation. This consolidation Act, the Housing (Scotland) Act 1987 (the 1987 Act) came into effect on 15 August 1987. The 1980 Act was wholly repealed by the 1987 Act, which is now the relevant statute. Standard Securities created under the 1980 Act effectively had a five year lifespan and will all have been extinguished by the passage of time. Consequently, for the rest of this chapter the only statute whose provisions will be outlined is the 1987 Act. The provisions added to this Act by section 128 and section 135 of the Housing (Scotland) Act 1988 came into effect on 20 February 1992. These provisions deal with the tenant’s preserved right to buy even when the existing landlord, that is the local authority, disposes of the landlord’s interest to a landlord in the private sector. A Statutory Instrument, which came into effect on 13 March 1992, regulates the provisions.
Sections 61 and 62 of the 1987 Act made provisions for tenants of houses let by district councils, and certain other bodies, to purchase the dwelling-houses which they occupied at a discount price. By virtue of the Local Government etc. (Scotland) Act 1994, district councils have ceased to exist and their responsibilities have passed to unitary local authorities.
Section 72 of the 1987 Act made provision for the recovery of the discount (or a proportionate part of it). This resulted if the person who had purchased the property under the terms of sections 61 and 62 of the 1987 Act disposed of the property before the expiry of a specified period. Under the 1980 Act, the period was 5 years, but by virtue of the 1987 Act the period is reduced to 3 years for all transactions where repayment became exigible after 7 January 1987.
35.1.1 Partial Assignation of Long Lease by Housing Authority
In counties such as Lanark, Renfrew and Glasgow and in some other counties public sector landlords may hold subjects not as proprietors but on a long lease. Section 84A of the Housing (Scotland) Act 1987 extends the provisions of the right to buy legislation to tenants where the public sector landlord is not a heritable proprietor but a lessee under a under a 999 year lease (or ultra long lease). The public sector landlord is obliged to assign to the tenant their interest in the council house and garden, grant a marketable title to the property and to meet the requirements of the right to buy provisions contained in the 1987 Act.
When dealing with a partial
assignation in terms of the 1987 Act, it should be noted that the granter is
a tenant and cannot grant heritable servitude rights but may be able to burden
the subjects (See also Leasehold property).
Where any part of an assignation purports to grant a servitude right this should
be referred to a Senior Caseworker. When drafting the property section care
should be taken not to inadvertently create a right of property where only a
condition or right of use is created in the lease.
35.2 Discount Standard Securities
Local authorities have not followed a standard conveyancing procedure when it comes to securing the discount money, so there cannot be blanket instructions to cover all eventualities.
In terms of section 72(5) of the 1987 Act, a standard security granted in respect of the discount ranks immediately after (1) a standard security granted in security of a loan for the purchase of the house or sums advanced for the purpose of improvements to that house and (2) if the landlord consents, a standard security over the house granted in security of any other loan (i.e. prior to any security, other than the loan to purchase or improve the property whether registered before or after the security for discount). It is important, therefore, that a title sheet should wherever possible disclose that a registered interest is subject to the effect of section 72(5).
If it is declared in gremio of a standard security that it is granted in respect of discount in terms of the Act, that declaration will be reflected in the entry of the standard security in the charges section e.g.
If the commencement date of the discount period is declared in gremio of a standard security that is granted in respect of the discount in terms of the Act, that declaration will be reflected in the entry of the standard security in the charges section e.g.
If it is not revealed in gremio of the standard security that it secures the obligation to repay a discount, but this information is revealed elsewhere in the application (e.g. on the application form or back of the deed), a note in either of the following forms will be added to the entry in the charges section:
If, however, a standard security granted in favour of a local authority following the sale of a house by the authority is not stated to be in security of a loan and it is not stated either in the deed or in the application that it is in security of the discount, no enquiry should be made of the applicant as to whether or not the security was granted in respect of the discount provisions under the 1980 Act or the 1987 Act.
35.2.1 Discount Standard Securities — Secretary of State for Scotland - Scottish Prison Service
The Scottish Prison Service (SPS) has operated a staff discount scheme for the disposal of prison quarters since 1981. Prison officers do not have a statutory right to buy, but in certain circumstances officers may purchase official quarters at a discount. Under the 1981 scheme when a member of SPS staff purchases an official quarter, a standard security is made out in favour of the Secretary of State for Scotland (now the Scottish Ministers) for a discount over a three year period. In addition to the three year discount period a further discount period operates dependant on the anticipated length of service of the member of SPS staff purchasing the quarter. A proportion of the discount secured in respect of the second period becomes repayable if either the debtor sells or disposes of the property, or if the debtor ceases to be employed in the Scottish Prison Service.
