Coronavirus (Scotland) Bill: Key impacts for property transactions and current developments
Remember before the Coronavirus? When property transactions and developments progressed smoothly to settlement, registration and practical completion. The last few weeks have seen significant change in the ability to progress transactions and to the practice of property law in Scotland with the closure of the property registers. The Registers of Scotland have acted quickly bringing in interim measures and securing significant changes through the introduction of this new legislation to allow the property registers to function again where social distancing guidance is in place. In this blog we will explain the impact of those changes and how parties can continue to complete transactions and register the necessary rights. The Coronavirus (Scotland) Bill was passed by the Scottish Parliament on 1 April. It is expected to come into force on 6 or 7 April. The legislation is temporary, expiring on 30 September 2020, unless that period is extended by subsequent regulations.
Since the closure of the Application Record to new applications for land registration on 24 March, some property transactions have been suspended. Schedule 7 of the Bill contains provisions to facilitate the continued functioning of the property registers during the period of social distancing and critically allowing the completion of transactions so that parties can obtain the security of a registered title which is warranted by the Keeper of Registers of Scotland. The details are:
In advance of settlement of a property transaction, it is standard for the granter of a deed, such as a seller signing a disposition to transfer title to a purchaser, to register an Advance Notice in the property registers. The Advance Notice gives the party benefitting from the deed a 35 day period of protection against the registration of a competing deed in favour of a third party, and some protection against insolvency including the registration of an inhibition blocking the registration of the deed. Advance Notices cover the “gap period” between payment of the price and the date of registration of title, giving comfort that the applicant will not be adversely affected by any such competing deed or inhibition.
The closure of the application record affected the operation of the protection of Advance Notices and the Bill addresses that issue by extending the protected period covered by Advance Notices as follows:
- Advance Notices which were already in the application record and still in force on 24 March 2020:
The protected period is extended to the date 10 days after the date that the Property Registers are fully reopened.
Advance Notices which (i) were in effect on a date between 24 and 26 March, when the Application Record and Register of Sasines were closed or (ii) were entered in the Application Register or recorded in the Register of Sasines on or after 27 March, the date the Property Registers were partially closed:
The protected period is extended until the later of (i) the 35 day period covered by the registered Advance Notice and (ii) the date 10 days after the date that the Property Registers are fully reopened.
These measures provide protection for purchasers, lenders or tenants whose transactions were suspended when the Application Record was closed.
Electronic Submission of Deeds
To date, all applications for registration in the property registers required submission of the principal signed deeds. The closure meant these could not be received and processed. The Bill permits applications for registration to proceed on the basis of copy deeds submitted to Registers of Scotland in electronic form, such as an attachment to an e-mail and Registers of Scotland are now making the practical arrangements needed to accommodate this over the coming weeks. This will have the most significant impact on getting transactions completed.
Irritancy Clauses in Commercial Leases
Please see Stephen Farrell’s blog for an explanation of these provisions.
Extension to Duration of Planning Permission
The Town and Country Planning Permission (Scotland) Act 1997 provides that full planning permission or planning permission in principle will lapse if development has not commenced within a specified period after the date it was granted. The impact of social distancing means that many developments cannot be progressed. No developer wants to risk their consent lapsing due to the current situation. The Bill provides that if a full planning permission or planning permission in principle is due to expire within 6 months of the provisions coming into force, it will not lapse until 12 months after the provisions come into force, unless development has already commenced. This will allow property developers who have paused construction work to resume more quickly after the coronavirus crisis is over, without requiring to apply for a variation to the planning permission.
Please do not hesitate to get in touch if you would like further advice on how any of these provisions will affect you.
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