Home Owner and Debtor Protection (Scotland) Act 2010

The above Act amends the law relating to the creditor’s power of sale in a standard security.  It also makes new provision for sequestration and amends the law relating to trust deeds granted for the benefit of creditors.  Some provisions have already come into force, and the remainder of the Act is expected to be in force by 15 November 2010.  Transitional provisions may apply where a creditor or debtor has commenced a course of action prior to the date when the relevant part of the Act came into force.

Solicitors and others submitting applications for registration in the Keeper’s registers should note the following changes to registration practice which apply as a result of implementation of the Act:

Land Register of Scotland

Disposition by a creditor in exercise of the power of sale in a heritable security

Part 1 of the 2010 Act introduces procedural steps which a creditor must follow before exercising rights of possession and sale over residential property.  These procedures amend the requirements set out in the Conveyancing and Feudal Reform (Scotland) Act 1970 and the Heritable Securities (Scotland) Act 1894.

Land Register application forms 1, 2 and 3 each contain a question asking applicants to certify whether the statutory procedures necessary for the exercise of the power of sale have been complied with.  Where that question is answered in the affirmative, the Keeper relies on the answer given on the form and does not ask to see evidence such as calling-up notices.  In a case where the new procedures under the 2010 Act apply, an affirmative answer to that question will be taken as an assurance by the person signing the application form that all relevant procedures under the 1894, 1970 and 2010 Acts have been complied with.

Disposition by the trustee under a trust deed for the benefit of creditors

Part 2 of the 2010 Act extends the definition of ‘trust deed’ to include deeds in which the debtor’s family home is excluded from the trust.  However, where the family home is included within the ambit of the trust, the trustee’s duties in respect of sale of the family home are brought into line with the provisions in section 40 of the Bankruptcy (Scotland) Act 1985, which apply when a trustee in sequestration wishes to sell the debtor’s family home. 

In an application for registration based on a disposition by the trustee, the Keeper will therefore expect to see evidence that the procedures in section 40 have been followed.  Depending on the circumstances, the applicant should produce either a consent from the appropriate person or a Court Order in terms of section 40.  If the property being sold is not the debtor’s family home, a letter to that effect (signed by the trustee or by the applicant’s solicitor) should accompany the application.

Register of Inhibitions and Adjudications

The Mortgage Rights (Scotland) Act 2001 allowed debtors to seek a Court Order suspending the creditor’s exercise of a power of sale.  The 2010 Act repeals those provisions, and also the provision which allowed such Orders to be registered in the Register of Inhibitions and Adjudications.