Property Law Y2S1 Week 4: L7 Problems with Transfer & L8 Questions on Title Status

Key terms and cases (Issue / Facts / Held) from my OneNote notes. 'Added' notes are from outside the notes (Gretton & Steven).

Derivative acquisition and the nemo plus rule

DERIVATIVE acquisition (transfer) requires the CONSENT of the owner. The transferor must be the OWNER or a person AUTHORISED to transfer. NEMO PLUS JURIS AD ALIUM TRANSFERRE POTEST QUAM IPSE HABET: no one can transfer more than they have. A disposition granted by a non-owner or unauthorised person is INVALID and does NOT transfer ownership. Consequence: the transferee must check the transferor's title. Because this is hard, the law sometimes protects GOOD FAITH acquirers, depending on the type of property.

Good faith acquirer protection: how does it differ by type of property?

• INCORPOREAL property: NO protection. • CORPOREAL MOVEABLES: virtually none. Added: the main statutory exceptions are in the Sale of Goods Act 1979 ss.23–25 (e.g. a buyer in possession) and the Factors Act. These apply to GOODS, not land. • REGISTERED LAND: a reasonable measure of protection under LR(S)A 2012 s.86 (and s.91 for encumbrances). • Even where s.86 does not apply, a good faith acquirer can usually claim COMPENSATION under the KEEPER'S WARRANTY. Slogan: a good faith acquirer gets either the 'MUD' (the property) or the 'MONEY' (compensation).

LR(S)A 2012 s.86: what are its key conditions, and what does it do?

s.86 deals with acquisition from a disponer WITHOUT a valid title. Its most important conditions are: (i) the TRANSFEROR was entered in the PROPRIETORSHIP section of the title sheet as proprietor; (ii) the transferor (or transferor and transferee together) were in POSSESSION for at least ONE YEAR (open, peaceable, without judicial interruption; possession includes CIVIL possession through a tenant, s.133(1)); and (iii) the TRANSFEREE is in GOOD FAITH. Added (check s.86(3) for the full wording): there must also be no CAVEAT on the title sheet, and the Keeper's warranty must not have been excluded. Your Tutorial 2 note says to quote the exact wording of s.86(3) in the exam. Effect: it FORGIVES the transferor's lack of title, so the transferee becomes OWNER despite nemo plus. This is REALIGNMENT: the law is brought into line with what the title sheet says.

What is 'realignment'? Name the two main examples.

Realignment means the LAW IS BROUGHT INTO LINE WITH THE REGISTER: what you see on the title sheet is what you get, for a good faith acquirer. • s.86: a good faith acquirer from a REGISTERED proprietor (in possession for a year) becomes OWNER even though the disponer had no title. • s.91: a good faith acquirer takes FREE of ENCUMBRANCES that ought to be on the title sheet but are NOT shown. This means there is no need to go behind the Register to examine prior deeds, as there was with the Register of Sasines. The loser (the original owner or encumbrance holder) is EXPROPRIATED and receives COMPENSATION from the Keeper (ss.94–95).

What are the limits of s.86? Work through the four standard examples.

1. Beth buys from Alan, but Tom is the true owner, on a FIRST REGISTRATION (from the Sasine Register). TOM remains owner, because s.86 does not apply to first registrations.
2. Beth buys from Alan, the REGISTERED proprietor, but Tom is the true owner. BETH can become owner under s.86 (if the possession and good faith conditions are met).
3. Brian buys from a fraudster posing as Anne (the true and registered owner), with a FORGED signature. ANNE remains owner. s.86 needs an inaccuracy on the register BEFORE the transaction, and here the transaction itself is the error (a 'transactional error').
4. Brian then sells to Catherine (in good faith). CATHERINE can be owner under s.86 (Brian is now the registered proprietor; the possession condition must be met), and Anne is compensated. Also: s.86 covers only transfers of OWNERSHIP, not subordinate real rights such as standard securities. There is separate protection for SERVITUDES in s.90.

Under the old Land Registration (Scotland) Act 1979, how were good faith acquirers protected?

Registration conferred an immediate real right EVEN IF THE DEED WAS INVALID: the 'MIDAS TOUCH' (s.3(1)(a)). The title flowed from the REGISTER, not the deed. This was TOO powerful. With a forgery, the forgee (Brian) became owner at once, but the Register was 'BIJURALLY' inaccurate. • Anne could seek RECTIFICATION (s.9(1)), but NOT against a 'PROPRIETOR IN POSSESSION' unless the inaccuracy was caused by their FRAUD or CARELESSNESS (s.9(3)(a)). • So if Brian (i) took possession and (ii) was not fraudulent or careless, (iii) he kept the property, and Anne got INDEMNITY from the Keeper.

