Register of Inhibitions and Adjudications
The search printout will list those names that are the same or similar to the names being searched, together with the minute numbers of the entries in which they appear. (There are occasions when there are no entries shown on the printout which will simply state ‘No deed’.) To see the minute in full, a further ‘search document’ (S.DOC) is required. The registration officer should examine the entries to see if any of the names listed in the search printout can be eliminated.
If there are no matches, the registration officer will mark the front page of the print ‘clear’ and instruct the front page of the search print to be archived so that there is a record of the parties and period searched.
Where a Report has been issued by the Agency, any entries against persons whose present whereabouts are unknown should have been disclosed. The agent should also have been informed that, at the time of registration, the Keeper would accept a certification from both agents to the transaction that they have satisfied themselves from their enquiries that the party disclosed in the report is not a party to the transaction. Registration officers should, therefore, check the documents submitted in support of the application before proceeding. If the certification has been submitted, the entry to which it relates will not be disclosed in the title sheet.
If the steps in the previous paragraph have not eliminated all the name matches, the registration officer will need to order an S.DOC disclosing the outstanding entries. If any party to the transaction is a public body listed in the paragraph Public bodies &c not to be searched against, the S.DOC must include the name of the public body in the list of parties to be searched against if it is going to be sent to an agent. The S.DOC provides a full print of the ROI minute for each entry requested. The registration officer must then decide whether the minutes constitute an adverse entry or not. This will depend on two factors. Firstly, whether the entry relates to an inhibition or not and, secondly, whether the person searched is a seller or purchaser.4.15 Eliminating disclosures
Whether an inhibition in execution which is disclosed in the ROI search will strike at a particular transaction is governed by the rules determining the effective date of that transaction. That in turn is dependent on whether the inhibition was executed (a) prior to 22 April 2009 or (b) on or after 22 April 2009. Different rules may apply to other ROI entries which have inhibitory effect (e.g. Notice of Determination of Sequestration).
An inhibition may be eliminated only if it is clear that it cannot strike at the transaction in question.
Where the ROI is clear, the registration officer will instruct that the first page of the ROI search print is to be archived, so there is a record of the parties searched and the period searched. Merely putting ‘ROI clear’ on the application workdesk or the title workdesk would serve no useful purpose. The print should be marked ‘clear’ or the disclosures noted. Where the search is not clear, officers should also add details of what action was taken and why to the title workdesk notes and instructions.
4.17 Adverse entries
Once an adverse entry in the ROI has been identified (whether disclosed to the Keeper in the application form and ascertained to be adverse or noted as part of the ROI search carried out by the registration officer), it will require to be entered in the title sheet. This will also necessitate an exclusion of indemnity because if there is no exclusion, then the provisions of section 9(3)(b) of the 1979 Act would prevent the court ordering rectification of the Register in implement of a decree of reduction sought by the creditor in the ROI entry.
The registration officer should check if an Agency report was issued and obtain a copy to check that the entry was disclosed to the agent. If an Agency report failed to disclose the inhibition it may result in a claim against the Keeper. The case should then be referred through a senior team leader to the Agency’s Indemnity Officer, in the Legal Services.
All potential ROI exclusions must be referred to the registration officer’s team leader. If the team leader confirms that the adverse entry should be entered on the title sheet, then where the agent did not disclose the entry in the application form, they must firstly be informed of the entry, and however the adverse entry came to light, that an exclusion of indemnity will be shown in the title sheet. The officer will send an L23 to the agent, together with a copy of the adverse entry/entries. The agent should be informed that, unless written evidence confirming that these entries do not relate to the application is submitted, a note detailing the inhibition and the exclusion note will be inserted in the title sheet.
One of the following forms of evidence may satisfy the Keeper:
The only occasion on which it will be unnecessary for the registration officer to examine the documentation is when Pre-Registration Enquiries Section have already examined it and have stated in correspondence that there would be no exclusion of indemnity. Often, however, in the enquiry to Pre-Registration Section the agent will have narrated the circumstances without actually submitting the supporting evidence. Any response given by Pre-Registration Enquiries Section, therefore, will have been conditional on the facts being verified at settle stage. In such circumstances the registration officer will still be required to requisition and examine the relevant documentation.
Unless the agent provides satisfactory evidence that the entry is not relevant, the entry will be shown in the B section together with an indemnity exclusion note.
Section 161 of the 2007 Act clarifies that the period of long negative prescription (set out in section 8(1) of the Prescription and Limitation (Scotland) Act 1973) applies to inhibition, i.e. an inhibitor can have a deed granted in breach of an inhibition reduced for up to twenty years following the date of delivery of that deed. In light of this, the Keeper will not automatically remove an exclusion of indemnity from the title sheet on the grounds that the five year inhibitory effect has expired but would expect confirmation that the inhibitor was not intending to seek reduction of such a deed granted in breach of an inhibition.
