Leading Title Insurance

FIRST COMMENT02

IN THIS ISSUE:• PLANS REPORTS – HOW TITLE INSURANCE CAN HELP• THE WIND OF CHANGE BLOWETH• CLAIMS CASE STUDY: ACCESS

SUMMER 2016 ISSUE

Welcome to the summer edition of our newsletter. Firstly, we would like to thank you once again to those of you who to responded to our recent customer satisfaction survey; your feedback is greatly appreciated. Congratulations go to Amy Jones of Pinsent Masons LLP, who was the lucky winner of our £500 experience day voucher.

This issue sees contributions from Professor Stewart Brymer, who considers the ever-changing conveyancing landscape. Our staff contribution this quarter is from underwriter Elizabeth Vyner, who discusses the practical application of Title Insurance in relation to plans reports. Lastly, we give an insight into how we deal with claims with a brief case study regarding a recent access claim.

We do hope that you are enjoying the new format of our newsletter. Should you have any feedback, suggestions or comments, please don’t hesitate to send them to us at marketing@firsttitle.eu

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Why Plans Reports?

The Land Registration (Scotland) Act 2012

(“the Act”) introduced a change from the

Land Register using the Ordnance Survey

Map to the new Cadastral Map in order to

produce registered titles. As the Cadastral

Map is made up of so-called cadastral units,

any deed inducing registration is required

to describe the land sufficiently, with a

suitable plan included where appropriate,

to enable the Keeper to delineate the

purported boundaries on the Cadastral Map.

If these requirements are not met then, the

application for registration will be rejected.

Where previously, P16 reports would be

obtained by practitioners to check the

property description and boundaries against

the Ordnance Survey Map, the new regime

under the Act involves obtaining Plans

Reports. These Reports check that there is no

title overlap between the proposed property

boundary (whether Sasine registered or

registered in accordance with the Land

Registration (Scotland) Act 1979 in terms

of the Ordnance Survey Map) and the new

Cadastral Map. There are three levels of

Plans Report available:

(i) Level 1 is a competition report (i.e.

comparison with Cadastral Map to identify

any competing interests.)

(ii) Level 2 is a comparison with the

Ordnance Survey Map (and also confirms any

competing registered interest.)

(iii) Level 3 is a comparison with the Ordnance

Survey Map and the Cadastral Map (this is

more detailed and identifies burdens as well

as identifying competing interests.)

Obtaining a Plans Report, therefore,

helps identify if there are any potential

title defects with the property and the

corresponding boundaries.

Plans Reports – How Title Insurance Can Help

FIRST COMMENT

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Elizabeth VynerTrainee assistant underwriter, First Title Insurance

Some of the most common results disclosed in a

Plans Report to date are as follows:-

• The plan or description submitted does

not meet the Keeper’s requirements for

registration.

• A conflict with another cadastral unit.

• The extent of the subjects does not

correspond with the relevant features as

defined on the Ordnance Map.

• The occupied extent does not correspond

with the legal title.

• The property is a floating shape which cannot

be mapped.

How can title insurance help?

Where unexpected results are produced by a

Plans Report, this can lead to a significant delay

in completing matters or in some cases result in a

price chip or the parties withdrawing entirely from

a transaction.

Title insurance can, therefore, be considered in

certain circumstances to help combat an unwanted

Plans Report result. Circumstances where cover

may be provided are as follows:-

Dispossession

This type of cover can be considered where the

Plans Report indicates that the owner of the

property is occupying a larger extent than that to

which they have legal title to. The owner can rely on

this type of policy for occupation purposes. This is a

useful alternative to attempting to obtain a legal title

either by corrective conveyancing or by making a

prescriptive claimant application. The risk insured

would be a claim by the legal title owner which

results in the dispossession of the insured from the

area in question.

Inadequacy of Description

This type of cover can be considered where the

Plans Report indicates that it has not been possible

to plot the subjects on the Cadastral Map based

on the current deed plan and/or conveyancing

description, i.e. the property is a floating shape. This

type of cover can also be used where there are no

plans available, or there are vague descriptions in

prior titles (e.g. in the situation where rural land is

shifting from the old Sasine Register to the Land

Register). This policy covers a challenge by a third

party against the registered title to the property

because of any or all of the following:-

inadequacy of the descriptions in titles prior to the

disposition in favour of the Insured;

inadequate or unavailable plans referred to in prior

titles; and

the inability to compare the description of the

property with descriptions contained in previous

split-off writs.

Lack of Title

If notwithstanding the result of a Plans Report, the

Keeper registers an application successfully she

may still exclude her warranty. This is possible if

for example, a prescriptive claimant application is

successful or if other issues with the title are flagged.

Title Insurance can, therefore, be used to plug this

gap with cover provided for the risk that a challenge

by a third party is raised against the registered title

to the property as a result of the Keeper’s exclusion

of warranty.

