Any good lawyer will be very aware of the areas they know and of the areas they don’t. If you were to ask me a question about employment law I’d shrug my shoulders, give you the phone numbers of some firms or colleagues and hope you’d be well served by them. One area I do know fairly well though is Scottish property law and conveyancing. This lies at the heart of what I do. And when people play fast and loose with it I get concerned, particularly when those playing fast and loose with it are charging people money.
The other morning I was on twitter and saw a tweet from a twitter user called Highland Titles:
“Buy land in Scotland & you may style yourself as Lord or Lady of Glencoe! From £29.99.”
NOw this raises immediate suspicions. and so I visited the website which was linked to from the tweet. For the Scottish property lawyer this is a mysterious hinterland that we rarely venture into. The site though was staggering.
It sells tiny plots of land, some of only a square foot in size.
This set alarm bells ringing. Scots law, since the introduction of land registration under the Land registration (Scotland) ACt 1979 has not allowed ownership of souvenir plots to be sold. Section 4 (2)(b) of the 1979 Act prevented registration of a souvenir plot.
“An application for registration shall not be accepted by the Keeper if –
(b) it relates to land which is a souvenir plot, that is a piece of land which being of inconsiderable size or no practical utility, is unlikely to be wanted in isolation except for the sake of mere ownership or for sentimental reasons or commemorative purposes”
The provision was repealed when the Land registration (Scotland) Act 2012 came into force but replaced with new rules.
Under section 21 of the 2012 Act any registrable deed (which includes a conveyance of land, or a written document which intends to transfer ownership) must be registered provided that it satisfies “general application conditions”. These are defined in section 22 of the 2012 ACt. This provides in s 22 (1)
“The general application conditions are
(b)the application does not relate to a souvenir plot,”
And “souvenir plot” is defined in s 22 (2) as follows:
““souvenir plot” means a plot of land which –
(a)is of inconsiderable size and of no practical utility, and
(i)a registered plot, nor
(ii)a plot the ownership of which has, at any time, separately been constituted or transferred by a document recorded in the Register of Sasines”
So plots of inconsiderable size and of no practical utility cannot be registered. And why does this matter?
Well, in 1617 Scotland introduced a system of land registration. The General Register of Sasines was introduced by the Registration Act 1617 and from that point every transfer of ownership in Scotland has been registered. The old sasine register was replace when the Land Registration (Scotland) Act 1979 (and subsequently the 2012 ACt) came in but broadly any transfer of ownership of land since 1617 has been registered. And if a transfer is not registered then no ownership passes. This was confirmed by the House of Lords in 1848 in Young v Leith 2 Ross’s LC 81 and has been reasserted at various points since – most importantly in recent years by the House of Lords in Burnett’s Trustee v Grainger in 2004.
Indeed the rule has been restated in statute first in s 4 of the ABolition of Feudal Tenure etc (Scotland) Act 2000 and now in s 50 of the 2012 Act.
This is quite stark
“(1)A disposition of land may be registered.
(2)Registration of a valid disposition transfers ownership.
(3)An unregistered disposition does not transfer ownership.
(4)Subsections (1) to (3) are subject to—
(a)sections 43 and 86, and
(b)any other enactment or rule of law by or under which ownership of land may pass.
(5)In subsection (1), “land” includes land held on udal title.”
An unregistered disposition does not transfer ownership. The exception in s 50 (4)(b) is there to safeguard a practice that has developed over the years where co-owners buy a house and provide that the survivor will inherit in the conveyance. This practice, the survivorship destination, allows ownership to transfer without having to go through the formal processes for confirming an executor to a deceased’s estate.
The position then is clear. If you do not register land you cannot acquire ownership. Scots law is after all a simple system where there are no relative entitlements to assets. Ownership is stark. You either own a thing or you do not. Scotland has a unititular system. There is one real right of ownership of any asset at any one time. Now this right can be shared. Mr and Mrs Smith might buy a house together. Once they register they become owners of the house. There is one real right of ownership but each has a share of that right of ownership, and under Scots law that share carries with it the right (that in the event of a breakdown of relations between co-owners) one co-owner can go to court to force the sale of the whole asset (and splitting of the sale proceeds).
