PART 1
March 2011
DEALING WITH PROPERTIES IN SCOTLAND
43.12.2 Power to deal with property in Scotland
In order to be able to deal with property in Scotland, the official receiver, as trustee, will have to seek the assistance of the courts in Scotland to have the bankruptcy order validated (see paragraph 43.12.3).
It is likely that local legal assistance will be required in this process and, therefore, the official receiver will need to ensure that the value of the property warrants the cost of protection and realisation.
It is accepted that this may be something of a circular matter, in that it may be necessary to incur some expense to find out that the property has no value.
43.12.3 Validation of the bankruptcy order
To either register the official receiver's interest, as trustee, in a property or formally deal with the sale of a property interest, it will be necessary to have the insolvency order (as made in England or Wales) recognised by the Court of Session in Edinburgh.
Where the official receiver decides it is appropriate to register his/her interest, or intends to apply to the court to formally realise his/her interest in a property located in Scotland and therefore requires validation of the insolvency order, he/she does not have a right of audience to make the application directly and should approach a solicitor-advocate to act on his/her behalf [note 1] (see paragraph 43.12.4). Details of an appropriate solicitor-advocate may be obtained from the following website: www.solicitoradvocates.org/.../SPAN>.
43.12.4 Instruction to solicitor-advocate
An instruction to a solicitor-advocate should specifically request that he/she applies upon Form 14.4 (which is available from the Scottish courts’ website at: www.scotcourts.gov.uk), to petition the Court of Session, in the manner set out in the rules of the court, [note 2] for registration of the insolvency order in accordance with the provisions of the Act [note 3].
The instruction should include, for the benefit of the petition to the Court of Session, an undertaking in the following terms, although the solicitor-advocate may have his/her own preferred terms:
“I undertake that all money and other property in Scotland received by me as trustee/liquidator of the insolvent estate shall be applied by me in the course of the administration of the insolvency in England and I submit to the Jurisdiction of the Court of Session in all matters in controversy in connection with the insolvency between myself as trustee/liquidator of the insolvent estate and other persons relating to the property in Scotland.”
43.12.5 Content of application to solicitor advocate
An instruction to a solicitor-advocate (see paragraph 43.12.4) should be accompanied by two certified copies of the insolvency order, details and evidence of the official receiver’s appointment as trustee/liquidator (such as the no meeting notice) and full details of the property situated in Scotland and the estimated value of the official receiver’s interest.
43.12.6 Ascertaining the value to the estate of a property in Scotland
In simple terms, the calculation of the value of a Scottish property to the estate involves the same process as would be required for a property in England and Wales (that is, the value of the property less any secured charges). What may be more difficult is the obtaining of accurate information regarding value of the property and the amount and level of outstanding charges.
43.12.7 Obtaining information regarding the value of a property in Scotland from the bankrupt
The most likely source of information regarding the value of the property will be from the information or documentation provided by the bankrupt, for example:
43.12.8 Other sources of information regarding the value of a property in Scotland
As in England and Wales, there are websites in Scotland that give the prices of properties that are for sale. Examples are given here:
http://www.findaproperty.com/listcounties.htmx?edid=00&salerent=0&countyid=15
http://www.rightmove.co.uk/property/Scotland.html
It is possible that a local estate agent may be prepared to offer an opinion. An agent may be located by region on the following website:
43.12.9 Where it is necessary to obtain an accurate valuation (amended October 2013)
Where it is necessary to obtain an accurate value of the property the official receiver may consider appointing a surveyor. As this service is likely to attract a fee the official receiver should consider the necessity of the valuation against the likely benefit to the estate.
A surveyor may be located on the following website:
www.rics.org/.../findasurveyor
Alternatively, the official receiver might consider appointing the surveyor used by the Accountant in Bankruptcy (the approximate equivalent of the official receiver in Scotland):
J & E Shepherd (http://www.shepherd.co.uk/)
Telephone: 01382 200454
Contact: Liz Ferguson
43.12.10 Establishing the position of charges against the property
It is likely that, as with an English/Welsh property, the official receiver will be able to establish what charges there are against the property from documentation or information provided by the bankrupt.
Assuming the identity of at least one of the secured chargeholders is known, they can be written to in the normal way (see paragraph 43.12.12) to obtain details of the amount outstanding under their charge and the identity of any other chargeholders.
43.12.11 Protecting the official receiver’s interest in the property
In the first instance, the official receiver should contact any chargeholder and request that they note the official receiver’s interest in the property (see paragraph 43.12.12).