The entry in the charges section of the title sheet should reflect the terms of the standard security e.g.
'Standard security by said A to the Secretary of State for Scotland in respect of discount containing undertaking for 3 years from ….. with further provisions to …….
or
'Standard security by said A to the Scottish Ministers in respect of discount containing undertaking for 3 years from ….. with further provisions to …….
It should be noted that these securities are not granted in terms of section 72 of the Housing (Scotland) Act 1987. In view of this a formal discharge or the evidence noted under section 35.6.1 is required to remove the charge from the title sheet.
35.2.2 Standard security to secure a grant subsidy
There are provisions in place for subsidies to be made to individuals to cover part of the purchase price of a property; this is described as a grant subsidy and is secured by means of a standard security, granted by the purchaser of the property, in favour of the grant provider, frequently Scottish Ministers. It should be noted that these are separate provisions to those in place for the purchase from Scottish Ministers of former Scottish Homes properties (see The Housing (Scotland) Act 2001 (Transfer of Scottish Homes Property and Liabilities) Order 2005
The deed makes no reference to it having been granted in terms of a relevant statute but does include ranking provisions similar in terms to those contained in section 72(5) of the Housing (Scotland) Act 1987. It also contains conditions regarding the debtors ownership and occupation of the subjects.
For registration purposes the standard security should be entered in the Title sheet as an "ordinary" standard security but the following note should be added:
Note: The amount secured by the above Standard Security shall be ranked after any standard security by the debtor granted in security of a loan either (a) for the purchase of the subjects in this Title or (b) the improvement of the subjects in this Title.
Any other standard security should be entered in the normal way with the following note added to that entry:
Note: The above Standard Security is affected by ranking provisions contained in the Standard Security in Entry xx.
The charge certificates for each registered standard security should include an appropriate ranking note and schedule of prior or pari passu charges based on the registration dates of the relative securities (i.e. if registered contemporaneously both charge certificates will include details of the other standard security). It is not for the Keeper to confirm that a standard security was for only the purchase or improvement of the subjects.
35.3 Application with no Discount Security
If an application for registration of a sale by a local authority of a council house is not accompanied by a standard security for the discount, but it is stated in the application that the sale is under the Act, the following note should be inserted in the proprietorship section after the entry of the registered proprietor
The note is necessary to warn a prospective lender that a security in his favour will rank postponed to a standard security for the discount, even although the latter may be registered after his security.
If the subjects are resold, the note referred to in the previous paragraph will be deleted, even if the sale is within the 3 year period, without the production of evidence of repayment of the discount. If no security for the discount is registered before the resale, the discount cannot thereafter be secured over the subjects.
If a conveyance by a local authority of a council house is not stated anywhere in the application to have been granted under the Act, no enquiry should be made of the applicant as to whether or not the sale is under these Acts and no note should be added to the proprietorship section.
35.4 Security to local authority for both loan and discount
Where, in terms of section 72(5) of the Act, a council secures both the loan (to the purchaser) and the discount by a single standard security, both elements of the obligation will be entered in the charges section, e.g.
If the standard security accompanies the application for registration of the granter’s title, an abated fee will be charged. If the standard security is registered separately, the fee will be charged on the total amount secured.
The discount element will be removed from the entry in the charges section either on receipt of an application to register its discharge, or if the title sheet is operated on after the expiry of the discount period (3 years).
When property has been purchased under the Act and a charge has been secured against that property, it is important that a creditor be aware of the statutory ranking of any charge secured for the recovery of the discount. It should be noted that the discount can be secured at any time within the 3-year period by standard security.
The restriction on the loan security will be apparent in the title sheet either from the entry relating to the discount security in the charges section or where there is no such security from the terms of the proprietorship section which will have been qualified.
As it is impractical to disclose the restriction in a schedule to the charge certificate for the loan security, it will be drawn to the attention of the creditor in the footnote to the certificate in the following terms:
35.6 Discharging of Discount Standard Securities.
The settler will only encounter this situation when dealing with a subsequent sale of a property which was originally purchased in terms of the Act.
A settlerdoes not require a discharge for the discount security if the charge was secured more than 3 years prior to the date of registration of the application.