The real right of ownership is a right that can be exercised against anyone who may potentially infringe it. There is no halfway house. You can’t own something a little bit. In Scotland, following roman law, ownership is a real right. A real right is a right exercisable against any third party. And ownership is the primary real right – the right that entitles a person to use, to enjoy, or to abuse their property as they wish. Scotland does not recognise a personal right of ownership. Burnett’s Trustee v Grainger (above) is clear on that. AS personal right is a right against another person. The typical personal right would arise from contract – where one contracting party has the right to enforce the obligations against the other contracting party (and vice versa). And personal rights and obligations are specific to those individuals. So, for example, if Andrew contracts with Brian to sell a car, Brian cannot sue Carol for the car because his right under the contract is simply a personal right to require Andrew (and no-one else) to fulfil his obligation. If you’re not a lawyer some of this might seem a little complicated (Particularly the jargon) but this is stuff that a law student is taught within the early weeks of his or her degree.
Taking this and applying it to the souvenir plot we are left with some simple propositions. First, a transaction relating to a souvenir plot cannot be registered. Second, if it cannot be registered this means that the purchase of a souvenir plot cannot become owner.
So what are Highland Titles selling? Highland Titles on their website talk about paying money to allow yourself to be titled Laird or Lady as a “landowner”. They talk about a “land ownership experience”.
But as shown above the law provides that you cannot become owner of a souvenir plot. So, what is going on?
Well, luckily the Highland Titles website has a series of frequently asked questions.
I have screen captured the one relating to registration.
This is an odd answer. We’ll come back to it. Elsewhere Highland Titles talk about ownership
“the new owner” suggest the purchaser is getting something. There is a question specifically asking about multiple owners.
And as explained above you can share the real right of ownership so what on earth do they mean when they say that individuals cannot share ownership of a plot? That runs counter to the normal Scottish principles of ownership.
Anyway, back to their point on registration. They say (the screencap is above – here it is transcribed)
You cannot register your land, because this is such a small plot; specifically it is defined as a “souvenir plot”. A souvenir plot is defined in the Land Registration (Scotland) Act 1979 as “a piece of land which, being of inconsiderable size or no practical utility, is unlikely to be wanted in isolation except for the sake of mere ownership or for sentimental reasons or commemorative purposes”.
This inability to register the land does not prevent us transferring personal ownership of the plot to you, which you can in turn sell on to another party, or gift to your heirs in due course.
Unlike in England, Scotland still permits the sale of souvenir plots of land under contract law without the requirement for registration. Although a right of ownership in land (in the sense of a right that is enforceable against third parties) can traditionally only be obtained by registration in the Land Register or by recording a deed in the Register of Sasines as appropriate, under Scottish law these small plots of land can be sold without the expense of registration which would otherwise make this uneconomical.
As the Scottish Law Commission wrote in 2005, in the Discussion Paper on Land Registration: Registration, Rectification and Indemnity:
You will receive a copy of the Certificate of Sale and a Plot ID card in your pack which confirms that ownership has been transferred to you.
For further information please read: How Souvenir Land is Sold in Scotland.
Scottish law of property is complex. Our sales are made with the advice of our Scottish solicitors, J. & H. Mitchell W.S. of Pitlochry, Perthshire, whose Legal Advice has ensured that the land is legally transferred to you.
First, they refer to the 1979 Act. That has been repealed and replaced by the 2012 Act. That bars registration of transfers of souvenir plots.
Second, they say “This inability to register the land does not prevent us transferring personal ownership of the plot to you, which you can in turn sell on to another party, or gift to your heirs in due course.” This is nonsense. There is no personal ownership in Scots law. You either own something or you don’t. If you do not have the real right of ownership (and you cannot get the real right of ownership because you cannot register) then you have at best – either a contractual right against the seller or a right as a beneficiary in a trust. Both carry risks. First, what happens if the seller sells the plot again to a third party? How do you know if that happens if there is no protection from registration? If the right is contractual you can use a rule of Scots law which would allow the second transaction to be struck down if the second purchaser was in bad faith (ie he or she knew about the earlier sale to you) but this only arises if your right is capable of becoming the real right of ownership – which this isn’t – which means you have no protection. And if your right is as beneficiary in a trust under s 2 of the Trusts (Scotland ) Act 1961 a trustee can sell the property to a third party who acquires ownership without the possibility of challenge. Second, what happens if the seller becomes insolvent. IN that case the purchaser’s personal right (if it is a contract) resolves itself into a right to claim in the insolvency of the bankrupt. Any right to the property is lost. Without the real right of ownership the position of the person who spends the money is therefore precarious. They are paying for nothing other than a personal right against someone whose solvency they can’t guarantee and who could legitimately transfer the property to someone else. What a great deal!
