Compensation

Under the Land Registration etc. (Scotland) Act 2012, compensation is payable under five distinct areas: warranty, rectification, realignment, claims for loss incurred under section 106 (loss of documents, etc.) and claims under transitional provisions. In circumstances where no claim is available under the Keeper's warranty, it may be possible to make a claim under the rectification or realignment provisions.

Claims under Warranty

Under the 2012 Act, the Keeper has an obligation to pay compensation for loss incurred as a result of a breach of warranty. This liability to pay compensation only arises when an inaccuracy is rectified.

Claims under Rectification

Compensation is payable by the Keeper for loss sustained by a person in consequence of an inaccuracy being rectified. A person is also entitled to reimbursement of extra judicial legal expenses incurred in securing the rectification.

Claims under Realignment

In circumstances where it is not possible to rectify the register because realignment has occurred, the Keeper must pay compensation to a person who, as a result of realignment: -

  • - has been deprived of a right which has been transferred to an innocent third party; or
  • - is the proprietor of a property burdened by a servitude.

Q1. Is compensation payable if the keeper erroneously includes rights in the title sheet to land which extends beyond that included in the deed?

No. The extra area mistakenly shown by the Keeper is not warranted and can subsequently be removed from the title (provided realignment has not occurred) without compensation being payable to the applicant.

Q2. Will the keeper pay compensation for non-patrimonial losses, such as emotional suffering?

No. The Keeper has no liability to pay compensation for solatium.

Q3. Does the 2012 Act provide for reimbursement of costs incurred in pursuing claims which appear to be reasonably well founded but which are ultimately unsuccessful?

No. There is no equivalent to section 13(1) of the 1979 Act in the 2012 Act. In their report on Land Registration, the Scottish Law Commission was of the opinion that the Keeper should not be liable for the payment of expenses to those who make unsuccessful claims.

Q4. Interest is now payable on compensation payments by the keeper. What date does interest start running from?

There are three key dates to bear in mind:

1. where the sum is for a loss incurred as a result of a breach of the Keeper's warranty or as a result of rectification or realignment, interest runs from the date the inaccuracy giving rise to the claim was rectified or realigned.
2. where the sum is a reimbursement of extra-judicial legal expenses, interest runs from the date on which the claimant paid the sum in question (rather than when the sum is billed).
3. where the compensation is for a consequential loss, interest runs on the date that loss was sustained.

Q5: Warranty is granted to the applicant for registration, can a claim under warranty only be made by the applicant?

No. The benefit of warranty extends to certain successors of an applicant such as the executor of a registered proprietor.

Q6. What is the effect of a caveat on a claim for compensation?

Caveats act as a warning of ongoing litigation on a title but do not prevent parties from transacting with the land that is subject to the litigation. A third party is free to transact with the title despite the existence of the caveat. However, if the Keeper subsequently rectifies a title sheet as a result of the court action to the detriment of that person, they will not be able to claim they had transacted in 'good faith' and this may reduce the amount of compensation which they might otherwise have been entitled to.

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