This guidance covers the duty of care. Parties must take reasonable care not to make the land register inaccurate.
Section 111 of the 2012 Act introduces a statutory duty of care owed to the Keeper by a person granting a deed which is intended to be registered, a person making an application for registration, and solicitors or legal advisers acting on behalf of both. The purpose of this duty of care is to protect the Keeper from situations where applicants and/or advisers acting on their behalf have not acted with ordinary competence, and section 111(5) states:
'The Keeper is entitled to be compensated by a person in breach of the duty for any loss suffered as a consequence of that breach.'
This provision allows the Keeper to recover a loss she may suffer in paying out compensation, for example, for a breach of warranty or as a result of the realignment provisions where the loss has been caused by a failure of the granter, applicant or legal adviser to take reasonable care.
The duty is to take reasonable care to ensure that the deed to be registered, information supplied on an application form, or contained within documentation supplementary to the application itself, does not induce the Keeper inadvertently to make the register inaccurate. It is intended to ensure that all information relevant to a transaction on a title, including any concerns or problems, is disclosed at the application stage. This duty covers any issues or information that the solicitor becomes aware of after the application is submitted, and continues until the Keeper has made the registration decision. The Explanatory Notes to the 2012 Act confirm that the period of time (when the solicitor is acting for the granter or applicant) to which the duty of care relates begins when the solicitor first acts for the client until the Keeper has made the registration decision.
Breaching the duty of care
By virtue of section 111(5), the Keeper is entitled to recover any loss she may suffer as a consequence of the failure of the granter, applicant or solicitor to take reasonable care. This provision ensures that where the Keeper has paid compensation and where the payment of such compensation is directly attributable to the failure of the granter, applicant or legal adviser to meet the duty of care owed to the Keeper, there is a remedy for the Keeper in that any negligent party will become liable under section 111. The amount of this loss should be calculated on an individual case-by-case basis however the loss may include (but is not limited to):
- compensation payments made;
- legal expenses for claiming compensation;
- interest paid on compensation and legal expenses;
- District Valuer's fees;
- legal opinions; and
- litigation costs.
The following declaration appears at the end of the form as a warning that once the application form is signed and submitted this is viewed as a certification that the information in the form is correct and that reasonable care has been applied:
Warning: In submitting this application you must take reasonable care to ensure that the Keeper does not inadvertently make the register inaccurate as a result of a change made in consequence of it. If you fail to do so you may be liable to pay compensation to the Keeper for any loss suffered as a result (see section 111).
Where there is disagreement as to whether a duty of care has been breached, the Keeper should be contacted in writing setting out the reasons for disagreement. As is the case with any disagreement regarding a decision of the Keeper, if agreement cannot be reached, the Lands Tribunal have jurisdiction to consider such matters on appeal under section 103 of Act.
There are however exceptions to the duty of care and section 111(6) states that a person has no liability to compensate the Keeper for a breach of the duty of care if:
- (a) the Keeper's loss could have been avoided by the Keeper taking certain measures which it would have been reasonable for the Keeper to take, or
- (b) the Keeper's loss is too remote.
Prescription on claims for compensation under section 111(5)
Schedule 5 of the 2012 Act introduces amendments to the Prescription and Limitation (Scotland) Act 1973 by inserting a clause into paragraph 1 of schedule 1 (obligations affected by prescriptive periods of 5 years under section 6 of that Act). The amendment to the 1973 Act has the effect that any obligation to pay compensation by virtue of section 111 prescribes after a 5 year period in accordance with section 6 of the 1973 Act (i.e. without any relevant claim being made in relation to the obligation). After such a time, any obligation to pay compensation under section 111 falls.