Third, they say “Unlike in England, Scotland still permits the sale of souvenir plots of land under contract law without the requirement for registration. Although a right of ownership in land (in the sense of a right that is enforceable against third parties) can traditionally only be obtained by registration in the Land Register or by recording a deed in the Register of Sasines as appropriate, under Scottish law these small plots of land can be sold without the expense of registration which would otherwise make this uneconomical.” Well you can contract to sell various things – but if you are a purchaser and are thinking you are getting ownership you are not. You cannot – as explained above. Ownership of the tiny plot can never be transferred to you. The suggestion that registration is a bolt on extra is demonstrable nonsense – as shown above. It lies at the heart of the law relating to land ownership in Scotland.
Fourth, they say “As the Scottish Law Commission wrote in 2005, in the Discussion Paper on Land Registration: Registration, Rectification and Indemnity: You will receive a copy of the Certificate of Sale and a Plot ID card in your pack which confirms that ownership has been transferred to you.”
I have carefully reviewed the Scottish law Commission discussion paper. The Commission does not suggest you’ll get certificates of sale and plot ID cards, nor does the Commission confirm ownership has transferred. This smacks of some hasty editing of the site to remove something. Who knows what was there though?
What the Scottish Law Commission does say about souvenir plots in its final report (which led to the Land Registration (Scotland) Act 2012 can be found here:
12.82 There are businesses that offer for sale small plots of land in remoter areas of Scotland, usually accompanied by the promise that buyers will be “entitled” to call themselves “lairds”. Plot sizes vary but may be one square metre or even less. Usually buyers are assured that they will acquire ownership of the plot, though in the advertisements we have seen there is no explanation of how that could happen given the terms of the 1979 Act, discussed in the next paragraph. The websites sometimes show the type of deed that a buyer will receive. The style used is generally English or American.
12.83 Section 4(2)(b) of the 1979 Act forbids the Keeper to accept souvenir plots for registration in the Land Register. Even if the land were unregistered, a conveyance of a souvenir plot could not be recorded in the Register of Sasines, because it would be a conveyance for value. Accordingly it is difficult to see how customers could acquire ownership of souvenir plots. We have seen it suggested that the non-registrability of souvenir plots means that ownership in them passes by simple contract. That is not so.
12.84 In DP 128 we noted that the corresponding provision in England and Wales had been repealed by the Land Registration Act 2002, and we proposed that the same should happen in Scotland.97 This proved controversial. Some respondents agreed, while others, including the Keeper and the Scottish Law Agents Society, disagreed. We have come to the conclusion that a sufficient case for repeal has not been made out. The definition of “souvenir plot” (see below) is admittedly rather vague, but the rule seems to have worked in practice over the years.
12.85 We also argued that, if, contrary to what we were then suggesting, the rule were to remain in force, certain minor changes to the definition of “souvenir plot” should be made.98 These changes are implemented in the draft Bill. We have added another change as well. It is possible that a souvenir plot already exists as a separate plot. Thus suppose that in 1978 a souvenir plot was sold and the disposition recorded in the Register of Sasines. If the owner were now to wish to dispone it to someone else, the case for allowing the transfer seems strong, and indeed it might be argued that to refuse registration in such a case would be to infringe Article 1 of Protocol 1 to the European Convention on Human Rights. So in one respect we recommend a loosening of the rule, by exempting from it souvenir plots that already exist as separate plots. We would add, however, that registration requires mapping. If a souvenir plot cannot be mapped within the Cadastral Map then the Keeper will be unable to register it, even if it falls within the exemption we are proposing.
Basically, the Commission considered changing the law from the position in the 1979 Act but was not persuaded it should be changed. This was not good news for the businesses marketing the chance to buy square feet of land in Scotland.
But this is not all HIghland TItles say about this. They have a further answer to a question asking “Can you tell me about the law governing souvenir land sales in Scotland?”
Here’s a screencap:
Lots of verbiage here but little meaningful to any suggestion that a purchaser becomes the owner.
‘Souvenir’ plots of land have been sold in Scotland for over 30 years. The sale of these plots is governed by the Land Registration (Scotland) Act 1979. Please note that this act does not permit souvenir plots of land to be added to the Land Register.
However, someone who purchases a souvenir plot of land does obtain a right of ownership. Provided that the land can be identified, the purchaser obtains a personal right to the land and reputable vendors such as Highland Titles provide a precise geographical location for each souvenir plot. The purchase of a souvenir plot creates beneficial ownership although not what is known in conveyancing terms as a ‘real right’, which can be described as a right of ownership enforceable against third parties and capable of being recorded in the Register of Sasines or registered in the Land Register of Scotland.
Of course, it is hard to imagine the circumstances in which a purchaser of a souvenir plot would need the extra level of protection that would be provided by registration, given that the land sold by Highland Titles is managed as a nature reserve.
