Shaky ground

The land reforms underway in Scotland read like the latest Indiana Jones movie for lawyers. Alison Newton points out the pitfalls and the route to a happy ending

Whether you regard yourself as a globe-trotting real estate lawyer, a commercial land contracts adviser or a down-to-earth conveyancer, you are going to have to throw out your preferred source of reference on Scottish land law. A revolution is underway that is going to change the basic concepts of how we hold and deal with land in Scotland forever. There is only one problem: few people seem to care that the changes will have far-reaching effects on more of us than just zealous crofters and free-spirited ramblers.
The reasons for this quite apparent lack of interest are that, first, some of this land reform stuff is really quite difficult, and second, as a profession we have not worked out how we are going to implement it practically. We have to understand the theory before we begin to work out how we are going to apply the law.
That is going to take some good brains and some collaborative working within the profession if we are not going to give up any gains we have made in the credibility stakes over the last few years for mostly trying to get the deal done. Head shaking and furrowed brows is a bad enough image. An even worse pros-pect is of two giant egos tethered to either side of a boardroom table finding all the ways not to do something, while the clients look on, first in bemusement and then in distaste.
To put this into context, it might be useful to highlight what all the fuss is not about. There are three acts that, first, deal with the abolition of the feudal system; second, they make new rules for creating or regulating title conditions; and last, they create new rights of access and new rights to buy. And that is it.
Unfortunately, that is not the end of the story. It helps to look at these land law changes as a picture – the one that works for me is a volcano. My description is really nothing more than the name of the volcano and the map grid reference to help you find it. When you get there you realise that you have to scramble up through some tiresome scree and dust. This will tell you that feudal tenure goes and that the new rules for title conditions come in on 28 November 2004. As you pause for breath halfway up the volcano, you realise that the bit about land reform (ie the rights of access and rights to buy, which have been given all the press), do not even have a timetabled date for commencement. But you are already doing deals where the suspensive conditions (conditions precedent) alone will take you beyond 28 November 2004.
As you continue hiking up, the ground underneath you starts to feel uncomfortable and precarious as you meet the first edge of the molten lava. This is when you you start to advise your superiority-owning clients as to whether they should accept that all of the title restrictions which they previously had the benefit of will disappear on 28 November 2004. Or is it only some of them? Or only some of them as long as they serve a statutory notice in time? You look behind you and realise that some of the molten lava is already further down the slope, cutting off your retreat, and this time it is because some of the drafting of the title conditions is retrospective. That means, for example, that any appointment of a party to manage an estate (it could be industrial, it could be mixed use) under a deed of conditions lasts only five years. That is pretty worrying if your manager was appointed before 4 April 1998.
You plough on relentlessly, taking heart from the fact that title restrictions more than 100 years old can just be dispensed with. Also, at least you will be able to tell the clients that if they have openly breached a title condition for five years then the other guy has lost the right to enforce.
You lose your way a little near the rim of the volcano as you work out how you are going to explain the difference between facility and service burdens which you can save, amenity burdens which you can create, manager burdens which you can create and that it may not be possible to use title conditions now to achieve any old commercial end. Broadly speaking, you have to live in or own the ground next door to the people you are trying to control, so you had better remember to look up reallotment again. But bear in mind that swapping the benefit of conditions at the whim of the ex-superior does seem to be against the spirit of the thing.
And what about development value burdens – could they be worth a fortune to a client who remembers that they did an overage deal with the local creche in case the property was ever turned on for a higher value?
There is another giddy moment as you peer through the smoke and sulphur down into the volcano. Access rights and rights to buy are not that interesting unless you are dealing with large areas of rural ground or, in the case of access, any open land not within 100 metres of a dwelling or place of business. Large-scale business parks spring to mind. It would be easier to rule out of hand if it was indeed only related to recreational purposes. But in fact, some commercial purposes are allowed. That large country hotel that a US consortium wishes to buy because of its limitless privacy is probably needing some further consideration now.
There is a rumbling in the heart of the volcano and you wonder if you are going to be engulfed. That is when you reach out to grab your lifeline. You have read the acts, your colleagues have read the acts, and you have a working practice group with other property lawyers in your locality. You are all committed to working out how to work with the acts. You have alerted your clients to the coming changes and you have briefed their advisers and intermediaries. You are mentally fit after reading the 176 pages of the first act and you have an appetite for the new. It is time to step off the rim and head for the cauldron below.
Alison Newton is a real estate partner at McGrigor Donald