Joined-Up Land and Property Information: Will the Dream Come True at Last?

Background

There have been a number of recent developments which have the potential to significantly improve the way in which information about Scotland’s Land and Property is managed and made available.  A number of inter-related initiatives are being, or are about to be, launched, which together with new governance arrangements, suggest that the original aims of the Scottish Land Information Service (“ScotLIS”) may finally be realised.  

In 2001 those involved with the ScotLIS project (http://www.scotlis.com) produced the following statements of intent:-

“The ultimate aim of the ScotLIS project is that of providing an integrated data set where the user obtains information from a range of providers by means of a single search enquiry. This will be facilitated by means of a gazetteer …….” 

“The extent to which data from different suppliers will be integrated will be determined in the course of the ScotLIS pilot and through the ongoing development of the service.”

ScotLIS never progressed beyond the pilot stage for a number of reasons, mainly to do with the available technology at the time, but also due to the way in which the organisations involved viewed their own information.  Since then a number of significant events have occurred including legislative change and most markedly the economic downturn which has led to serious review of the way in which the public sector will require to deliver services in future. For a more detailed review of the background to ScotLIS, see an article by the authors in Greens PLB Issue 97 pp1-3.

Recent Developments

In December 2009, Scottish Ministers signed the European INSPIRE Directive which places an obligation on them to publish information on a number of spatial data themes which contain environmental data.  Those themes directly related to land and property are Addresses, Geographic Names, Cadastral Parcels and Buildings and the Directive explicitly specifies what information is required to be published and how this must be done using web services. This was a very important step on the road to the goal of joined-up property information.

In 2010 a joint venture was established between the Local Government Association and the Ordnance Survey to deliver a National Address Gazetteer for England and Wales by working collaboratively to combine the best features of the National Land and Property Gazetteer and Ordnance Survey address products.  There are now plans to include Scottish data into the National Address Gazetteer and John Swinney, the Cabinet Secretary for Finance and Sustainable Growth has given his approval to seek closer integration between the One Scotland Gazetteer and National Address Gazetteer, whilst retaining a Scottish identity.  It was announced on 18 July 2011 that the National Address Gazetteer would be handled by the soon to be created Public Data Corporation.

The One Scotland, One Geography strategy for Scotland is due to be renewed in 2011 with the working title of “One Scotland: One Europe: One Geospatial” which reflects the current aspirations to consider Scotland in a more European context. This demonstrates the broad consensus that exists across Europe to deliver a unified picture of land and property information. A number of interested parties are being consulted on the content of the strategy and Scottish Government will have the responsibility for publishing it in due course.

The Scottish Government recently announced the establishment of a Spatial Information Board with the remit to implement the Scottish Spatial Data Infrastructure / INSPIRE Directive requirements. The Board’s membership will be drawn from senior officers from Scottish Government, NDPBs, SOLACE, NHS, AGI Scotland, Edina and the Registers of Scotland and it is chaired by Jim Mackinnon, Director and Chief Planner, Scottish Government.  The Board is expected to report to a National Board overseeing public sector reform in Scotland.  Five theme groups have also been established under the Board, with one of these having the remit for Land, Property and Addresses, which include Geographic Names and Buildings.  Once the governance structure is established and functioning it should provide a clear reporting structure for land and property related information to Ministerial level.  This was one of the key components missing from ScotLIS in 2001, as well as the links to other spatial initiatives.

Assuming that the above all materialise as anticipated, Scotland should be well placed to develop a land and property infrastructure which will be capable of supporting greatly improved services, including eConveyancing and improved asset management.  

What does this mean for Conveyancing practice?

Up to date and readily accessible information on land and property is at the very core of the conveyancing service. It has been argued for many years that it is nonsensical for solicitors to have to have recourse to multiple data sets, some of which may not be comprehensive in their coverage or, indeed, be current. This is not in the best interests of either buyer or seller. Why should they be put at risk? It must surely be the case that in today’s information-based society that all relevant data on land and property is held in a comprehensive and easily searchable database. This initiative is the catalyst for reform that has been required. Without it, the existing systems would grind on with little or no appetite for change.

It is unclear where the role of the private sector lies in this. Perhaps there might be a case for a form of public/private partnership? This would bring together the pioneering work undertaken to date by the public sector with a number of comprehensive datasets that exist in the private sector. Unifi Scotland (http://unifiscotland.com) is a think tank that was established a number of years ago to look at ways of improving access to and use of data on Land and Property with a view to having a government-backed definitive source of information. Anyone who is interested in contributing to that debate should contact the Chair through the website.

The views expressed in this article are those of the authors and do not represent the views of their respective organisations or of the Scottish Government.

An Article by Professor Stewart Brymer WS, Brymer Legal Limited and Iain McKay, Improvement Service    

Published in Greens PLB (October 2011)

The Demise of the Letter of Obligation?

Introduction

Delivery of a disposition  in exchange for payment of the price in a conveyancing transaction does not, of itself, confer a real right. Only registration does that. See Sharp v Thomson 1997 SC (HL) 66 and Burnett’s Trustee v Grainger 2004 SC (HL) 19. Accordingly, the so-called “race to the register” dictates that the first person to acquire a real right by way of registration prevails. See also Ceres School Board v   McFarlane (1895)23 R 279.