Owners of souvenir plots are reassured by the fact that there are other forms of heritable property in Scotland for which the title cannot be registered in the Land Register. For example, some forms of shared interest in salmon fishings – such as a right to fish for salmon from one boat on a loch – also cannot be registered, but is a valid form of ownership that can be passed down from one generation to the next. Similarly, most timeshare interests in property are not registered in the Land Register but are nonetheless valid ownerships without limit of time. Arrangements other than registration in the Land Register need to be made for these unregistered forms of ownership of heritable property and Highland Titles provide proof of ownership in the form of a Certificate of Sale and an ISO standard CR80 card, which should be retained to prove that title has passed to the bearer.
A question asked in the Scottish Parliament by MSP Mike Russell about Scottish souvenir land plot sales was answered by MSP Ross Finnie, then the Minister for the Environment and Rural Development. He clarified that “Inability to register a souvenir plot means that the purchaser can only get a personal right of ownership. He or she cannot get a ‘real’ right protected by the state guarantee that underpins a registered title,” and that the rights and responsibilities of the new owners would be of a personal nature. He finished his reply by observing that “The Registers of Scotland have no knowledge of any problems caused by them.”
The right to purchase souvenir plots of land is thus enshrined in Scottish law, and the economy of Scotland has had the benefit of this provision for over 30 years.
We are pleased to be able to offer you the right to beneficial ownership of a souvenir plot from our estate in Scotland.
Again, it refers to the wrong Act (suggesting on one hand that it governs such sales and then that it doesn’t apply to them. They say,”someone who purchases a souvenir plot of land does obtain a right of ownership.” This is demonstrable nonsense, as we have seen above. If you are not registered then under Scots law you cannot become the owner of land. They then suggest “the purchaser obtains a personal right to the land” and “The purchase of a souvenir plot creates beneficial ownership although not what is known in conveyancing terms as a ‘real right’, which can be described as a right of ownership enforceable against third parties and capable of being recorded in the Register of Sasines or registered in the Land Register of Scotland.” A personal right to the land is a right against the owner of the land. By acknowledging the right is a personal right this is an admission that the purchaser is not the owner – but instead it is couched in ways that suggest the purchaser is really the owner with a notion of “beneficial ownership” explicitly rejected in Burnett’s Trustee v Grainger. Scots law does not recognise beneficial ownership (a concept that seems to come from anglo American legal systems). To be fair to Highland Titles there is an earlier House of Lords case (Sharp v Thomson) that suggests a purchaser of land who has paid a price and received a conveyance of the property has a “beneficial interest” but Burnett’s Trustee v Grainger confirms that Sharp is a case limited to questions involving competitions with floating charge holders.
Highland Titles then go on to suggest that certain other rights of ownership of land need not appear in the Land Register. They mention two: salmon fishing rights and timeshares. Both are easy to deal with. IN Scotland a salmon fishing right is known as a separate tenement. Separate tenements can be separately owned, and under the Land registration (Scotland) Act 1979 a transfer of salmon fishings required to be registered under s 2 of the Act (salmon fishings being expressly excluded from one of the general exceptions to the requirement to register). The position is replicated under s 21 and s 50 (see above) of the 2012 Act. Timeshares, in Scotland, do not confer ownership at all. The position is dealt with well by Professor Gordon Scottish Land Law (3rd edition) at para 18-16 and Professor reid at para 39 of The Law of Property in Scotland. A timeshare in Scotland is structured typically with one owner of land giving a personal right to occupy to individuals for a particular period each year. This right is either conferred as beneficiary in a trust or as a contractual right. As Professor Reid notes “the holder of the timeshare right runs the risk of the owner of the land becoming insolvent, or selling to a third party who would not be bound by the contractual or trust right”. The punter buying the timeshare is not the owner.
GIven my familiarity with the law, and a quick squint at the Highland Titles website confirming they were playing fast and loose with property law to suggest to people that they would become owners on paying money, but which I viewed as paying something for no property right in land, when I saw the promoted tweet from Highland Titles once more in my timeline I felt justified in replying as follows
“No you can’t. You’re talking bollocks”
This began much fun on twitter collated by Malcolm Combe, a bizarre response from Highland Titles and an excellent riposte from Malcolm Combe.
In short, every lawyer who has commented on this on twitter from inside and outside Scotland, shares a view. I have given the reasons for this view above. For Malcolm and myself, this is an area we have some expertise in. We know what we are talking about. If though you prefer to hand over money to an organisation based furth of Scotland to get no ownership of land but a precarious right subject to the risks of future sales or insolvency of the seller then so be it. Do so at your own risk. BUt make that decision on a properly informed basis. Don’t rely on the sleight of hand peddled on the Highland Titles website.