4.19 Reduction of deed by inhibitor
In any situation where the Keeper is presented with evidence of reduction by an inhibitor of a deed which gave rise to an application for registration (or forms part of the prescriptive progress of titles for such an application), the case should be referred to a senior caseworker. This area of law is both complex and potentially contentious, and the senior caseworker should therefore consult Legal Services if in any doubt as to what action is required.
4.19.1 Reduction of a deed granted in breach of inhibition
Section 162 of the 2007 Act adds section 159A of the Titles to Land Consolidation (Scotland) Act 1868. This states that where an inhibiting creditor raises an action of reduction of a deed or conveyance granted in breach of an inhibition they must register a notice of summons in an action of reduction in the ROI and a certified copy thereof in the Land Register or Register of Sasines as appropriate. Registration should be effected as soon as reasonably practicable after the summons is signeted, and if possible registration in the ROI and the Land/Sasine Register should take place on the same day. The summons indicates that the property has been rendered litigious and will be minuted in the ROI as follows
NOTICE of signeted summons in an action of reduction of conveyance or deed in breach of an Inhibition —A.B. designed [pursuer] against C.D. designed [defender] Signeted dd mmm yyyy. Summons in relation to [description of property (Sasines)/title number (land register)]
In practice, the Keeper’s expectation is that the Notice and certified copy thereof should be submitted for contemporaneous registration in both the ROI and the relevant property register. In all such cases, Land Register staff should ensure that the submitting agent’s intentions are understood. Where the Notice is submitted for contemporaneous registration in the Land Register and the ROI, confirmation of its acceptability will be required by the ROI staff on the date of receipt, in time to complete registration of that day’s ROI intake.
The information in the Notice will be entered as a note in the B Section of the title sheet as follows:
An inhibiting creditor who fails to obtain a decree of reduction will discharge the notice.
As with a Notice of Summons, the discharge will be registered in the ROI and a certified copy thereof will be registered in the relevant property register. This is in order that the land no longer appears as litigious. Again, the Keeper’s expectation is that registration in the two registers will be contemporaneous.
The entry in the ROI Minute Book will be in the following style:
DISCHARGE of Notice of signeted summons of reduction of a conveyance or deed of or relating to lands granted in breach of Inhibition – A.B. designed [pursuer] against C.D. designed [defender] Signeted dd mmm yyyy. Summons in relation to [description of property (Sasines)/title number (land register)]
On registration thereof in the Land Register the settler will remove the Note in the B section regarding the Summons of Reduction from the title sheet.
4.19.2 Reduction of a lease granted in breach of inhibition
In terms of Section 163 of the 2007 Act the above procedure of reduction is also applicable to leasehold interests. Where an inhibited debtor grants a lease of land affected by inhibition, such a Lease is reducible if it has at least five years to run as at the date on which the action for reduction is raised. A lease which is not capable of lasting 5 years after that date will be reducible only if the Court of Session is satisfied that it would be fair and reasonable in all circumstances to do so.
4.20 Inhibitions and company liquidations – please see chapter on Liquidation.
The Law Reform (Miscellaneous Provisions) (Scotland) Act 1985, which came into force on 30 December 1985, introduced a document called a notice of litigiosity which may be recorded in the Register of Inhibitions and Adjudications. Section 8(7) provides that it is competent to register in the ROI a notice of an application (to the Court of Session or the Sheriff Court) for the rectification of a deed relating to land. The land to which the application relates is rendered litigious (which means that a deed granted by the debtor while the action was depending would be reducible) from the date of registration. Litigiosity expires after 5 years.
The 1985 Act amended the previous form of notices of litigiosity (governed by section 159 of the Titles to Land Consolidation (Scotland) Act 1868 and Schedule RR thereof) to allow for the insertion in the statutory notice of a description of the lands to which the notice relates. For the notice to be effective, the subjects must be identified. The registration officer would therefore expect to see a conveyancing description or, if the subjects are registered, the title number.
Registration Officers should, however, bear in mind that the term ‘notice of litigiosity’ is also used in other contexts, such as that of a notice of litigiosity on the dependence of an action of adjudication. The latter (also called a ‘notice of summons of adjudication’) effectively inhibits the debtor from dealing with a specified property in respect of which court proceedings have been instigated.
Registration Officers should also bear in mind that, on and after 22 April 2009, the procedure under Schedule RR no longer applies to actions for reduction of a deed in breach of an inhibition. Instead, the procedure in Reduction of a deed granted in breach of an inhibition will apply.
