Advance Notices from the Scottish Law Commission

The Scottish Law Commission (SLC) have stated that the introduction of ‘Advance Notices’ as part of the Land Registration (Scotland) Act 2012 will be ’appealing to conveyancers and the system should benefit their clients’. The SLC also go on to state that advance notices ‘offer something more direct and effective than the protection offered by a letter of obligation.’

The idea behind the introduction of advance notices was to minimise the risk period between the delivery and registration of a deed in a conveyancing transaction as a real right in conveyancing only occurs when registration has been completed. The risk period for the purchaser consists of a potential situation where the seller becomes insolvent or the seller has granted a deed which transfers ownership to a third party which is then registered first. It is believed that the system of advance notices will remove the risk of losing legal title to property between payment and date of registration.

Advance notices do not completely eradicate the risk period but registering an advance notice can provide the purchaser with protection against the registration of a competing conveyance from a third party as well as insolvency of the seller for up to thirty five days from when the advance notice is lodged on the register. In spite of this, the ‘race to register’ still exists although the Scottish Law Commission have said that it would ‘remain the case that the first person to register would prevail, but with the possibility of the result being changed if that registration happened during the currency of a notice in favour of another person’.

This is still an improvement on the former practice of a letter of obligation. A letter of obligation is a guarantee by the sell...

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...ler can still be sequestrated and their creditor(s) can still try to use diligence against the property before the purchasers disposition is registered, this can happen if the advance notice has not been registered or the thirty five days ‘protected period’ has expired. There is also still the possibility of the seller granting a competing deed to a third party, which is then the first to be registered or is registered if the original sellers advance notice has expired after the thirty five days protection and they have not sought another.

For those reasons, I believe that advance notices improve the conveyancing process, and once the Land Registration Act 2012 comes into full effect, they should provide significant assurance for purchasers overall, but unfortunately, even with these procedures in place, the risks for purchasers have not been entirely eradicated.