The 'designated day' (8 December 2014): what happened to existing inaccuracies?

When LR(S)A 2012 came into force, inaccuracies on the Land Register were dealt with under sch 4 paras 17 and 22: • If the Keeper HAD POWER TO RECTIFY: the power was DEEMED EXERCISED, so the person who should have the right got it (e.g. Anne became owner in place of Brian, though Brian stayed on the Register for the moment). • If the Keeper had NO power to rectify: the Register CEASED TO BE INACCURATE (Brian stayed owner and Anne lost the property). The Keeper usually had power only if Brian was NOT a proprietor in possession, which was rare. There is a statutory PRESUMPTION that he was in possession (sch 4 para 18). Example: Highland Ventures Ltd v Keeper of the Registers of Scotland.

Accretion: what is it, and when does it operate?

Problem 2, where the transferor owns LATER but not at the time of the transfer. If the transferor did not own at the time the disposition was registered but becomes owner LATER, ownership passes AUTOMATICALLY at that moment to the original transferee. The earlier lack of title is CURED. Example: in year 1 Alan dispones to Beth, who registers, but Tom owns the land. In year 5 Tom dispones to Alan, who registers. Ownership now passes to BETH. Requirements: the disposition must contain (a) a grant of ABSOLUTE WARRANDICE or (b) a clause conveying the granter's whole right, title and interest, present and FUTURE (Swans v Western Bank (1866)). Limits: it is NOT fully retrospective; it is unnecessary where s.86 applies; it also applies to subordinate real rights; and it is BLOCKED by the granter's supervening SEQUESTRATION (Bankruptcy (Scotland) Act 2016 s.78(7)).

Voidable titles: what are they, and how are they cured?

Problem 3, where the transferor owns NOW but may not LATER. A VOIDABLE title is a GOOD title (the holder really is owner) UNLESS AND UNTIL the disposition is REDUCED and the decree of reduction is REGISTERED (Conveyancing (Scotland) Act 1924 ss.46, 46A, the latter inserted by LR(S)A 2012 s.54). It arises only from a defect in HOW the property was acquired, through misconduct by the acquirer (Alan) or by the granter (Zara), the latter affecting Alan if he was gratuitous or in bad faith. CURE: a voidable title becomes ABSOLUTELY GOOD when transferred to a GOOD FAITH acquirer who gives VALUE.

Six examples of voidable titles

(i) Alan induced the transfer by FRAUD or UNDUE INFLUENCE (Thomson v Warwick [2022]). (ii) Zara, aged 16–18, made a PREJUDICIAL TRANSACTION (Age of Legal Capacity (Scotland) Act 1991 s.3). (iii) Zara made a GIFT to defeat her CREDITORS (a gratuitous alienation: Bankruptcy (Scotland) Act 2016 s.98). (iv) Zara made a gift to defeat her SPOUSE (Family Law (Scotland) Act 1985 s.18). (v) Zara transferred in BREACH of an obligation not to (the OFFSIDE GOALS rule, Week 6). (vi) Zara's OWN title was voidable.

Absolutely good, voidable or void? Work through the six title-status examples.

1. Alan (owner) dispones to Beth, who registers: ABSOLUTELY GOOD.
2. 'Alan' was a fraudster and the disposition was FORGED (Beth in good faith): VOID. A forgery transfers nothing.
3. Beth promised to pay £100k but never intended to (FRAUD): VOIDABLE.
4. As in 2, but a year later Beth sells to Donna (good faith, pays £120k): Donna is ABSOLUTELY GOOD under s.86.
5. As in 3, then Beth sells to Donna (good faith, pays £120k): ABSOLUTELY GOOD. The voidable title is cured by a good faith acquirer for VALUE.
6. As in 3, but Beth GIFTS the land to Donna: VOIDABLE. No value was given, so there is no cure.

If the missives are void, is the conveyance still effective? (causal vs abstract transfer)

Two possible systems:

1. CAUSAL: a just cause of conveyance (JUSTA CAUSA TRADITIONIS) is required. If the contract is void, the transfer fails and Alan remains owner.
2. ABSTRACT: the conveyance is viewed separately from the contract. If the disposition is registered, Beth is owner even though the missives are void. SCOTLAND follows the ABSTRACT approach (Stair: dispositions are not annulled because they are 'sine causa'). Even with no valid contract, an agreement to TRANSFER suffices. Any remedy is personal, e.g. unjustified enrichment.

