The recently published Lands Tribunal case of David Brown and Another v Mark Richardson and Another has confirmed the concerns which many property lawyers in Scotland have held regarding the abolition of the feudal system in November 2004, and in particular the consequent effect on feudal building restrictions.
The Lands Tribunal has confirmed that in some circumstances, feudal reform, rather than relieving a land owner of feudal building restrictions, has in fact placed a greater burden on the land owner by conferring "new" rights to control building in favour of neighbouring properties.
A practical example
The facts of the recent Lands Tribunal case are fairly typical. Mr and Mrs Richardson owned a terraced house in Ruthrieston Estate near Aberdeen, and like many other owners, wished to modernise and add value to their home by building an extension. Their property (and the surrounding properties) were subject to feudal building restrictions imposed in a Feu Charter dating back to 1888. Under the Feu Charter, any new building or alterations required the prior written consent of the feudal superior. In the period of at least 20 years prior to November 2004 this feudal restriction had, however, not caused any practical difficulties as the superior had not sought to enforce it. Indeed, it was apparent that house owners in the area had long ago ceased even to apply to the superior for consent, and concerned themselves only with obtaining planning permission.
Feudal Reform Legislation
Unfortunately for the home owners in Ruthrieston, with feudal abolition came a change in the law and the creation, in some circumstances, of new building controls in favour of neighbours. Where feudal restrictions were imposed on a number of "related properties" prior to November 2004 with a view to maintaining a "common scheme" (e.g. houses in a uniform housing estate), then despite the removal of the feudal superior, the feudal restrictions may be replaced with new equivalent restrictions enforceable by neighbouring related properties.
In the case of the Ruthrieston Estate, the Lands Tribunal decided that the Richardsons' house and the neighbouring properties were related properties within a common scheme. Due to the feudal reform legislation, the neighbours had therefore been given new rights to enforce the building restrictions which had formerly only been enforceable by the, in this case passive, feudal superior.
This change in the law, effective since November 2004, is unwelcome to developers for a number of reasons:
Increase in numbers of people entitled to enforce burdens
As with the Ruthrieston Estate, before feudal reform, in many instances only the superior had the right to enforce the feudal restrictions. Prior to the reform, a cautious developer could therefore have purchased a formal waiver from the superior, or alternatively could simply have ignored the restriction if he was comfortable that the superior would not make any objection.
Uncertainty due to vagueness of the criteria
Whether such new enforcement rights exist depends on whether there is a "common scheme" of "related properties". There is no statutory definition of "common scheme" and the concept of "related properties" remains fairly vague and general. Although some examples are given in the legislation, in Brown v Richardson the Tribunal found that, while none of the practical instances of "related properties" were present, the way in which the conditions had been imposed over a much larger area, which was split up in to a number of "lots", was sufficiently like a deed of conditions for the relevant statutory provisions to apply, albeit that this view was expressed "with some hesitation"
Expensive and time consuming due diligence
Determining whether such new enforcement rights exist involves the examination of neighbouring titles which can prove to be both time consuming and expensive. Worse still, even after a thorough due diligence process, there may remain some uncertainty as to the existence or extent of such neighbour enforcement rights.
Fortunately for the developer, there are some practical solutions:
- A developer may apply to the Lands Tribunal for variation or the removal of the offending restriction. In considering whether to grant such an application, the Lands Tribunal will consider a number of factors including the existence of planning permission (which is persuasive, but not conclusive) the original purpose of the restriction, and the balance to be struck between the "burden" placed on the developer and the corresponding "benefit" conferred on neighbours. Ultimately, in the Ruthrieston Estate case, Mr and Mrs Richardson were able to persuade the Lands Tribunal to vary the title restriction to allow the construction of their extension despite its impact on the neighbour.
- Applying to the Lands Tribunal is not always the ideal solution. There is no guarantee that the application will be successful, and as part of the application process, the Tribunal will inform neighbouring properties of the particular building restriction in question. This may only serve to highlight the restriction which may otherwise have gone unnoticed. In these circumstances, a developer may choose to address the risk, rather than the burden, and seek to arrange suitable title indemnity insurance against the possibility of future enforcement of the title restriction. This solution is being considered more frequently by developers following feudal abolition, although it is unlikely to be a suitable option if those with rights to enforce the burden are aware of this entitlement.
The feudal reform legislation has a number of difficulties and shortfalls, particularly in relation to the new enforcement rights which may be conferred on neighbouring properties. As with much new legislation, there is always some doubt, following its introduction, of how it will be interpreted and operate in practice. In time, it is hoped that the Courts and the Lands Tribunal will add more clarity and certainty, but until then the lawyer and the developer will need to be pragmatic and take practical steps to deal with development restrictions.
The full text of the Lands Tribunal decision in Brown v Richardson is available at: http://www.lands-tribunal-scotland.org.uk/decisions/LTS.TC.2006.41.html