Professional practice updates 2014

Professional Practice Updates December 2014

Land Registration etc.(Scotland ) Act 2012-Definition of Designation
New Scottish Standard Clauses
Update on Sheriff Baird's decision on the wording of Powers of Attorney

Updated information on Advance Notices
Draft forms for preparation of Advance Notice
Form for registering a notifiable Land and Building Transaction Tax transaction
CML Handbook Compliance Checklist
Vulnerable Clients Guidance
CML Lenders' handbook

Land Registration etc.(Scotland) Act 2012-Definition of Designation

The Professional Practice team has received a number of enquiries recently in relation to deeds which have been submitted to the Land Register for registration but which have been rejected on the basis that they did not include the correct designation of parties to the deed e.g. the registered office of a lender. We raised this with the Registers of Scotland who advised that this is a statutory requirement in terms of the definition of “designation” set out in Section 113 (1) of the Land Registration etc. (Scotland) Act 2012 [ http://www.legislation.gov.uk/asp/2012/5/section/113]

That must include, for non-natural persons, the legal system under which they are incorporated or otherwise established and, if a number has been allocated under the Companies Act 2006, that number. Accordingly, the applicant must provide the Registers of Scotland with that information either in the deed or on the application form failing which the application for registration will be rejected.

New Scottish Standard Clauses

The Scottish Standard Clauses, which are designed to represent a Scotland-wide approach to standard clauses for use in residential conveyancing transactions, are now available.  Please click here for a PDF for the registered extract.

Update on Sheriff Baird’s decision on the wording of Powers of Attorney

The Inner House of the Court of Session has heard a Special Case raised in respect of the validity of a continuing power of attorney in substantially the same form as that which was in doubt following the opinion of Sheriff Baird at Glasgow in the case of Application for guardianship in respect of W (13 May 2014). The court, which delivered its decision at the conclusion of the hearing on Wednesday 10 December, decided that the form of words used was valid. 

The form of words in both W and the Special Case was substantially as follows: 

“I, [name], residing at [address] appoint [attorney] to be my continuing attorney in terms of section 15 of the Adults with Incapacity (Scotland) Act 2000”. 

The Inner House was asked if the power of attorney was valid having regard to the provisions of section 15(3)(b) of the 2000 Act, which requires that the power of attorney incorporates a statement which clearly expresses the granter’s intention that the power be a continuing power. The court answered the question in the affirmative. 

The court also considered the requirements of section 15(3)(ba), which provides that where the continuing power of attorney is exercisable only if the granter is determined to be incapable in relation to decisions about the matter to which the power relates, the continuing power states that the granter has considered how such a determination may be made. PoA

The court decided that section 15(3)(ba) did not apply as that provision came into force in 2007, after the power of attorney which was the subject of the Special Case was granted in 2004. However, it observed that had the deed been granted today, 15(3)(ba) would not apply as the deed took effect on registration rather than upon incapacity.

The court confirmed that written reasons would follow separately in due course.

Updated information on Advance Notices

There has been some uncertainty as to when it is and is not appropriate to use an Advance Notice. Whilst this must be a matter for professional judgement according to the circumstances of the individual case, Professors Brymer, Gretton, Paisley, Reid and Rennie would suggest that, as a rule of thumb, an Advance Notice should be used where a classic letter of obligation would have been used, but that where a classic letter of obligation would not have been used one would not normally expect to see an Advance Notice. Accordingly, in the normal case the Professors consider that there is no need to request an Advance Notice in a dual representation scenario when the solicitor is acting for both the borrower and the lender.

Draft Forms for preparation of Advance Notice

Professional Practice has been receiving enquiries from solicitors regarding draft Forms for preparation of Advance Notice (which are prepared by the Seller’s Agents) and the revisal of them by the Purchaser’s Agents. The electronic facility presently available from Registers of Scotland does not allow a draft to be prepared and revised. Therefore the Property Standardisation Group has prepared styles which can be used as drafts until such time as the Registers have made the facility available. These drafts can be accessed from the following links:-

Advance Notice Application - First registration
Advance Notice Application - Part of Registered plot
Advance Notice Application - Whole of a Registered plot

Form for registering a notifiable Land and Building Transaction Tax transaction

Registers of Scotland advised that shortly anyone registering a notifiable Land and Building Transaction Tax transaction in the Books of Council and Session will require to complete the Books of Council and Session application form (the move will take effect by virtue of an order under s.67 of the Land and Buildings Transaction Tax (S) Act 2013 and is expected to be effective from 1 April 2015). This is a back-up for the keeper to help confirm whether or not a transaction was notifiable. Currently, there is no requirement to complete the form and only around 30% of applicants do when registering a document in the Books of Council and Session.  The Law Society was asked to advertise the change and encourage users to get into the practice of completing the form now.

Download the form

CML Handbook Compliance Checklist

The CML have issued a handbook compliance checklist which members should have regard to when acting for lenders in residential conveyancing transactions.

Revisals to Vulnerable Clients Guidance focusing on issues relating to young people

The Profession will be aware that the Society issued Guidance in relation to Vulnerable Clients and also Continuing and Welfare Powers of Attorney in 2013.

It is confirmed that The Vulnerable Clients Guidance will be adjusted from 1 December 2014 to confirm that it applies whenever a client or prospective client of whatever age may lack full capacity, whether having attained the legal age of capacity or not.

Paragraph 3 of the original Guidance has been updated to delete references to specific reports but continues to state both the scope and purpose of the Guidance.

The categories of situations set out in paragraph 20 of the Guidance have been well received by the profession and two further situations have been added focusing on issues that may be relevant to young people.

 

CML Working Party Update-Amendments to Lenders’ Handbook for Scotland-1 December 2014

The CML Working Party, which was established in November 2013 following the “no” vote against the separate representation of borrowers and lenders in residential conveyancing transactions at the Society’s SGM in September 2013, has been in negotiations with the CML with a view to seeking amendments to the Scottish version of the CML Handbook.

A number of amendments to the Lenders’ Handbook for Scotland were introduced on 1 December 2014 and we would draw members’ attention to the above noted summary of amendments.