First Comment Newsletter Scotland issue 1
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Transcript of First Comment Newsletter Scotland issue 1
Leading Title Insurance
FIRST COMMENT01
IN THIS ISSUE:• HOW CAN TITLE INSURANCE HELP WHEN THE KEEPER’S MIDAS
TOUCH/WARRANTY CANNOT BE RELIED UPON?• WHAT IS SCOTLIS?
SPRING 2016 ISSUE
Like any good spring clean, we have applied the “Out with the old, in with the new” mantra to our quarterly newsletters. Our decision to move to this format was not only to refresh the look and feel of the newsletter itself but, also to provide a better user experience for an increasing number of our subscribers who read our newsletter when out of the office. Our new platform is fully optimized for both desktop and mobile devices and newsletters can also be downloaded as PDFs to enable viewing without an internet connection. We believe that the content is still as compelling as always with contributions this quarter from First Title’s Laura Lapsley, who considers the terms of the new registration as well as our regular feature from Professor Stewart Brymer who offers an insight into the Scottish Land Information Service.
We hope that you like our new style. As always, if you have any comments or suggestions, please feel free to drop us a line at [email protected]
More than a year after the introduction of the Land Registration (Scotland) Act 2012 (“the 2012 Act”), solicitors are adjusting to the various changes implemented. However, the 2012 Act is still relatively new and so there are bound to be teething problems and many property practitioners may still be finding their feet when it comes to changing their traditional ways of working. Some parts of the 2012 Act are still untested and it may take some time and some trial and error before precedents are set and it is known how certain sections operate in practice.
The Keeper’s Midas Touch
One of the most significant changes resulting
from the Land Registration (Scotland) Act
2012 (“the 2012 Act”) was the weakening
of the Keeper’s ‘Midas Touch’. Under the
previous Land Registration (Scotland) Act
1979 (“the 1979 Act”) the effect of registration
was to grant a title which was immune
to rectification. All that was required was
the registration of a title deed along with
possession of the land in question (section
3(1)(a) of the 1979 Act). This system provided
a great deal of certainty as to ownership of
registered land, as there was no need to ‘look
behind the register,’ however, the problem
with this practice was that it was vulnerable
to fraud and error. For example, a purchaser
could register a deed, and provided they had
possession of the land, would become the
registered proprietor on the Land Certificate,
even if they were not the true owner. The
effect of this was that true owners of land
could be deprived of ownership. This practice
was an example of bijuralism – where there
was an inconsistency between registration
law and property law – and is one of the
issues that the 2012 Act sought to rectify.
How can Title Insurance help when the Keeper’s Midas Touch / Warranty cannot be relied upon?
FIRST COMMENT
3
By Laura LapsleyAssistant Commercial Underwriter
Realignment
The 2012 Act still does contain protection for
registered proprietors known as ‘Realignment,’
which is similar to the previous Midas Touch, but is
not as instantaneous and a number of boxes must be
ticked before this protection applies. Section 86 of
the 2012 Act sets out the conditions which must now
be met for the disponee to achieve a valid title where
a person who is not the proprietor of a registered
plot of land but (A) is entered in the proprietorship
section of the title sheet as proprietor, and (B) is in
possession of the land, purports to dispone the land:
1. the land has been in the possession, openly,
peaceably and without judicial interruption—
(i) of (A) for a continuous period of at least one
year, or
(ii) of (A) and then of (B) for periods which
together constitute such a period,
2. at no time during that period did the Keeper
become aware that the register was inaccurate
as a result of (A) or (B) not being the proprietor,
3. B is in good faith,
4. the disposition would have conferred ownership
on (B) had (A) been proprietor when the land
was disponed,
5. at no time during the period mentioned in
paragraph (A)—
(i) was the title sheet subject, by virtue of
section 67, to a caveat relevant to the
acquisition by (B),
(ii) did the title sheet contain a statement under
section 30(5), and
6. the Keeper warrants (or is to be taken to
warrant) (A’s) title.
This section raises the bar and requires that more
criteria be met before title to a piece of land can be
said to be valid. After the year period has passed
and all of the other criteria have been met, the
registration cannot be reversed and so if a true
owner came forward at that point, they could only
seek compensation from the Keeper.
How can Title Insurance help?
One point of concern to some solicitors, is the new
requirement contained in Section 86 of the 2012
Act, which states that the land must be possessed
openly, peaceably and without judicial interruption
for a continuous period of one year. This gap
represents a potential year of uncertainty, where the
title is open to challenge and rectification. Wherever
there is uncertainty or a potential gap in title, title
insurance can be invaluable in providing comfort
and protection.
First Title can consider providing a bespoke policy
which will cover the purchaser of land against a
challenge by a third party against the title to the
land because of a lack of title in terms of s.86 of the
2012 Act. Our policy lasts in perpetuity and passes to
successors in title, so the solicitor can rest assured
that their client is provided with an extensive level
of cover. The interest of mortgagees is also covered
and so this policy can provide comfort to lenders
and assist in getting your transaction over the line.
Another change introduced by the 2012 Act
involved the level of responsibility which rests on
the shoulders of the solicitor. Under the 2012 Act,
there is an express statutory duty of care owed
by the solicitor, not to cause the Land Register to
become inaccurate. There may be occasions where
the solicitor feels unable to fully certify the title to
the Keeper because of missing deed plans or poor
property descriptions and may seek additional
comfort elsewhere, in the form of a title indemnity
policy, to ensure that their client is fully protected.