Conclusion

Plans Reports are proving to be a helpful

method of identifying issues with a purported

title extent and flagging to solicitors where a

conveyancing description and/or deed plan may

have to be reviewed. While in some cases remedial

conveyancing may assist in remedying such issues

a title indemnity policy may prove to be beneficial

as this offers clients a cost efficient alternative

and allows them to proceed with transactions as

planned. We have experienced an increase in clients

obtaining our dispossession and inadequacy of

description policies since the Act came into force

and we anticipate that, as the legal profession gets

to grips with the Act and the new mapping regime,

requests for cover will continue to increase as a

result of defects identified by Plans Reports.

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FIRST COMMENT

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Introduction

For many years, nothing much seemed to change

in the practice of conveyancing. The first signs of

change appeared on the horizon in the early 1970s

with the enactment of The Conveyancing and Feudal

Reform (Scotland) Act 1970 and the Land Tenure

Reform (Scotland) Act 1974. Little did we know it

but there was much more to come. The end of the

decade saw the introduction of registration of title

in the form of the Land Registration (Scotland) Act

1979 and there was then a bit of a hiatus during

which time the profession had the opportunity of

getting to grips with the various changes introduced

such as the introduction of standard securities; the

compulsory redemption of feu duty on sale; and

registration of title itself as a map-based system

complete with the Keeper’s “Midas Touch”. If we

thought that was change, however, even allowing

for the abolition of scale fees in conveyancing, we

had no idea what would come our way only some 25

years later. The rest, as they say, is now history.

There has been a proverbial tsunami of legislation

affecting Scots property law in recent years. There

are some who are of the opinion that there has

been too much legislative intervention affecting the

conveyancing process. There is, however, another

view that it is a great time to be a property lawyer.

Suffice it to say that the jury is still out in that regard

although personally I support the latter proposition.

In recent years, the terms E-Conveyancing and

E-Registration have been used with increasing

frequency and often without thinking what it was

exactly that was being described by the term. So

what is E-Conveyancing?

The answer is that the term means different things

to different people. In essence, however, it is no

more than the traditional paper-based conveyancing

transaction being undertaken electronically in an

increasingly digital society. We may think that it

is about the future but, in reality, E-Conveyancing

is already with us at various stages of the

conveyancing process. The purpose of this short

article it simply to state that there is nothing to be

feared by the term.

The Wind of Change BlowethBy Professor Stewart Brymer WSBrymer Legal Ltd

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Conveyancing Processes

It would be difficult to argue against the

proposition that process of conveyancing

has not changed much over the years. That

is a good thing in many respects. Obviously,

the increasing legislative involvement in

property law and the growing number

of cases being considered by the courts

and by the Lands Tribunal is resulting in

a corresponding growth in the body of

jurisprudence surrounding property law.

Once again, that is not a bad thing. All that

digital transformation programmes do to

the conveyancing process is to make it

smarter. Information input on one occasion

can be used on multiple occasions thereafter.

There are an increasing number of case

management offerings available to property

lawyers and estate agents which have had,

and will continue to have, a positive effect on

the practice of conveyancing. Surely it is not

a bad thing to consider how we might better

deliver a service to our clients? The use of

e-mail has transformed communication –

sometimes for the worse it has to be said

but generally for the better. Properties

can now be marketed using an array of

different portals and the only weakness that

they all have is a weakness that has always

been there namely, they all suffer from the

“rubbish in, rubbish out” syndrome.

In a previous article, I wrote about the

forthcoming introduction of E-Discharges.

These should be with us by the end of this

year bringing Scotland into line with the rest

of the United Kingdom. Registers of Scotland

are to be congratulated for the work that

they have done in this regard as part of their

own digital transformation programme.

E-Discharges will make the process of

discharging a standard security much more

straightforward and with less room for delay.

The only aspect thereof which has still to

be agreed if the level of registration fees

which will be payable thereon. Elsewhere

in the UK, no fee is payable for an electronic

discharge. At present, the fee in Scotland

is £60 per discharge – with a £10 reduction

if done through ARTL. Any variation of

this fee will require to be introduced after

consultation on a Fees Order, which will come

into force in April 2017. In my opinion, it is

too much to expect Registers of Scotland to

move from the current charging system to

a radical alternative and I would envisage

some form of sliding scale of fees reduction

over a period of say, five years, might be

appropriate.

What other changes might we see?

I would answer this question by asking a

question in return, namely: what changes

you would (please amend to read would you)

like to see? It really is as open as that. Some

of the changes in the pipeline include:

• I think that the next logical step as far

as Registers of Scotland is concerned

is the introduction of the electronic

registration of standard securities. I

would envisage that that process would

follow much the same lines as has been

the case with E-Discharges. In other

words, there will be full consultation

with the Council of Mortgage Lenders

and with The Law Society of Scotland.

By necessity, however, there will also be

broad consultation with practitioners.

