It has long been the case in Scotland that tenants enjoy the protection that comes from successor landlords being bound by leases granted by previous owners. The original law on this dates back to the fifteenth century, and is certainly not news.
However, for tenants with long leases or a Limited Duration Tenancy (for 20 or more years) to benefit from this protection, the tenant’s interest must be registered in the Land Register. Only then is it binding against successors in title to the original granter of the lease. This too is not news – the requirement to register a long lease was introduced in the nineteenth century.
The advent of the Land Registration (Scotland) Act 2012 has introduced a number of changes to the practice of Land Registration, and new complexities for tenants with long leases.
The requirement to register
The provision in the law of Scotland for successor landlords to be bound by leases granted by their predecessors in title dates back to the Leases Act of 1449. For leases of less than 20 years’ duration, this remains the governing statute that binds successor landlords to the terms of the original lease. There is no requirement to Land Register these leases, and nor is it possible to do so.
For long leases (i.e, of 20 years or more), which are now more common, the situation is more complex. The Registration of Leases (Scotland) Act 1857 introduced the requirement to register a long lease in the Register of Sasines to give protection against successor landlords. A succession of legislation has followed since and Land Registration is now more often required.
Land registration is not a one-off
One drawback is the evolving nature of most farms. Whereas the lease of a shop or an office is likely to be a definable grant for its duration, the lease of a farm will often not be. Fields may be added or removed, and cottages or house plots resumed during the course of the lease. As such, while the Land Registration of the tenant’s interest of a shop is unlikely to change over the duration of the lease, the same could rarely be said in relation to the tenant’s interest in a long lease of a farm.
As the tenant’s interest in a long lease will be Land Registered, plans acceptable to the Land Register will be needed each time a field is added or a cottage resumed. This will involve a solicitor completing the paperwork to amend the extent of the Land Registered tenant’s interest in the lease. Registration dues will also be payable each time this occurs.
Automatic title registration
An important consequence of the 2012 Act is automatic title registration. While a solicitor would normally be expected to see the landlord’s title as part of the grant of a lease, the examination of that title would generally focus on the extent of ownership and confirmation that the party granting the lease is the same as the party who is the registered owner. Where Land Registration is involved, that will be insufficient.
Under the 2012 Act, the Land Registration of the long lease will, where the landlord’s title is in the old deed-based Sasine Register, trigger automatic registration of the landlord’s title in the Land Register in respect of the land that is being leased. In effect, the tenant could be said to be acting as the landlord’s agent in registering what is likely to be a part only of the landlord’s title. This is unlikely to suit the landlord, but registration of title is an unavoidable consequence of registration of the tenant’s interest in a long lease. Landlords will (not unreasonably) generally want to be involved in that registration process.
Where Land Registration in respect of the landlord’s interest is an issue, the tenant’s solicitor will also need to search the landlord’s title, see title searches and copies of all relevant deeds showing exceptions to the title and deeds that create or reserve rights over it. The solicitor will also need to complete appropriate Land Registration forms for registration of both the long lease and the landlord’s interest. This will have a cost implication for tenants due to the increased scope of work required of their solicitor.
Where a long lease is Land Registered the tenant will pay registration dues based on the value of the lease (see the fees calculator on the Registers of Scotland website [www.ros.gov.uk]). There is no additional registration fee for the Land Registration of the landlord’s interest.
Requirements for plans are more stringent
Before a long lease can be Land Registered, the tenant’s solicitor will also need to obtain confirmation that the lease plan is of sufficient quality to be plotted by Registers of Scotland onto the Land Register map. This is likely to require a much higher standard of plan than is generally used for long leases, and certainly much higher-quality than those traditionally attached to agreements.
A long lease with a plan of insufficient quality for Land Registration will leave a tenant exposed as he will be unable to Land Register his lease.
Summary
Tenants have much to lose by not Land Registering a long lease, and much to gain by doing so: without registration, they will not have any protection binding successor landlords. Clearly, therefore, it is not a step to avoid. Nevertheless, tenants and advisers should not underestimate the complexities of Land Registration following the 2012 Act.
Registration has impacts for both landlord and tenant, and the additional work and costs involved in registering such a lease should always be considered, and expert advice sought – ideally as early as possible in the negotiation process.