If the charge was secured within 3 years prior to the date of the current application, the settler will require a discharge of the discount security. The usual procedure for outstanding standard securities or charges should be applied, and details of the outstanding charge should be entered in the title sheet if the discharge is not submitted timeously. In place of a discharge (the Act makes no provision for a compulsory discharge), a receipt for the proportion of the discount repayable would be sufficient evidence for the settler to omit details of the charge from the title sheet.
If the property has been disposed of within the 3-year period, the discount (or a proportion thereof) is repayable at the time of disposal. The discount security will therefore remain in place until the relevant sum has been paid to the local authority. In terms of section 73 of the Act, there will be no repayment of the discount where disposal is (a) by an executor of the deceased owner, (b) as a result of a CPO or (c) to a member of the owner’s family who has lived with him for 12 months and disposal is for no consideration, in which last event, the discount provisions for the remaining period still apply.
35.6.1 Discount Standard Securities — Secretary of State for Scotland or Scottish Ministers
When dealing with the first re-sale of a house after it has been purchased from the Secretary of State consideration has to be given to any standard security to the Secretary of State that was to secure discount provisions. In the absence of a formal discharge the Keeper will accept a letter from the Scottish Government Legal Directorate (SGLD) as sufficient in lieu of a discharge where there is an expired discount standard security to the Secretary of State for Scotland which refers neither to the Tenants Rights etc (Scotland) Act 1980 or the Housing (Scotland) Act 1987. The registration officer should add the letter to the archive.
Sections 72 and 73 of the Act set out circumstances in which a discount standard security is repayable. The Lands Tribunal has confirmed the Keeper’s interpretation of the statute and ruled that when there is a disposal by the executor of the purchasing tenant, the discount security flies off completely. By disposal is meant either a sale to a third party or, for example, a docquet of transfer to a spouse or beneficiary.
In practical terms, this means that when processing an application for registration on behalf of someone to whom the executor of the purchasing tenant has ‘disposed’ the property, settlers should remove the discount from the title sheet. Settlers should note that production of a death certificate in the absence of any disposal by the executor does not enable the discount security to be so removed.
The case of Highland Council v Patience and
others (1996 GWD 40-2294, The Times 9 Jan 1997), 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. Full details of the
clause and the Court’s findings can be found at Highland
Council v Patience and Others (1996 GWD 40-2294, The Times 9 January 1997)
The Keeper’s assessment of the effect of the decision is that a public
sector housing body, whose title is burdened by a right of pre-emption, may
disregard the clause of pre-emption on the occasions of the sale to a tenant
who has exercised his statutory right to buy. The effect is NOT that the right
of pre-emption is spent or extinguished. The purchasing tenant, when wishing
to sell the subjects, will still be bound to offer them first to the party enjoying
the right of pre-emption.
35.8.1 Transfers to Housing Associations - monetary obligations
With the transfer of local authority housing stock to housing associations there has been the development of a practice essentially attempting to gain recompense for previous investment in the properties transferred in the event of the sale of the property by the housing association. This has been done by the insertion of a clause in the sale by the local authority to the housing association, the following is an example of such a clause contained in a feu disposition:
"AND ALSO WITH AND UNDER the following additional real burden and condition, namely the subjects hereinbefore disponed shall not be sold, conveyed or otherwise disponed to the current tenant, Ms Knox, residing at 27 Your Way, Tarbet, or her nominees unless with the express written consent of us or our successors as Superiors of the said subjects which consent we and our successors foresaid shall be taken bound to grant in exchange for payment of a sum comprising fifty percent of the excess amount, if any, by which the net proceeds from the sale to the tenant after deducting the transaction costs comprising the Feuar's reasonable legal fees and outlays and the District Valuer's fee for the valuation of the property exceed the purchase price paid to us by the Feuar, provided always that this burden shall be deemed discharged in the event of the Feuar obtaining vacant possession of the subjects following on the current tenancy being terminated, and in such event the Feuar shall thereafter be free to sell convey or otherwise dispone the subjects without the necessity of obtaining our prior written consent"
Whether or not this condition is disclosed in the burdens section of the title sheet will be dependant on the nature of the transfer inducing registration and what evidence is produced to the Keeper. If any necessary evidence of compliance is not produced as part of the application it should be requisitioned in the usual manner
Deed effecting registration
is sale by local authority to housing association:
The clause should be shown. There is no need to create a next application note
to highlight existence of the clause in subsequent transfers.
