Matrimonial Homes (Family Protection) (Scotland) Act 1981
8.23 Grant of/power of sale in standard security
The statement regarding occupancy rights under the 1981 Act entered in the title sheet is in respect of persons who were formerly entitled to the subjects. The Keeper gives no such assurances in respect of the interest of the current registered proprietor and consequently does not require sight of any documentary evidence for the applicant. As such, neither the granting of a Standard Security nor the subsequent granting of any Deed of Variation would necessitate the submission to the Keeper of any Matrimonial Homes Act evidence. The only circumstances in which the Keeper would require to examine a consent, renunciation or affidavit granted in respect of a Standard Security or related deed is in the event of a sale by the Creditor under the Power of Sale procedure. The Keeper’s requirements in this respect will depend on whether the standard security was recorded or registered before or after 1 January 1991. Further, with effect from 30 June 2006, a written declaration, as introduced by the 2006 Act, can be made in relation to the grant of a Standard Security. Such a declaration can either be in a separate document or in gremio of the security.
While there is no need for Registration Officers to examine a written declaration, consent, renunciation or affidavit when processing an application for registration of a standard security by a single debtor, if such evidence accompanies the application it should nevertheless be archived (see Items to be archived). However, this is done merely for the pragmatic reason that it may assist the Keeper if the security becomes subject to a power of sale and there is difficulty obtaining the evidence. The Keeper is under no duty to examine or archive the evidence at the time that the security is registered, and he is therefore not liable if either the evidence is not archived or it is subsequently discovered that it is defective.
With regard to Section 8, which deals with the interests of heritable creditors, the Keeper applies the same practice to sales by heritable creditors in virtue of the power of sale provisions contained in a heritable security granted in their favour as he applies in relations to dispositions by the proprietors themselves, i.e. no occupancy right can exist if there is more than one person entitled at the time of granting the Standard Security.
Before Schedule 8 Part II Section 31(2)(a) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 came into force on 1 January 1991, creditors could only gain protection in terms of section 8 of the 1981 Act if the documentation was produced ‘before the granting of the loan’. So, if the standard security was recorded or registered before 1 January 1991, the Keeper, in addition to examining an affidavit or consent or renunciation in respect of the granting of the standard security, will require an assurance that the document was produced to the creditor ‘before the granting of the loan’. The effect of the 1990 Act was to remove that stipulation, however it was not retrospective. If, therefore, the standard security was recorded on or after 1 January 1991, no such assurance will be required.
If the necessary matrimonial homes act evidence is not produced in relation to the grant of a standard security recorded prior to 1 January 1991 then a note in the following terms (MH4) should be inserted in the proprietorship section:
Note: The Keeper is satisfied that there are in respect of the subjects in this title no subsisting occupancy rights in terms of the Matrimonial Homes (Family Protection) (Scotland) Act 1981, of spouses of persons who were formerly entitled to the said subjects, except AB (design), who ceased to be entitled on [date] and in respect of whose entitlement no evidence has been produced to the Keeper that the requisite documentation was produced to the creditor by said AB before the granting of the loan in terms of Section 8 of the above Act.
If no evidence was produced and the standard security was recorded after 1 January 1991 then the note (MH6) should read as follows:
Note: The Keeper is satisfied that there are in respect of the subjects in this title no subsisting occupancy rights in terms of the Matrimonial Homes (Family Protection) (Scotland) Act 1981, of spouses of persons who were formerly entitled to the said subjects, except AB (design), who ceased to be entitled on [date] and in respect of whose entitlement no evidence has been produced to the Keeper that the requisite documentation was produced to the creditor by said AB in terms of Section 8 of the above Act.
Note: Care should be taken with regard to the date on which the debtor is stated to have ‘ceased to be entitled’ to occupy the property. The safe course is to assume (as with a disposition by the proprietor) that the relevant date is the date of entry of the purchaser in the Power of Sale Disposition. However, where the creditor has acquired possession as a result of a Court Decree, the applicant may request that the relevant date be taken to be the date of the creditor’s possession. If that line of argument is suggested, the Registration Officer should seek advice from his or her Team Leader.
The law is unclear as to whether a further advance under a standard security constitutes a dealing under the 1981 Act. Until such time as it is judicially decided that section 8(2) or 8(2)(A) of the 1981 Act applies to further advances, the Keeper will not, in relation to applications for registration proceeding upon powers of sale, require to examine either an affidavit or a consent or renunciation in respect of such further advances.
8.24 Prescription of occupancy rights
The Family Law (Scotland) Act 2006 reduced the prescriptive period for occupancy rights from 5 to 2 years, however the two year prescriptive period does not apply if the spouses ceased to cohabit prior to 4 May 2006 Act; the registration officer should refer a case through their normal channels if the applicant requests the removal of a qualified statement on the basis of prescription.
(a) Prescription before a dealing
In terms of s.1(7) of the 1981 Act (as amended by the Family Law (Scotland) Act 2006), if there has been no cohabitation between an entitled spouse and a non-entitled spouse during a continuous period of 2 years, and during that period the non-entitled spouse has not occupied the matrimonial home, then the occupancy rights cease. For the purpose of calculating the 2 year period, no account is taken of any time during which the spouse was attempting to assert the occupancy rights in court.
(b) Prescription after a dealing
Section 6(3)(f) of the 1981 Act (as amended by the Law Reform (Miscellaneous Provisions) (Scotland) Act 1985 and the Family Law (Scotland) Act 2006) provides that the occupancy right of the non-entitled spouse will prescribe if it remains unexercised for a continuous period of two years after the entitled spouse permanently ceased to be entitled to occupy the property. Prescription will not start to operate if the non-entitled spouse remains in occupation. Equally, where the entitled spouse enters into a dealing which does not lead to the loss of entitlement to the property (e.g. the grant of a standard security), the prescriptive period does not commence from the date of that dealing.