There is, however, an attendant risk caused by the brief delay between delivery of the deed and its registration. This has come to be known as “gap risk”. That risk can be divided into (a) the risk that the granter is sequestrated, put into liquidation etc.; and (b) a risk that the granter grants a competing deed to another party and that deed is registered first. In addition, there is also a short gap between the date of the search in the registers on which the grantee relies and the actual date of settlement. This gap has been reduced considerably in recent years and, if using ARTL, (www.ros.gov.uk/artl)  the gap is virtually removed altogether. Nevertheless, the gap still exists. As stated in para 14.2 of the Report of the Scottish Law Commission  Number 222 on Land Registration  (www.scotlawcom.gov.uk/publications/reports), “Efficient conveyancing can cut down these two gap elements but experience shows that it is hardly possible to eliminate the problem altogether.”

As mentioned above, the introduction of ARTL  along with the effect of Section 17 of the Bankruptcy and Diligence (Scotland) Act 2007 have also helped reduce the gap risk but they do not provide a complete solution.

The gap risk has traditionally been covered by the seller’s solicitor granting a letter of obligation which, if in “classic” form constitutes a personal guarantee by the granter’s solicitor. In recent years, solicitors have, quite rightly, questioned why they should provide such a guarantee to make the conveyancing system operate more efficiently. As Professor Rennie has said, the letter of obligation is effectively the oil that lubricates the system and enables it to work. 

In England and Wales, it is possible to obtain an “official search with priority” which provides a period of 30 business days (a period equal to 42 days). Under that system, the use of advance notices is optional but they are widely accepted as part of the conveyancing process as they afford a degree of protection to purchasers. A registered advance notice involves a notice being placed on the Register stating that the owner (A) is intending to grant a deed to a third party (B). This notice does not confer a real right on B. What it means is that if a deed is, in due course, granted to B and that deed is registered, then anything in the Land Register in favour of another party (C)  that is registered between the date of the advance notice and the deed of the registration of the deed in favour of B is postponed to the said deed in favour of B – the advance notice being capable of being seen on a search of the Register carried out by a prospective purchaser.

Proposed Reform

A recommendation for reform to the Scottish system to deal with problems associated with floating charges was suggested a number of years ago. See Greens PLB Issue 45 at pp 1-3. In response to calls for reform of the system generally  from The Law Society of Scotland amongst others, the Scottish Law Commission carried out an investigation into possible reform. This involved a consideration of the systems of advance notices used in England and Wales and in Germany. See Scottish Law Commission Discussion Paper 130 and the aforementioned Report on Land Registration.

A brief outline of the proposed reforms is as follows:

1.     An advance notice may be registered whether or not there are antecedent missives.

2.     It is recommended that the advance notice system will apply only to properties registered in the Land Register. Scottish Ministers will, however, have power to extend it to first registration.

3.     The draft Bill which forms part of the Scottish Law Commission Report does not specify the form of an advance notice which, in practice, is likely to be electronic. It will be possible to lodge the notice in paper however. It is expected that the exact form of the notice will be regulated by rules to be promulgated by Scottish Ministers.

4.     An advance notice would normally be granted by the party named as proprietor in the title sheet but third parties, who are not heritable proprietors but who can validly grant the deed in question, may also register an advance notice. It is also recommended that the notice can be granted by any other person, so long as the notice bears the consent of the person who could validly grant the deed in question. This accords with the German approach. In a standard conveyancing transaction, the missives will require to provide for an advance notice to be applied for.

5.     Advance notices will enter the Application Record in the Land Register and would not be registered in the title sheet. Unlike at present, the Application Record will be one of the four recognised parts of the Land Register if the recommendations of the Scottish Law Commission are followed. See SLC Report paras 4.9 and 4.35.

6.     The Scottish law Commission recommended that the advance notice would subsist for a period of 5 weeks (35 days) – not “business” days. The Bill envisages that the period can be varied by secondary legislation.

7.     It is recommended that the protection afforded by advance notices should extend to entries in the Register of Inhibitions that appear within the protected period.

Conclusion

In broad terms, an advance notice would cover the risks covered by a typical letter of obligation. It is not envisaged that it would protect against a notice of potential liability for costs and other possible exceptions as may be listed by Scottish Ministers.

It is suggested that the introduction of advance notices in Scotland is long overdue. The Scottish Law Commission are to be congratulated for carrying out an in-depth investigation of the background to the current system and of the options available for reform as part of their research into the reform of the land registration system. Under the proposed system, there would still be a “race to the register”. Under that system the first person to register would prevail “but with the possibility of the result being changed if that registration happened during the currency of a notice in favour of another person” – SLC Report para 14.49.

Conveyancing practice would obviously require to change. The prospective grantee will require to ensure that the advance notice is entered on the Register a reasonable time before the intended settlement date. Then immediately prior to settlement, the Register can be checked to confirm the entry of the notice, to confirm that no competing deed has been registered (as now) and to confirm that no potentially competing advance notice has been entered.

The Scottish Law Commission envisage that the new system will be relatively straightforward to operate and that it will be of considerable benefit both to the legal profession and to members of the public alike. Assuming a clear search, the transaction can be settled and the deed in favour of the grantee registered without fear of challenge. In a normal conveyancing transaction, it is envisaged that there would potentially be two advance notices – one in respect of the Disposition and the other in respect of any Standard Security.  This is seen as being a low cost solution to the potential harm caused by the gap risk – especially where the letter of obligation, for whatever reason, does not provide an assurance. 

It will be interesting to see whether or not letters of obligation will become redundant. It is hoped that they are no longer required. They have served their purpose and should be laid to rest – or as could otherwise be said: “Their time has came and went”!

An Article by Professor Stewart Brymer WS, Brymer Legal Limited.

Published in Greens PLB (August 2011)