Deed effecting registration
is sale by housing association to 3rd party inducing first registration:
The clause can be omitted in cases where the sale is to the current tenant or
her/his nominees provided the local authority consent to the granting of the
deed. In cases where the sale is to a party other than the current tenant or
her/his nominees the clause should be shown in the burdens section unless evidence
that the feuar has obtained vacant possession following the current tenancy
being terminated is submitted. Such evidence must be more than a letter to that
effect from the submitting agent.
Deed effecting registration
is sale by housing association to 3rd party inducing a dealing with whole or
transfer of part:
If no evidence of compliance is produced then the text of the existing burdens
entry should not be altered. If the evidence set out in the previous paragraph
is produced then the clause should be deleted from the entry in the burdens
section. Consideration should be given to retaining an entry for the deed if
a feudal relationship had been established.
Deed effecting registration
is sale by 3rd party or successors:
The clause can be omitted if the necessary evidence set out above is produced.
Unlike a non-recurring right of pre-emption the clause should not automatically
be omitted in this scenario due to the creation of a monetary burden on the
land.
See also Statutory Transfers and Rights of Pre-emption
35.9 Scottish Homes – Scottish Special Housing Association.
Under the initial tenants’ rights legislation Scottish Special Housing Association (SSHA) were not compelled to sell houses to sitting tenants, however they did so on a voluntary basis at the appropriately discounted price. This discount could not be secured by a security in terms of the legislation, so SSHA created a voluntary form of discount security that reflected the provisions in the 1980 Act by including a ranking clause to effect that the ‘discount’ security would be ranked after any standard security granted in respect of a loan either (a) for the purchase of the subjects or (b) the improvement of the dwellinghouse erected on the subjects.
Discharge of these securities is in accordance with Discharging of Discount Standard Securities above.
As SSHA and their successors were encompassed by the provisions of subsequent right to buy legislation, any discount should be secured under the terms of that legislation and the security entry will be in terms of Discount Standard Securities above. This information, while historical, may be relevant if dealing with the first re-sale of ex SSHA property.
From 1 April 1989, in terms of section 3 of the Housing (Scotland) Act 1988, the Scottish Special Housing Association was dissolved and all heritable property belonging to it vested in Scottish Homes. It should be noted that the Act provides that Scottish Homes will have power to acquire land compulsorily.
Writs (other than leases or feu dispositions) granted by Scottish Homes, where the existing title is in the name of the Association should, when recorded in the Sasine Register, contain a deduction of title using section 3 of the said Act as a link in title. Such writs, when submitted with an application for registration in the Land Register will be acceptable with or without a deduction of title.
Schedule 1 to the Act contains the constitution of Scottish Homes. At paragraph 19, it provides that a document shall be presumed, unless the contrary is shown, to have been validly executed by Scottish Homes, if it bears to have been subscribed on its behalf by one of its members, or by any other person duly authorised in that behalf, and to have been sealed with its common seal, whether attested by witnesses or not.
Section 179 of the Local Government and Housing Act 1989 amends section 2 of the 1988 Act. In terms of section 2, certain functions of Scottish Homes, for example the disposal or acquisition of land, require the consent of Scottish Ministers before the function can be carried out. Section 179 slightly amends the requirements for consent as regards the disposal of land. Scottish Homes can dispose of land under a variety of different schemes and the separate consent of Scottish Ministers is required for each scheme.
Section 178 amends section 76 of the 1987 Act and introduces a new section 84A to the latter Act to extend the application of the right to buy provisions to cases where the selling landlords are themselves the lessees under a registered lease. The new provisions provide for the acquisition of the landlords’ interest in a house by the tenant of the house where the landlords themselves hold only a tenant’s interest under an earlier registered lease of the house or of land which includes it.
The new provisions also provide for the obtaining of a loan by the tenant in the above circumstances.
In the above provisions ‘a registered lease’ is defined as a lease –
Settlers, in applications to which Scottish Homes are a party, need not concern themselves as to whether the appropriate consent by the Secretary of State has been given or not, but they should ensure that question 8(a) and question 12 on Application Forms 1 have been answered YES and NO respectively. On Forms 2 the relevant questions are numbered 4(a) and 8(a) while on Forms 3 the questions are again numbered 6(a) and 10.
If the questions are so answered, the Keeper can rely on those answers as sufficient warrant that proper consent has been given and can proceed to register without further enquiry.
Updated February 2003