From 1 April 2016, the General Register of Sasines will close to standard securities. This will have important consequences for real estate finance transactions in Scotland.
Why is this change happening?
Land Registration in Scotland currently operates a dual registration system: the map-based Land Register and the older, deeds-based General Register of Sasines. The intention is that the Land Register will eventually replace the General Register of Sasines.
In order to achieve this, certain deeds act as “trigger events”, requiring the underlying property to transfer from the General Register of Sasines to the Land Register. At present, the granting of a standard security on its own (i.e. without a disposition or lease accompanying the application) does nottrigger Land Registration of a borrower’s property. In such circumstances, the borrower’s title to the property would remain in the General Register of Sasines.
From 1 April 2016, standard securities will effectively become such a trigger for registration.
What does this mean for funders?
It will no longer be possible for a borrower to grant a standard security over property recorded in the General Register of Sasines, without voluntarily registering the property itself in the Land Register. We anticipate that this will be of the greatest significance for refinancing transactions and, in particular, where there is a commercial view being taken on the approach to due diligence.
There will be no additional registration fees for the voluntary registration of the borrower’s title. However, the potential time and costs involved in reviewing the Borrower’s title (due to more onerous confirmations requiring to be given in Registers of Scotland application forms) will be of important consideration for both lenders and borrowers.