Encumbrances (Section C)

MORTGAGE

Original name: Standard security.

Definition of this right: A grant of a right over land for the purpose of securing any debt.

Type of right according to national classification: Right in security.

Observations:  In Scotland a Standard Security is the only competent means of securing a debt over land.

1.1. With respect to the mortgage liability, the Scottish mortgage system prepares in general four options:

a) Extracts include the amount of loan strictly, nothing else about interests or other liabilities due to the loan. [g. In the event that the loan is 100,000 € and the information shall contain that number. Although interest or other debts are due, the information does not include them.]

b) Extracts include the global amount including all liabilities due to the loan (loan, interests or other debts). [E.g. The loan is 100,000 € and interest at 20,000 € is agreed. LR extracts indicate that the secured debt is the sum of both concepts, i.e. 120,000€].

c) Extracts include itemized liabilities arising from the loan, so that can be distinguished amount of loan and the other liabilities due to interests of the loan or others, guaranteed by the mortgage. [E.g. The loan is 100,000 and has agreed interest at 20,000 and mortgage cover up to 10,000 from other debts related to loan. LR extracts shall include separately information about these three types of debt].

d) Information about sums of money guaranteed by mortgage is not provided by the extracts. [E.g. The loan is 100,000 € but LR extracts will not inform any figures, or at most will inform the fact that the property is encumbered by a mortgage].

1.2. Regular LR information in this system also comprises ordinarily:

1. Contract or basis of obligation guaranteed by a mortgage (e.g. a loan)
2. Name of the mortgagee or creditor
3. Name of the mortgagor or debtor (land owner)
4. Deed whereby mortgage was constituted or awarded

However, there should not be expected any information about deadline of the loan or credit or other contract which is basis of the mortgage or the deadline of the mortgage

1.3. With respect to the mortgage rank (preference of the mortgage in comparison with other mortgages or encumbrances), this LR system has the following criteria:

a. Mortgage rank depends on date of registration of the mortgage, so whoever may ascertain mortgage rank taking into consideration the information on the date of registration of the mortgage.
b. Information indicates specifically what the mortgage rank is, as a general rule.

In this LR system these are the following:

OWNERSHIP

Original name: Ownership

Definition of this right: In Scotland the real right is the foundation of ownership. It is only registration that confers a real right in Scotland. Registration in the Land Register confers ownership.

Type of right according to national classification: Real right in land

RIGHT IN SECURITY

Original name: Standard Security

Definition of this right: A right held by a creditor in property in security of a monetary debt or other obligation owed to him.

Type of right according to national classification: Right in security.

Observations:  The only important right in security in respect of land is the standard security. Standard securities appear in a separate section of the Land Certificate (Section C CHARGES). They are not listed alongside other burdens or rights.

LIFERENT

Original name: Liferent

Definition of this right: A right to the use of or income from another’s property for the duration of the holder’s lifetime.

Type of right according to national classification: Right of use.

Observations:  In Scotland, liferents are shown in the D section of a Land Certificate as a burden/restriction on another person’s ownership.

SERVITUDE

Original name: Servitude

Definition of this right: A servitude is a title condition running with the land. It is created for the benefit of a proprietor of land (the “dominant tenement” or the “benefitted property”) and entitles the benefited owner to exercise certain rights on or over adjoining price of land (the “servient tenement”) or the “burdened property”).

Type of right according to national classification: Servitudes are subordinate real rights (a real right held by a person in land owned by another).

LEASE

Original name: Lease

Definition of this right: A right to occupy land in exchange for making a periodical payment to the owner.

Type of right according to national classification: Right of use.

Observations:  Only leases over 20 years in duration are registrable in the Land Register.

REAL BURDEN

Original name: Real burden

Definition of this right: A real burden is an encumbrance on land in favour of the owner of other land.

Type of right according to national classification: Right of use.

Observations:  As with servitudes there must usually be both a servient tenement (burdened property) and a dominant tenement (benefited property); and enforcement is by the owner for the time being of the benefited property against the owner for the time being of the burdened property.

But unlike servitudes a real burden does not usually confer a right of use. Either it is a restriction on the burdened property (e.g. that nothing further is to be built on the property or that the property is not to be used for business purposes), or it imposes an affirmative obligation on its owner (e.g. to build a house or to maintain a wall).

This information includes LR entries or notices related to restrictions decreed by judicial orders which mean either a claim on the property, or a challenge on the registered title, or an attachment of the property to debts as a result of judicial procedures, etc.

In this system:

a) Information on judicial restrictions is out of the scope of the regular land register extracts. Other registers or archives would have to be consulted to know if a property is affected by judicial restrictions.

For purposes of the information, orders of attachment or seizure decreed by administrative authorities lead to notices, administrative restrictions or burdens.

About fiscal burdens in this system it is not possible to register land without proof that the transaction tax (land and buildings transaction tax) has been paid.

No other information appears on the property registers unless the tax authority takes some kind of enforcement action.  In that respect taxes are treated like any other debt.