This means that one cannot necessarily ignore transactions which took place more than two years prior to First Registration. However, the Keeper is normally prepared to take a pragmatic view where question 9 in application Form 1 is answered in the affirmative.
By virtue of the provisions of s.6(1A) of the 1981 Act (as inserted by the Family Law (Scotland) Act 2006), it is no longer necessary to consider the position of occupancy rights of non-entitled spouses of former owners: documentation is required only in respect of the current owner (provided the transaction involves a transfer for value and is in good faith). There is doubt that a party is acquiring in good faith when there is already a note on the title sheet regarding potential adverse occupancy rights. The current situation regarding any such occupancy right would require to be investigated and evidence of its termination, as set out in paragraph 8.26 below, should be submitted with the application if available.
The Land Registration (Scotland) Rules 2006 introduced new Forms 1, 2 and 3, each of which now contains an expanded series of questions about the occupancy rights of non-entitled spouses, the answers to which will assist the registration officer in determining whether they will enter any statement regarding occupancy rights in the title sheet, and if so, whether the statement will be qualified to any extent.
Registration Officers are reminded that a decision on entering a statement about occupancy rights of spouses of former proprietors is required only where they are dealing with a transfer of title. The changes in the format of the questions asked on the new application forms have not altered the Keeper's statutory role. For example, the registration officer does not require to consider entering a statement or removing or qualifying an existing statement where the application for registration pertains to the grant of a standard security. Therefore, the questions concerning occupancy rights do not require to be considered by a registration officer where the application being examined does not involve a transfer of title.
If the questions are answered appropriately and the registration officer can proceed on the basis of the certified information there is no requirement to archive any supporting documents that may be submitted. If, however, it is necessary to look beyond the certified in formation on the application forms then any other documentation must be archived.
Question concerning whether application is for registration of a dealing within meaning of Matrimonial Homes Act.
Each application form asks the applicant to certify whether the application for registration pertains to a dealing with the property within the meaning of the 1981 Act. For further information on the meaning of "dealing" in this context, see Dealings by the entitled spouse. Further, a registration officer only requires to consider the questions concerning occupancy rights where a transfer of title is being registered.
Unless the registration officer is dealing with a voluntary registration, in the majority of cases where an application for registration of a transfer of title is being dealt with, this question will be answered in the affirmative. However, where the deed inducing registration is a schedule conveyance or a disposition by a trustee in sequestration, this question may correctly be answered in the negative. If the question is answered in the negative the registration officer must carefully consider any omission of a matrimonial homes note, since it may still be appropriate for the registration officer to enter either an MH1 or a qualified note where the property falls within the definition of a Matrimonial home.
For example, if a transaction is entered into by spouses who both have title to the property, then where this question is answered in the negative it may still be appropriate to enter an MH1 Note where the property involved is of an appropriate type, as no consents are required in this situation. Equally an applicant might answer this question in the negative but further advise that all necessary consents etc had been obtained. If a transaction is entered into by only one spouse, where both have title to the property in question, then the applicant should answer this question in the affirmative and go on to answer the remaining related questions.
If the question is answered in the negative but the transaction is one that falls within the meaning of a dealing in terms of the Act, however no further information is provided that the necessary documents exist, or have been produced, then an appropriately qualified note should be added.
Question concerning whether the subjects could be a Matrimonial Home
If the application is for registration of a dealing within the meaning of the Matrimonial Homes Act, the applicant should proceed to answer this question. If it is answered in the negative, the registration officer does not require to consider the matter further and no 1981 Act note is to be entered. If there is an existing note in the title sheet with which the registration officer is concerned, this may be removed.
Question concerning the existence of appropriate evidence confirming no occupancy rights subsist
Where this question is answered affirmatively, the registration officer may
enter an unqualified note in the Proprietorship Section. If it is answered in
the negative, a qualified note is appropriate. The appropriate form of note
selected from LRS, will be determined by the circumstances of the case. Further
information may be required from the applicant if it is unclear from the application
in respect of which proprietor there is a lack of evidence in terms of section
6 of the 1981 Act.
8.26 Removal of qualified
statement
Where the Keeper has inserted a qualified statement, he will remove the qualification on the subsequent submission to him of satisfactory evidence that the occupancy right has terminated, or in respect of applications received on or after 22 January 2007, where the agent advises that an error has been made in the certifications and appropriate written certifications are subsequently made to the Keeper.
Evidence can take a variety of forms and includes:
• evidence that the requirements of section 6(3)(f) of the 1981 Act have been met, namely that the occupancy right has prescribed (see Prescription of occupancy rights).
• The evidence which the Keeper requires is an affidavit from each proprietor during the two year period, to the effect that no non-entitled spouse of the person named in the note in the Title Sheet exercised an occupancy right during the deponent’s period of ownership;
• evidence of the termination of the relevant marriage after the occurrence of the dealing, either on divorce or the death of either spouse. Evidence of termination of the marriage before the occurrence of the dealing, except by the death of the entitled spouse, is not satisfactory evidence because the entitled spouse might have remarried;
• evidence of the death of the entitled person whether or not that person was married.
An application to remove a qualified note should be made on Form 2 (not Form
9) and will be charged the appropriate fee for a miscellaneous event, except
where the request is made at the same time as another dealing application is
being given effect to.
End of Topic
Updated January 2007