On 8 December 2014 the legal process by which we buy and sell property in Scotland will be shaken-up by the coming-into force of the Land Registration etc. (Scotland) Act 2012 (after this, ‘the Act’). Conveyancing is seen as a bit of a stuffy, old-fashioned process, so a shake-up is surely a good thing, isn’t it? Well, it might be. But, from the point of view of the property seller or buyer in Scotland, we wouldn’t be too sure. Here’s what you need to know!
By way of a quick disclaimer, the Land Registration etc. (Scotland) Act 2012 is not a page-turner. This summary attempts to be as straight-forward as possible but we certainly wouldn’t recommend operating heavy machinery whilst reading it…
The End of Conveyancing?
This Act will bring about the demise of the conveyancing system which has been familiar to most Scottish conveyancers for over 35 years. By ‘End of Conveyancing’, we really mean a huge change in the more technical aspects involved in land registration rather than the end of the process as a whole. All of the forms that solicitors and paralegals have worked-with for several years will be changing. If you are a conveyancing lawyer and are on sabbatical at the moment, returning in two years, it will be a very different looking landscape that you come back to!
These technical changes may have a profound impact upon the actual work of the conveyancing lawyer in Scotland, first and foremost, but this will have knock-on effects for the consumer in their sale or purchase transaction and it is hard to see that these will be positive.
A Little History…
Time for some history. In 1979, legislation was introduced that changed the then-archaic way of registering Scottish property ownership. A map-based, computerised system was introduced. Essentially, rather than getting your ‘Time Team’ on and looking back through dusty parchment and scrolls, a title logbook would essentially be created for all property. The best bit was that this was then guaranteed by the State. This meant that, if there was a subsequent dispute over the extent of the ‘title’ in the land that had been sold, the State would make reparation to anyone who lost-out because of it.
This system was rolled-out in stages throughout Scotland. It was introduced in Glasgow in the mid-1980s and in Midlothian (including Edinburgh) in 2001. So it was fairly spread-out.
The senior civil servant who runs the Land Register in Scotland is called ‘The Keeper’. The Keeper had the ability to put right any defects or dispute in titles. This became known as The Keeper’s ‘Midas touch’.
Over time this practice became part of the conveyancing landscape. However, this practice upset those who believed in the purity of Scottish property law. They argued that there were now two systems of law operating in Scotland; the traditional property law which applied to property bought prior to the introduction of Land Registration and the ‘Midas touch’ law operated by the Land Register.
So, Why Change It?
Whilst the system worked satisfactorily in practice, some people were unhappy about costs and a rise in claims against the indemnity guarantee that the State provided on registered properties.
The end result was the 2012 Act which effectively turns back to the clock to one system of property law in Scotland as well as restricting the extent of the State’s guarantee and removing the Keeper’s ‘Midas touch’ of decision-making and dispute resolution.
What Does This Mean in Practice for a Property Seller or Buyer?
It is difficult to see that this can have a positive impact on the experience of the average person moving house.
In the longer term, it may create greater certainty. However, at the present time, the changes are only likely to create hurdles that need to be overcome during the course of transactions. Essentially:
Me: I think that should be my bit of garden…
You: No, I really think it should be my bit of garden. The Title Deeds aren’t very clear about it.
Me: Well, if it’s likely to be a problem in the future, let’s go and see what the Keeper says about it. If they register it, and it turns out it isn’t mine or yours in the future, whoever loses out as a result of it will get a pay-out from the Keeper for any losses they suffer.
Keeper: Respectfully, please leave me alone, this isn’t my problem any longer. Take it up with your own solicitors. They can surely agree the best course of action.
My Solicitor: I am covering my back: I can’t take a view on this, it’s all on your head to decide it.
Your Solicitor: I’m not making a decision either. I want my back covered too.
My Solicitor: No, I refuse to back down on this point.
Your Solicitor: Well, I refuse too. Etc etc etc.
Cue delays. As a general rule, lawyers hate being sued. Add to this that there is a new criminal sanction against solicitors who recklessly submit material to the Land Register and you are likely to have a far more lengthy, drawn-out process that will ultimately cost the consumer time and money. It is also entirely likely that, as a result of all the extra work and hassle, not to mention the increased risk of being sued in the future, conveyancing fees will go up. Perhaps worse from the consumer’s point of view, where a transaction would previously have gone through because the solicitors were content to allow the Keeper to make a decision about any potential issues with Title, it is now more likely to fall-through as both sets of solicitors protect their clients’ interests, as well as their own, and take a far more defensive approach to property law and conveyancing.
In summary, this is a complete rearrangement of the legal furniture with a few banana skins thrown in to boot, combined with a scary, ‘Go Straight to Jail and Do Not Collect £200’ penalty. It is hard to see that it will do anything to improve the experience of conveyancing for the consumer and, quite the opposite, in practice it will arguably make it more difficult in the next few years.
Much of the early disruption will be caused by inevitable teething problems in the new system, particularly as solicitor firms and the Registers of Scotland get used to entirely new processes. The Registers will actually close for a few days around the change-over to the new system which happens on 8 December 2014, physically preventing normal conclusion of transactions. But, mainly, many questions that conveyancing solicitors have been asking in advance of the new system coming into force remain to be answered. That uncertainty, combined with the increased risk of making decisions and of taking a view with regards to questions about title to the property in question, will almost inevitably cause delays in the early days and it can only be hoped that this won’t have too much of a negative impact on sellers and buyers.
That said, it is our job as solicitors to do what we can to minimise the impact of any of these changes on our clients. If you do have any questions about this new system, please don’t hesitate to get in touch with us!