4.22 Adjudication in execution
Although uncommon in modern times, adjudication is the next step for an inhibitor to take to obtain a real right in the heritable property of the debtor, although it is a separate form of diligence and it is possible to adjudge without inhibiting. Whereas inhibition is a quick process and has a blanket effect, eliminating the need to identify the property held by the debtor, adjudication is a lengthy process and the subjects must be specified. The title does not pass to the creditor but the creditor is in a similar position to the holder of a security, and will rank in the usual manner. Although in theory the owner can be removed and the property rented out, it cannot be sold. This remains the position for a period of ten years known as ‘the legal’. At the expiry of the legal, in order to obtain a real right as proprietor, the creditor has to obtain and register a decree of expiry.
There is considerable doubt as to whether a decree of adjudication in execution would induce a first registration. Such an application for registration should be referred to Legal Services for a decision on its acceptability. It would, however, be registrable as a dealing against a registered title. The effects of adjudication in execution and adjudication in implement are quite different and this must be reflected in the title sheet (for the latter, see Adjudication in implement below).
A decree of adjudication (in execution) does not by itself give the adjudger an absolute title to the subjects as the debtor can still purge the debt at any time during ‘the legal’ (a period of 10 years), thereby nullifying the effect of the decree. This situation is given effect to in the B section by leaving the existing entry relating to the registered proprietor (the debtor) as it stands, and making a further entry giving full particulars of the adjudger as registered proprietor or as a pro indiviso or joint proprietor, if only one of the registered proprietors is the debtor in the decree. However, there will be an exclusion of indemnity in respect that the adjudger’s title is a decree of adjudication subject to the legal. An entry is also made in the C section in respect of the security element of the decree, to establish its ranking in relation to other securities.
If, on the expiry of the legal, the adjudger obtains and registers a decree of declarator of expiry of the legal, the entry relating to the former registered proprietor will be removed from the title sheet and the exclusion of indemnity will be removed from the adjudger’s entry. Likewise the C section entry can be removed. If, however, the adjudger chooses not to obtain such a decree, both entries will remain in the B section untouched.
If no declarator of expiry of the legal is registered, since the adjudger’s title is subject to an exclusion of indemnity, prescription will operate in favour of the adjudger from the date of expiry of the legal if prescriptive possession can be proved from that date. The long negative prescription can, of course, operate in favour of the proprietor if the adjudger neither registers a decree of declarator of expiry of the legal nor completes the adjudger’s right by prescriptive possession. The long negative prescription commences on the date of expiry of the legal.
4.22.1 Style for exclusion note in B section
· Note: Indemnity is excluded in terms of section 12 (2) of the Land Registration (Scotland) Act 1979 in respect that the entitlement of the said A is founded on an Extract Decree of Adjudication registered on ……………..
4.22.2 Style for C section entry
· Extract Decree of Declarator and Adjudication in Action at instance of A (desig) (Pursuer) against the said B (Defender) – Finding and Declaring ……….and Adjudging the subjects in this Title to the Pursuer. Dated………and extracted ……..
Notwithstanding the expiry of the legal, an adjudication in execution will still subsist and remain in the title sheet until a decree of expiry is registered or prescription has run. Prescription does not, however, begin to run until the legal has expired.
The general rule is that adjudications rank chronologically like any other securities (the exception to this is provided for in the Diligence Act 1661 as regards the ranking of more than one adjudication, in that all adjudications within a year and a day rank pari passu). The adjudger will, subject to the ranking of other creditors, be paid any surplus if a prior standard security holder sells the property.
4.22.3 Adjudication in implement
This type of adjudication is not based on the failure to repay a debt. If a seller fails to grant a disposition (or other deed), the purchaser can apply to the court to order the seller to sign the deed. If the seller refuses, the court may grant warrant to the clerk to execute the deed instead of the seller, or alternatively grant a decree of adjudication in implement. This type of situation may arise in a divorce case where one party refuses to sign the disposition when the sale of the house has been completed.
The adjudication operates as a conveyance, and the extract decree can be recorded in the Sasine Register or registered in the Land Register, and may induce first registration. Thus, this event is treated in the same way as a normal transfer of the subjects. If the adjudication in implement affects a registered title, then the existing proprietor will be removed from the proprietorship section. The adjudger’s details will then be entered in the title sheet as the person now entitled to the interest and a land certificate will be issued to the adjudger, or a prior heritable creditor if that is who submitted the application for registration of the effect of the decree of adjudication.
This type of adjudication is not subject to ‘the legal’ (a period of 10 years).