In addition to informing the chargeholders of the making of the bankruptcy order, it will be necessary to register the official receiver’s interest in the property at the land registry office (see paragraph 43.12.13).
43.12.12 Contacting the chargeholder
It should be possible to contact the chargeholder(s) using the normal MP2 and MP3 letters available on document production.
43.12.13 Protecting the property at the ‘land registry’
It may be necessary for the official receiver as trustee, after considering the particular circumstances of a case, to protect his/her interest in land located in Scotland by the registration of an inhibition in the Register of Inhibitions and Adjudications. A validated copy of the insolvency order will be required for this purpose (see paragraph 43.12.3 for details of how an insolvency order may be validated in Scotland).
The Registers of Scotland (see paragraph 43.12.14) have confirmed that the inhibition is registered against the individual rather than the property and therefore protection is afforded to both solely or jointly owned property through effecting registration. For registration purposes, a copy of the validated order should be sent to the Registers of Scotland (see Chapter 50, paragraph 50.87) with an accompanying request that the insolvency be noted in the Register of Inhibitions and Adjudications
43.12.14 Registration of property in Scotland
The Registers of Scotland is the Government Department responsible for Scotland's land and property registers, performing a similar role to the Land Registry in England and Wales. The purpose of the Registers of Scotland is to maintain the public registers, for which the Keeper of the Registers of Scotland is statutorily responsible. The Registers of Scotland administer 15 registers, the largest of which are the two property registers, the Land Register (see paragraph 43.12.15) and the General Register of Sasines (see paragraph 43.12.17).
The Land Register was introduced by law in 1979 [note 4] on a county by county basis and was not fully implemented throughout the whole of Scotland until 2003. Sale of property for valuable consideration will induce a first registration in the Land Register, if it is not already registered within that Register. Unlike the Register of Sasines (see paragraph 43.12.17), registration in the Land Register guarantees the validity of title to property.
43.12.16 Searching the land register
A search of the Land Register can be effected through the online forms or printable forms supplied on the Registers of Scotland website (http://www.ros.gov.uk/public/services/copy_deeds.html), such a search revealing similar information to that available from the Land Registry in England and Wales. A search may take up to eight days and an invoice will be produced upon completion.
The Register of Sasines (http://www.nas.gov.uk/guides/sasines.htm) is an official record of the historic transfer of heritable property (primarily land and buildings although it may include mineral or fishing rights also) or of the use of such property as security for a loan. Since 1981 the Register of Sasines is gradually being replaced by the Land Register.
The Register shows the last transaction for the land but does not necessarily mean that the party shown is the owner. Certain transactions do not lead to first registration in the Land Register such as gratuitous transfers (gifts) or other transfers for no consideration. To verify ownership it may be necessary to arrange for a personal search of the papers for previous transactions to be undertaken to ensure good title has been transferred.
It is not envisaged that the official receiver will deal with such properties often, most properties encountered being recorded on the Land Register. Due to the differing systems and the steps needed to verify ownership from the Register of Sasines, the official receiver should, where the need arises, employ solicitors or a company specialising in land searches (which should be located using an internet search) to confirm ownership of land in Scotland.
43.12.18 Realising the interest in the property – transfer to the RTLU
As with a property in England and Wales, the official receiver may seek to transfer dealings in relation to the property to the appropriate RTLU as soon as possible after his/her interest in the property has been protected (see paragraph 43.12.11).
43.12.19 Instructing a local solicitor
It is not envisaged that official receivers should attempt to deal with the sale of a property in Scotland directly, and it is recommended that local legal representation is obtained to deal with the particular aspects of Scottish conveyancing and insolvency procedures.
43.12.20 Locating a solicitor in Scotland
Solicitors engaged by the official receiver in this country may be able to recommend a solicitor in Scotland with which they have some connection or arrangement.
As an alternative, the Law Society of Scotland has a directory of Scottish lawyers, that may be searched by region:
http://www.lawscot.org.uk/wcm/lssservices/find_a_solicitor/Core/directory.htmx
It may be the case that any Scottish organisation from whom the official receiver seeks information will cite data protection as a reason for not providing the requested information.
In this case, the official receiver should have the bankrupt complete the data protection subject [note 5] and send that to the relevant organisation with a renewed request.
For information, the Data Protection Act 1998 applies to all of the UK (i.e., including Scotland).