You will be consulted and you should

offer your views.

• In my article in the Quarter 1 Newsletter,

I talked about the introduction

of ScotLIS. That will significantly

improve our ability to access accurate

information on land and property thus

making the process more streamlined.

• The Keeper of the Registers has

accepted a remit which will hopefully

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FIRST COMMENT

see the whole of Scotland registered on the Land

Register by 2024 (or perhaps a few years later).

Considerable work has been done already and the

process of applying for voluntary registration of

titles has gathered pace. More still has to be done

in this regard however and, speaking personally,

I feel that there should be a greater incentive

in the form of a reduction in registration fees

to accelerate the process. I also think that the

definition of ”public bodies” should be broadened

to include organisations such as the Church of

Scotland and other religious organisations who

hold considerable landholdings.

• After voluntary registration, of course, comes

Keeper Induced Registration (KIR) – a somewhat

unfortunate term which brings back memories

of anaesthesia for some. The full implications of

KIR have still to be worked out and will, no doubt,

be further consultation on the subject. Of one

thing we can be sure however and that is that the

process of transferring title will become simpler.

That will affect the time spent and, therefore, the

fees associated with the process. Should this be

seen as a negative? No. Other jurisdictions have

gone through this process and property lawyers

have survived and, indeed, have thrived. A good

example is in Denmark. Why can the same not be

true here? In my opinion, we have much to learn

from colleagues in countries such as Denmark.

• Allied to completion of the Land Register will be

the creation of the oft-referred to, but not widely

understood, Cadastral Map. This is, as they say,

a work in progress. Good work is already being

done using Global Information Systems which

will result in better mapping of properties. It is

suggested however that part of that process will

require an analysis of the issues surrounding the

use of a 1:1250 scale for urban properties. Such a

scale has a tolerance of 0.23 metres and issues

can arise if less than precise plans are produced

to Registers of Scotland along with a title for

registration. Under the 2012 Act, Registers can

maintain an archive record which should include

any detailed plan given at the time of registration.

It is recommended that good quality plans be used

on every occasion.

• Registers also plan to launch an API shortly

which will facilitate better data capture on one

occasion to be used subsequently as a transaction

progresses. This will allow E-Forms to be created

using existing data and, thereafter, pre-populate

other forms. Not before time, some will say.

• In recent years, we have seen an increase in the

use of title indemnity insurance. No longer is it

associated only with titles that have some form

of defect therein. On many occasions, it is used to

facilitate conveyancing transactions. Given the

responsibilities on solicitors in terms of the 2012

Act, I suspect that there will be more use made of

such insurance in the years to come. This may not

result in a full private sector-based title insured

environment, but I am confident that there will be

further developments in this regard.

So is it time to retire or retrain?

No. In Scotland, we are proud of our conveyancing

system, and rightly so. 2017 sees the 400th anniversary

of the creation of the Register of Sasines. I believe that

there will be a number of positive developments in our

conveyancing processes before that anniversary is

celebrated and there will be more to follow thereafter.

The pace of change is, quite simply, exponential. My

message is that there is nothing to be feared and

everything to be gained by embracing such change and

improving our businesses accordingly. The alternative

is to place our heads firmly in the sand and believe that

change will pass us by and we can carry on doing things

as they have always been done. The problem with that

way of thinking is that by the time we stand up to assess

where things are, the world will have passed us by.

There are ample opportunities to improve our businesses

and secure the place of solicitors in the process of

buying and selling heritable property. They simply

need to be grasped.8

Claims Case Study:

Becky Morgan

Claims Team Manager

Access

What was the background to the claim?

The insured’s property had the benefit of a right

of access over neighbouring land. This right,

however, only existed for two dwellings.

In 2011, the insured was granted planning

permission to develop a total of six dwellings at

the property and obtained a title insurance policy

to provide cover for access rights for all six.

The property was also burdened by title

conditions limiting development of the property

to two dwellings, and the policy also provided

cover in this respect.

When the insured began work on the

development of the site he was contacted by a

solicitor acting for the owner of neighbouring

land, who owned the access way used by the

property. He raised a number of queries regarding

the proposed development, including the use of

the access road for six properties rather than two.

The insured duly notified us of a potential claim

against the policy.

How did First Title approach the situation?

We arranged for the insured’s solicitor to

correspond with the neighbour’s solicitor, who

responded with a without-prejudice offer to vary

the right of access to allow the development of six

houses in return for a financial settlement.

We then obtained a report from a chartered

surveyor, who advised that based upon the

valuation of the insured’s property, the financial

offer proposed to vary the servitude represented

good value.

What was the outcome?

We agreed to the insured entering into a financial

settlement with their neighbour, the cost of which

was met under the terms of the policy.

In addition, we paid all legal costs incurred by

the insured’s solicitor in drafting, agreeing and

registering the revised deed of servitude.

FIRST COMMENT

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