the Land Register when the security subjects are themselves registered, it is essential that the security appears as a charge in the land register. Failure to disclose security in title sheet If  the  Keeper  were  to  omit  an  existing  heritable  security  from  a  title  sheet,  the  creditor  under  the security would not be able to enforce it against the registered proprietor unless the Keeper is able to rectify the omission under section 9. If the Keeper cannot rectify the title sheet, the creditor will have a claim for indemnity against the Keeper. Registration of creditor’s interest Although there are good reasons for doing so, there is no compulsion that a creditor’s interest in an existing recorded heritable security be registered when the security subjects are themselves registered. An unregistered security however, is subject to any defects which may have existed prior to registration of  the  security  subjects.  Since  the  Keeper  has  neither  received  the  certification  which  an  applicant would  be  required  to  make  on  an  application  form  nor  examined  documents  or  other  evidence required to support such an application, no charge certificate will be issued. No indemnity will attach to the creditor’s interest except where the Keeper has failed to note the existence of the security in the title sheet and is unable to rectify the omission. To  obtain  the  full  benefit  of  the  indemnity  provisions  under  the  Act,  the  creditor’s  interest  must therefore be registered. Such an application is competent, however, only if the security subjects are already  registered,  or  if  an  application  for  registration  is  pending  it  is  subsequently  completed. Application should be made on Form 2 whether the existing security relates to the whole or to a part only of the registered interest. The effect of the registration of a recorded heritable security is that the creditor obtains the full benefit of the Keeper’s indemnity provisions and a charge certificate is issued. Even if the decision is made not to register the creditor’s interest, subsequent transactions involving the security interest may make registration of the creditor’s interest necessary; for example, to give effect to a subsequent variation of the security. An example of this situation arises where the proprietor of a half share in subjects sells that share to the proprietor of the other half; e.g., on divorce when one spouse acquires the other’s share in the matrimonial home. The disposition of the half share, if for value, will induce a first registration and in these circumstances the Keeper will almost invariably encourage voluntary registration of the other half share. If the spouses had previously granted a standard security the creditor will usually require the spouse acquiring the whole property to undertake the other spouse’s personal obligation under the security, normally by way of a variation of the standard security. If such an application is submitted to  the  Keeper  (i.e.  half  compulsory,  half  voluntary)  accompanied  by  a  recorded  standard  security granted  by  the  previous  proprietors  and  a  variation  thereof  in  the  terms  above-mentioned,  the creditor’s interest under the security will have to be registered. Accordingly, separate application forms should be submitted for both the standard security and the variation. Standard registration dues are payable for the registration of a recorded heritable security, but, where the application for registration of the recorded security accompanies the application for registration of the security subjects, the reduced fee for heritable securities accompanying transfers will apply.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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