Of course, there are obvious benefits to this change
in legislation, such as the realignment of property
law and registration law, which provides more
protection for the true owner of land. However, there
is less certainty for the good faith purchaser, who
may not be able to rely on the register as confidently
as they previously could. In their circumstances, title
insurance is there to back up their title and mitigate
their loss should the worst happen.
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FIRST COMMENT
5
ScotLIS is an acronym for the Scottish Land Information Service. It will be hosted and operated by Registers of Scotland. In essence, it will provide a one-stop-shop for accessing information about land and property. Registers of Scotland will lead on the development of the new system as part of its digital transformation programme, which is focused on improving our registration and information services.
Why is it required?
Many countries already have such a system. One of
the main benefits is that those seeking information
on land and property only require to go to one
place instead of, as at present, instructing numerous
searches or trawling numerous disparate web-sites
and databases. It should be the “Go to” place for
all such information. As a result, there should be
significant efficiency improvements to searching
for information about land and property and
there should be less risk of information not being
discovered about a property.
How will ScotLIS be accessed?
The objective is for information to be delivered on
a digital basis through ScotLIS. It will be able to be
accessed by anyone be they a member of the public,
a solicitor, surveyor or a searcher. Information on
land and property is currently held in a number
of disparate sources and it is felt that there will be
economies of scale and increased accuracy from
information being able to be accessed through a
single channel – the information will remain to be
held by the “producing” organisations responsible
for it but made available through a portal or channel.
ScotLIS will ultimately be accessed by a Unique
Property Reference Number (“UPRN”) which will be
allocated to each property.
ScotLIS will provide a single point of access to
land and property information via a portal, which
is likely to be map based, although other searches
e.g. by address could be possible. Where datasets
have been matched to the gazetteer and contain
the URPN, this will enable linking of different
information. Where this matched has not been
completed the linkages will be through location.
What is ScotLIS?By Professor Stewart Brymer
How will the information be collated?
The information that is being talked about here is
largely public data which is currently held in various
silos across central and local government. Much
of this data is held by local authorities. One of the
first goals will be to ensure that all local authority
data is held in the same way across Scotland so
that it may be more easily accessed and analysed.
It is not envisaged that ScotLIS will be a single
point of access to local authority information
which, although forming part of a Property Enquiry
Certificate, could be accessed through a number of
other portals.
Will there be an indemnity in case of error?
ScotLIS is not intended to alter the warranty that
currently applies to certain types of land and
property information. So where information is
currently warranted by a provider, that warranty
would exist in ScotLIS. Much will depend on
the type of information being accessed. So, for
instance, information from the property registers
will be provided on the same footing as is currently
applicable to Registers Direct. It is anticipated
that all the information accessed through ScotLIS
will be covered by a suitable indemnity insurance
“wrapper” the exact terms of which have yet to be
discussed however due, in part, to the quality and
lack of consistency of existing data.
What will be contained within ScotLIS?
ScotLIS will be a cadastral map-based system. When
accessed via a UPRN or other means as mentioned
above, a user will hopefully be able to view the
property and see both the boundaries thereof and
also the route of utilities, servitudes and other
important pertinents of the property. This should
greatly enhance what a prospective purchaser will
know about a property being marketed for sale and,
as such, will be a positive development of the Home
Report. Indeed, a development if the system would
be for Energy Performance Certificates and Home
Reports themselves to be registered in ScotLIS on
a property-specific basis. This would allow repairs
and improvements flagged up in Home Reports to
be logged which, at long last, would meet what was
the principal objective of the Scottish Government’s
Housing Improvement Task Force.
6
What is to be done now?
A Project Board has been created to take the
development of ScotLIS forward. This is under the
direction of Registers of Scotland as envisaged in
the report of the Task Force, which considered the
subject. The Project Board will consult broadly with
stakeholders and external IT consultants and will
consider international examples of what is being
proposed. Discussions are already taking place with
local authorities, Ordnance Survey, The Law Society
of Scotland and RICS. A prototype will be developed
and tested. This will be an incremental process with
version 1 likely to be focused on the information
required in a property transaction.
When will it be available?
It is hoped that ScotLIS will be launched by October
2017 which, interestingly, will mark the 400th
anniversary of the creation of the Register of Sasines
which was the world’s first register of property
deeds. Scots Property Law has a long tradition and
is highly regarded across the globe. The creation of
ScotLIS will place Scotland at the forefront of land
and property initiatives and will generate a
significant return on investment for both the public
and private sectors while reducing time, cost, risk
and stress to the citizens of Scotland. It will provide
improved transparency which, in turn, will result in
more certainty and lower costs when buying and
selling property.
What is next?
Current systems are less paper-based than they
were and solicitors have to key data through web
portals into the systems of other agencies they deal
with eg Registers of Scotland, Revenue Scotland et
al. Unfortunately, database formats and fields are
anything but uniform, so the way data is stored in
case management systems does not match the way
the same information is stored in the systems of
other agencies making the uploading of data very
difficult. The objective must be to have data entered
once in a consistent format so that it may be used
many times thereafter. ScotLIS could well be that
single agency collecting such data. This would allow
property lawyers to generate all relevant documents
and forms in a consistent manner. That may well be
what is required in an e-conveyancing system. Only
time will tell.
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FIRST COMMENT
1
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