When passed, the Title Conditions (Scotland) Act 2003 contained a section headed "Development Management Scheme" which promised the ability to apply a pre-formulated scheme for managing commercial and residential developments. What was missing was the pre-formulated scheme itself. The Development Management Scheme (DMS) has at last been published by the Scottish Government and will be available for application from 1 June 2009.
The terms of the DMS do not make for light reading, but if you would like to know a little more about what the DMS contains, please click here for Supplementary Information.
In summary, the DMS is a template scheme which land owners can elect will apply, with or without modification, to commercial and residential developments, to deal with day to day management issues - such as the maintenance and repair of common parts, the provision of common services, and mechanisms for taking decisions in relation to, and paying for, all matters affecting the chosen scheme.
Pros & Cons
Developers are already very familiar with the concept of a deed of conditions. Anyone who has ever been involved in preparing a deed of conditions in relation to the management of a commercial development will know how hard it can be to cover adequately all of the relevant management issues. While the DMS may not be capable of application to every development without alteration, it is arguably a very good starting point as regards management. However, it is also arguably too detailed and may be difficult to edit into something more suitable. So, is the DMS really any better than a deed of conditions? Sometimes it will be; sometimes it won't. However, developers now at least have the option to use the DMS template. The template is at least adequate, and if widely used would introduce an element of consistency and certainty for purchasers (and tenants) of units in developments.
The association which must be set up to administer the DMS is to be a "body corporate"; that is, an association with a legal identity separate from its individual members. The association will have the power to enter into certain types of contract (e.g. purchase of goods, contracts of employment, etc.) It is the association as a body corporate which will be liable under those contracts, albeit acting through its office bearers. The DMS makes no specific mention of liability of office bearers, but the general law will apply as it does to all bodies corporate, so that there should be no personal liability attaching to office bearers, provided that the office bearers act within the powers specified in the DMS. Nonetheless, there will be some responsibility associated with being an office bearer in an association, and it is to be wondered whether that will be a role willingly taken up by many.
One of the primary aims of the DMS is to reduce the scope for disputes, an aim which it may well achieve. However, we expect that, in most commercial developments, the ultimate management responsibility will still be delegated to a managing agent. If that is the case, it may be that a "traditional" deed of conditions will deal better, and more simply, with development management.
We anticipate that law firms will start to offer the DMS as a viable alternative to developer clients, but we also anticipate that developers will often opt to stick with what they know, and use tried and tested deeds of conditions.