Until recently, property law in Scotland had not been the subject of major legislative reform. This all changed in 2004 with the introduction of several pieces of legislation. The key changes include the abolition of the feudal system, the reform of the law on real burdens and the introduction of a community right to buy in rural areas.
Abolition of the feudal system
For hundreds of years, Scottish property law was based on the principle, deriving from medieval times, that ownership of land emanated from the Crown. The local aristocracy – some distant relation of the monarch – would convey land by way of a grant ‘in feu’, the effect of which was to create a two-tier system of ownership in the same property. The aristocrat became the ‘feudal superior’ and the buyer was termed ‘the vassal’.
In addition to payment of a sum of money, the vassal would be bound by conditions requiring payment of a periodic sum of money (feuduty) and the observance of practical conditions, such as the prohibition on altering the use or appearance of the land or buildings without the consent of the superior. These conditions formed a ‘feudal contract’, the terms of which represented a significant qualification of the liberty of the vassal to do with the property as they saw fit.
Gradually, it became competent for anyone, not just the landowning gentry, to sell land by way of a feu conveyance. The titles kept at Registers of Scotland, the official register of land and property in Scotland, quickly bulged with conditions and restrictions that had no real place in a world now regulated by a web of legislation undreamt of back in the days of Rob Roy. With effect from 28 November 2004, the Scottish Parliament abolished the estate of superiority through the coming into force of the Abolition of Feudal Tenure Etc (Scotland) Act 2000. Vassals became owners, not persons whose rights were subject to inappropriate restrictions enforceable by those with no real connection with the property concerned.
Some superiors invoked provisions in the act to preserve limited control over the relevant property. But such was the volume of superiority titles and the lack of real benefit these titles gave, that the vast bulk of superiority titles disappeared overnight. Across Scotland, examination of title deeds containing feudal conditions suddenly quickened and, for once, the conveyancer’s life became a little easier. However, as discussed in the next few paragraphs, legislation introduced at the same time gave the same conveyancer new issues to grapple with.
Reform of real burdens
Real burdens are title conditions which, as the Title Conditions (Scotland) Act 2003 puts it, “run with the land”. The feudal conditions discussed above also ran with the land, but gave rise to particular difficulty due to the relative ease (at least in theory) with which they could be enforced by the feudal superior. Real burdens have traditionally been more difficult to enforce due to complex rules on what was required to constitute a valid real burden, and even more complex rules on their enforcement.
From 28 November 2004, the act introduced a measure of clarity into the law by sweeping away many, but not all, of the grey areas and replacing them with a statutory regime, which for the first time sets out in legislative form the rules that are to be followed in order to create new real burdens, as well as instructions on how to enforce them and how to enforce real burdens created prior to 28 November 2004.
In some respects, the new act restates the law and is therefore not radical. But the effect is likely to be to make property lawyers think more carefully about the limitations of real burdens. For many years, those drafting real burdens have strayed from the basic rules on constitution, but no vetting mechanism existed within Registers of Scotland to prevent questionable, or downright invalid, real burdens from appearing in the titles of properties up and down the land. As with feudal conditions, the registers became (and will remain for the foreseeable future) cluttered with provisions which are truly contractual in nature, essentially a matter between original seller and buyer, although with the semblance of legitimacy simply by forming part of a registered title.
It remains to be seen whether Registers of Scotland will adopt a vetting role, not accepting a real burden for registration unless it satisfies the substantive tests laid down in the new act, or whether the Registers will accept a real burden for registration if it meets the test for formal validity specified in the act. The former approach has clear attractions, although the Registers will wish to avoid becoming involved in arguments with the profession over issues that involve difficult questions of substantive law, particularly as provision exists in the act for those subject to real burdens to challenge them at the Lands Tribunal for Scotland, a body to which the act gives an expanded role.
Community right to buy
By far the most ‘political’ of the three pieces of legislation featured in this article, the legislation on the right to buy and the crofting right to buy (Parts II and III of the Land Reform (Scotland) Act 2003 respectively), was introduced by the Scottish Parliament in June 2004. The purpose of the legislation is to enable the communities of essentially rural areas in Scotland to buy land upon which they live or work or have some other close connection. This is achieved by giving them a statutory pre-emption right. This right is not a right to buy the land at a time of the community’s choosing.
A community must act through a specific community body whose creation is regulated by the act. The community body must make out a case for being awarded the pre-emption right. The case must be made out to the Scottish Executive, which must be satisfied that the pre-emption right (and any subsequent purchase) is in the public interest.
Once the Scottish Executive permits a community body to have a pre-emption right, the landowner cannot sell over the heads of the community body. Banks that have repossessed properties are regarded as landowners caught.
The legislation has been in force for one year and several community bodies in rural areas have been established to take advantage of the new opportunity. A community body in Assynt has taken this furthest so far and is closing in on its target.
Ian Bowie is an associate in the property gruop at Dundas & Wilson