Construction Industry

What you need to know about the Moveable Transactions Act:

The Moveable Transactions (Scotland) Act 2023 (the “MTSA”) was passed by the Scottish Parliament in May 2023 and made fundamental and very positive changes to the commercial landscape in Scotland.  The MTSA came into force on 1 April 2025. The MTSA modernises the law relating to the transfer of contractual rights and the creation of security over those rights and also introduces two new registers.

There are two areas which are of particular interest to the construction industry.

Assignation

Assignations (transfers) of construction documents, like building contracts and collateral warranties, play an important part in the contractual matrix in many construction projects. In particular, collateral warranties are relied upon by parties like employers and funders, as well as future tenants and purchasers, to access rights in underlying contracts and appointments. Being able to assign such documents is key to protecting their interests.

Under the previous law, the legal framework around assignations was cumbersome. Assignations of construction documents were traditionally effected using hard copy documents, with wet ink signatures, intimated (notified) to performing parties by post. There remained some legal uncertainties around how notice needs to be given and what acknowledgement is required, for them to be effective.

Under the MTSA there is a new Register of Assignations. The Register is publicly available and online. It allows for electronic registration of assignations and online searches, simplifying the existing law. The MTSA also made changes to the law relating to intimations. It is now possible to effect an assignation by intimation or registration, or both.

In practice, parties (or their lawyers) may still choose to intimate by giving notice to the performing party when assigning construction documents. If so, under the MTSA that can be done by email or by an electronic link to a website or portal.

However, the ability to effect an assignation by registration and without the need to give notice,  streamlines and modernises the current legal process.

Statutory pledges

The MTSA introduced a new fixed security right, called a statutory pledge. A statutory pledge can be taken over most types of corporeal moveable property in Scotland (physical property which is not land or buildings), like plant, machinery, equipment and vehicles. The statutory pledge is a non-possessory security and allows for the first time security to be created without the need to hand over secured property to the lender.

Again there is a new, public and online Register of Statutory Pledges, which allows for electronic registration and online searches of statutory pledges.

Statutory pledges are therefore of interest to contractors or suppliers who want to secure borrowing by making use of their high value property like plant, equipment and vehicles, whilst continuing to use them in day to day construction.

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