Undiscoverable encumbrances, and what s.91 does about missing encumbrances

Not every encumbrance appears on the Register. These 'OFF-REGISTER' rights (called 'overriding interests' under the 1979 Act) include SHORT LEASES (20 years or less), many SERVITUDES, and FLOATING CHARGES (check the Companies Register). The buyer takes the risk, though leases and servitudes may be obvious on INSPECTION. Any remedy is usually under WARRANDICE. Most encumbrances (long leases, standard securities, liferents, real burdens) MUST be registered to exist, so the buyer buys with eyes open. But sometimes one is wrongly MISSING (a Keeper error on first registration, or a forged discharge). s.91: a GOOD FAITH acquirer (with no CAVEAT) who becomes owner by registration takes FREE of encumbrances not shown on the title sheet. The encumbrance is EXTINGUISHED, and its holder claims compensation (ss.94–95). Exceptions are in s.91(4). This is another example of REALIGNMENT.

Risk: if the house burns down before completion, who bears the loss?

RISK means the risk of damage to or destruction of the property without anyone's fault. • Default rule in Scotland: risk passes to the BUYER on CONCLUSION OF MISSIVES. Added: this is the periculum rei venditae rule, see Sloans Dairies Ltd v Glasgow Corporation 1977 SC 223. • In practice this is virtually ALWAYS altered by the missives: risk passes on the DATE OF ENTRY. • If someone was AT FAULT for the fire, there is also a claim in DELICT against them.

Tutorial 2 problem: a forged disposition, then a resale. Who owns, and on what basis?

From your Tutorial 2 (the parts relevant to this week): • Billy takes a disposition from Airdrie Industries (the registered owner). The subscription for Airdrie is FORGED. Billy's title is VOID, not voidable: a forged deed is invalid, and only registration of a VALID disposition transfers ownership (LR(S)A 2012 s.50; check the subsection numbers in your notes). Airdrie remains owner. • Two years later Billy sells to Carol, who registers in good faith. Carol can become OWNER under s.86: Billy is the registered proprietor, there has been possession for a year, Carol is in good faith, and there is no caveat. Quote the s.86(3) wording. • Airdrie's remedy is COMPENSATION from the Keeper (s.94). Correction to your tutorial notes: the references to s.23 and s.24 'of the 1979 Act' and National Employers v Jones are SALE OF GOODS ACT 1979 rules for MOVEABLES. They do not apply to land. For land, the answer is s.86.

CASE: Simpson v Keeper of the Registers of Scotland [2025] LTS 9

Issue: Could the current owners rely on s.86 to keep land wrongly included in their title sheet? Facts: On a cottage's move onto the Land Register, an extra piece of land that truly belonged to a NEIGHBOUR was added to the title. The cottage was sold on, and at that point the neighbour spotted the error. The new owners relied on s.86. Held: s.86 did NOT apply. BOTH neighbours had been using the strip, so there was no SOLE possession by the party relying on s.86 (and their predecessor) for the required year.

CASE: Highland Ventures Ltd v Keeper of the Registers of Scotland

Issue: On the designated day (8 December 2014), did the Keeper have power to rectify an inaccuracy (so the true owner regained the property), or did the Register cease to be inaccurate? Facts: Not recorded in your notes. It concerns the transitional rules in LR(S)A 2012 sch 4. Held: Your notes cite it as an EXAMPLE of the designated-day rules, where the Keeper's power to rectify (which depended on whether the registered proprietor was 'in possession') determined who owned. Check the facts and outcome against the report.

CASE: Swans v Western Bank (1866) 4 M 663

Issue: When does ACCRETION operate to pass a later-acquired title to an earlier grantee? Facts: Not recorded in your notes. Held: Your notes cite it for the requirement that the disposition contain either (a) a grant of ABSOLUTE WARRANDICE or (b) a conveyance of the granter's whole right, title and interest, present and FUTURE. Only then does a later-acquired title accrue to the earlier grantee.

CASE: Thomson v Warwick [2022] SC INV 31

Issue: Was a transfer of land induced by UNDUE INFLUENCE, making the transferee's title voidable? Facts: An ELDERLY man (your notes: 'elderly brother in a farm') was induced to give the FARM to family members. Held: Your notes use it as an example of a VOIDABLE title arising from undue influence (or fraud) in the acquisition. Check the outcome against the report (it is a Sheriff Court decision).

CASE: Sloans Dairies Ltd v Glasgow Corporation 1977 SC 223

Added (the default rule on risk in your L8 notes). Issue: Who bears the risk of accidental damage to heritable property between conclusion of missives and the date of entry? Facts: Property was sold, and after missives were concluded but before entry and payment it was damaged by fire (check the detail against Gretton & Steven). Held: RISK passed to the BUYER on CONCLUSION OF MISSIVES (periculum rei venditae est emptoris), so the buyer had to pay the full price. This is why missives in practice provide that risk stays with the seller until the date of ent