Although the commercial approach on property deals is similar, there are still major differences between the two legal systems including in the terminology used.
If you are familiar with one system, but occasionally deal with property in the other, it's important that you understand these differences. Today I'm going to discuss terminology and some basic divergences related to the terms mentioned.
Heritable v freehold
In Scotland most property is held in outright ownership - often still referred to as heritable title. This is the equivalent to freehold title in England and Wales.
Leasehold
It is more common in England and Wales to see leasehold titles (particularly in development scenarios or multi occupied buildings) with the leasehold structure regulating parts common to all parties. Often there is also a management company appointed to deal with regulating the common parts of the property.
In Scotland such aspects are dealt with by Deeds of Conditions (setting out title conditions - the equivalent of covenants) and legislation. Leasehold titles are the exception rather than the norm. Indeed the tenant's interests under many historic longer leases will be converted to outright ownership on 28 November 2015.
Commonhold
Since 2002, there has been a further form of title in England. Commonhold is a combination of freehold title of a property within a development together with a shareholding in the company that manages the common parts of the development. This removes the requirement for a leasehold title and ensures that all parties with an interest in the development have the ability to make decisions as to how the development operates.
There is no equivalent to this in Scotland.
Mutual Walls v Party Walls
A party wall in England and Wales can be broadly defined as a wall which bounds two properties but there are various other possible circumstances that could give rise to a party wall. All matters relating to ownership, rights and maintenance of party walls are governed by legislation.
In Scotland, unless the titles specify to the contrary, the common law provides that parties own such boundary walls in common and it also regulates the maintenance and rights in relation to use of such walls.
Servitudes v Easements
In both jurisdictions these are rights, e.g. a right of access, that are created (in the titles) over one piece of land for the benefit of another piece of land. These rights run with the land rather than being personal to the owners of the relevant land at the time that the rights were created - and so such rights benefit and bind successor owners of both properties.
In Scotland the areas of land are known as the benefitted and burdened properties (historically referred to as the dominant and servient tenements). In England and Wales they are known as the dominant and servient land.
In both jurisdictions there are various methods available for creating such rights and rules as to how the rights operates.
Title conditions v covenants
These are title deed obligations on an owner of land, either to do or to refrain from doing something. In England and Wales covenants over freehold titles need to be in a form of a restriction to run with the title.
In Scotland title conditions can, in certain cases, be either a restriction or a positive obligation
Land Register of Scotland v Land Registry
Both registers are government regulated entities that operate to deal with registration of title and other related deeds.
In England and Wales it is less common for a title to not be registered at the Land Registry and to be an unrecorded title. In Scotland all titles are either in the Land Register or sitting in the historic register of deeds (referred to as the Sasine Register). The Register of Sasines is gradually being phased out, so that all Scottish land will eventually appear on the Land Register.
In both jurisdictions land registered title certificates are now issued electronically.
Advance Notices v Priority searches
In December 2014, Scotland's Land Register began to issue advance notices, adopting a similar approach to the system of priority searches used in England and Wales. Both systems involve something registered over titles before completion of a property transaction to ensure that the purchaser has an assurance that its title can be registered at the Land Register of Scotland or Land Registry without being "trumped" by a competing title.
Missives v Contract
It is common, south of the border, to refer to exchange of contracts - as the point in time when the signed contracts are exchanged between the parties by their solicitors and a legally binding contract entered into.
In Scotland this is usually dealt with by the solicitors, as agents, signing the missives (formal letters - often an offer from one and a simple acceptance from the other) on behalf of their clients. If this method is used, the clients do not actually sign the contract themselves. This is known in Scotland as missives being concluded. However some Scottish solicitors, when advising clients located south of the border, will confirm to them that missives have been exchanged - as this is terminology with which the clients are more familiar.
Leases
The law of leases is very different between the jurisdictions. Much of the Scottish law on leases is based on court decisions and common law which results in most of the lease provisions being part of the lease contract. A few are contained in statutes. In contrast, in England and Wales there are a number of statutes that govern leases and this has an impact on leasing matters - but that is a whole other topic for another day and other articles…
As you can see there are both similarities and differences between the two jurisdictions and the above is simply an example of some of the differences in terminology. If you would like any further information, please get in touch with our Real Estate team. We have more detailed briefings available.
