FEUDAL ABOLITION

Constitution of real burdens over properties in developments

Since the Appointed Day, the Pre-Registration Enquiries Section has received many enquiries from agents concerning the Keeper's practices and procedures in connection with the imposition of new burdens. A particular area of interest has been the imposition of real burdens on property developments.

The purpose of the following is to provide some background information on the registration of constitutive deeds post appointed day. There are also related frequently asked questions which will hopefully be of further assistance.

PROPERTY DEVELOPMENTS AND REAL BURDENS

In a situation where a developer or a landowner is selling a number of related units of property, such as flats in a tenement, houses on an estate or adjoining plots of land and wishes to impose new real burdens on them, the future proprietors of those units might wish to be able to enforce any new real burdens imposed on those units on a reciprocal basis. Burdens created in this way are known as "community burdens". The title sheet for each unit in the development will show that it is both burdened by real burdens and also has the right to enforce those same real burdens against other units in the development.

However, the landowner/developer may also wish to have enforcement rights against each proprietor. As the developer's/landowner's property is not generally burdened with burdens that are identical to those imposed on the individual units sold, these are sometimes known as "neighbour burdens". In this case, only the landowner/developer's title sheet will specify that it is the benefited property.

The Keeper has no view as to which method of creating real burdens should be used in respect of such a situation. The decision as to who should have enforcement rights and how this can best be achieved is always a matter for those advising parties.

However, the Title Conditions Act sets out rules that must be complied with in order to create real burdens. How this is done will depend on whether you wish to create "neighbour burdens" in respect of separate burdened and benefited properties or "community burdens" which are mutually enforceable by each unit in a larger scheme or community of properties. The requirements for forms and fees will depend upon the option you select.

PROPERTY DEVELOPMENTS - TYPES OF DEED USED TO IMPOSE REAL BURDENS

While it is not the Keeper's role to prescribe the method by which real burdens are created, it is noted that there are differing implications for the registration of a constitutive deed, depending on which method you elect to use.

The focus of the following information is the creation of community burdens.

Deeds of Conditions

Many parties will wish to use a deed of conditions with the intention that once all of the properties are sold, the burdens will remain mutually enforceable among the proprietors of the various units within the development. These are "community burdens" - in respect of which each property is a burdened and benefited property - and the rules governing their creation are set out in the Title Conditions Act.

The use of a deed of conditions in anticipation of subsequent sales will generally only require a single application for registration against the developer's title for which only one fee is required.

Single Disposition

Another option seems to be the use of the first disposition out of a development selling only one unit but imposing community burdens on the whole development - this is a bit like incorporating a deed of conditions into the disposition. This would require two applications (a) one in respect of the unit sold and (b) a further application against the Parent Title in the Land Register or where appropriate, the remnant of the development in the General Register of Sasines. (This would also allow for the creation of unique "neighbour burdens" if required.)

Consecutive Dispositions

Thirdly, it is possible to create real burdens using dispositions of individual units, whereby in terms of each disposition only the unit being disponed is burdened by the real burdens set out in it.

However, it is the Keeper's opinion that if the parties intend to create 'community burdens' by using dispositions in this way each disposition should also

• nominate all the individual units in the development as benefited properties (not merely by using the parent title number or a description of the remnant of the development where it is unregistered but also by describing each unit which has already been sold)

• be dual registered against those properties (i.e. the parent/developer's title and any properties already sold off); and

• expressly state that the property being sold will also have the benefit of the burdens created in the dispositions of units sold earlier as is required by section 12 of the Title Conditions Act.

Whilst a deed which burdens only the unit in the process of being sold, and only nominates the remnant of the developer's title (often a registered title in the Land Register) as the benefited property can be registered, as it meets the requirements of section 4 of the Title Conditions Act, this will not create community burdens. The Keeper's opinion is that the net effect of using dispositions drafted in this manner is, in terms of the Title Conditions Act, that when each disposition is registered, the benefited property (the residue of the parent title) in respect of the burdens is diminishing in size. If this pattern continues it is possible that only the last unit or the land retained by the developer (if any) will have any enforcement rights. As a consequence, the title sheet for the last unit of property (or residue) will be the only one to show that it has enforcement rights.