Acquisition by voluntary transfer

Question 1

What is the difference between rights capacity and transactional capacity?

Answer 1

• Rights capacity involves whether a person is able to hold rights
• Transactional capacity involves whether a person has capacity to buy property

Question 2

If a person lacks transactional capacity what may be done?

Answer 2

• Another may act for them which is given by the law of persons
• E.g. parents have power to enter juridicial acts on infants behalf

Question 3

What type of consent is required for voluntary transfer and by whom?

Answer 3

• Mutual consent is needed by both parties

- No consent would mean no transfer

Question 4

In respect of consent what must the transferor and the transferee hold?

Answer 4

• Transferor must have ‘animus transferendi dominii’ - the intent to transfer ownership
• Transferee must have ‘animus acquirendi dominii’ - the intention to acquire ownership.

Question 5

Can a contract be made between persons for goods that a seller has not yet obtained?

Answer 5

YES

• This is a valid contract
• However, ownership cannot actually transfer until the goods have been identified
• where a buyer cannot physically point out which good they’d like to purchase there will be no real right

Question 6

What is the distinction between contract and conveyance?

Answer 6

• An obligation to transfer (contract) is NOT the same as transfer (conveyance), any more than an obligation to pay is a payment.

Question 7

What was decided in the case of ‘Johnstone’s Trustees v Baird [2012]?

Answer 7

• Formal agreement stated “the home shall be owned in the sole name of the first party for convenience”
• Parties agreed amongst them that the property would be owned in equal shares
• Since the property was in the ‘sole name’ of one party that meant he was the sole owner
• Impossible for the property to be owned by all UNLESS and until there was a valid disposition registered in the LR.

Question 8

Describe what happened in ‘Wheeldon’s Exr v Spence’s Exr [2014].

Answer 8

• Ms Spence signed an agreement which read “Mr Wheeldon now assumes full title to Powfoot Hall on 20/12/1993 and becomes owner of said property”
• There was NO disposition, and Ms Spence remained the owner
• Right was simply a personal one

Question 9

What is the publicity principle?

Answer 9

• Where an external act is needed to transfer property

- E.g. Register of deeds for land, delivery in moveable property

Question 10

Define “Traditionibus, non nudis pactis, dominia rerum, transferuntur.”

Answer 10

Ownership is passed not by mere agreement but by delivery

Question 11

How would instantaneous transfer be described?

Answer 11

• At no point are two parties both the owner

- unititular nature of Scots law

Question 12

What happened in the case of Sharp v Thomson?

Answer 12

• The Thomsons agreed to purchase a flat from Albyn Construction Ltd. in 1989.
• The price for the property was paid on 12 June 1989 and they were subsequently given keys to the property.
• No disposition was granted however for 14 months
• In that time Albyn held the purchase price but still had right of ownership (with obligation to transfer)
• Thomsons were in possession of the property with a right to have it transferred to them
• There was a floating charge over the flat which was granted when Albyn took out a loan from BOS, this continued to float over the property until in crystallised on the 10 August 1990
• The disposition had been granted on the 9 August 1990 to the Thomsons and register on the 21st August 1990
• Q. for the Court was whether the charge had actually attached to the property
• At first it was held to have attached by the inner and outer houses but that was revered in the House of Lords who stated Thomsons right of ownership was unencumbered by the charge.

Question 13

Describe the case of ‘Burnett’s Trustees v Grainger 2002’ and how it varied from the decision in ‘Sharp v Thomson 1995’

Answer 13

• Mr and Mrs Grainger entered in to a transaction to purchase a house from Ms Burnett
• In Nov 1990 buyers paid the purchase price and were given keys along with a disposition
• The Solicitors did not register the dispostion
• On 29 May 1991 Ms Burnett was sequestrated and this led to Ms Burnett’s trustee becoming the register owner on the 10 December
• Grainger’s solicitors tried to have the disposition registered in month later but but it was a non domino
• The Graingers lost the ‘Race to the Register’

Question 14

What is meant by the term warrandice?

Answer 14

• Warranty or guarantee of title

- Warrandice of the seller is presumed but also expressly stated

Question 15

Define “ nemo plus juris ad alium transferre potest quam ipse habaret”

Answer 15

No one can transfer a greater right than he himself has

Question 16

Which of the following would be valid or invalid?

• A Void Title
• An absolutely good title
• A voidable title

Answer 16

• Void title would be invalid
• Absolutely good title would be valid
• A voidable title would be valid

Question 17

Under what circumstances may a title be void?

Answer 17

(a) Where the granter did not have title (demo plus rule)

(b) Where the granter did have title but there was a fatal defect in the transfer process

Question 18

What may cause there to be a ‘fatal defect in transfer process’ and make title void?

Answer 18

• Force and Fear

- Lack of capacity

Question 19

If a person who purchases a property that has void title, then they sell that property on does the title change?

Answer 19

NO

A void title sold on to a third party would still be void.

Question 20

When would a voidable title occur?

Answer 20

Where someone validly acquires property, but in some way that is contrary to the rights of another - that person would have the right to avoid the title.

Question 21

What are the ground for violability (voidable title)?

Answer 21

(a) Fraud
(b) Inhibition (an order from a court that affect inhibitee’s power to grant deeds affecting title to heritable property)
(c) Gratuitos Alienation – a gift per say, cannot at times of insolvency give away assets
(d) Unfair Preference - where a person or company transfers assets or pays a debt to a creditor shortly before going into bankruptcy, that payment or transfer can be set aside on the application of the liquidator or trustee
(e) “Off-side goals” rules

Question 22

How was the “off-side goals” rule described by Lord Justice Clerk Wheatley in “Rodger (Builder) Ltd v Fawdry 1950”?

Answer 22

“The appellants assumed that their title would be safe once the goal of the Register House was reached. But in this area of law as in football, offside goas are disallowed.”

Question 23

Example (Off-side goals rule)

Liam contracts to sell his house to Gary. Liam then conveys the house to Brian. What can Gary do?

Answer 23

Remedy 1 - Gary could sue Liam for breach of contract as he has a personal right.
Remedy 2 - If Brian knew of Gary’s personal right between Gary and Liam then Gary may be able to have the disposition reduced.

Question 24

What are the conditions for the “off-side goals” rule to apply?

Answer 24

• A contracts to sell a thing to B
• A then sells that thing to C
• If C knows about the prior obligation owed to B then C’s title is voidable at the instance of B.

Question 25

When may the “off-side goals” rule not apply, even though its conditions are satisfied by all the parties?

Answer 25

Where a person is sequestrated.
If a person contracts to sell a house to another and then the seller is sequestrated. The trustee in sequestration can take ownership of the house, even where he knows of the contract between A and B.

Question 26

Explain the case of ‘Roger (Builder) Ltd v Fawdry 1950’ and the outcome.

Answer 26

• In this case owner of proper entered into missives with purchaser for sale
• Part of price paid at date of missives, rest was to be paid on date of entry
• 14 days after date of entry no payment made
• Seller gave purchasers three day warning to pay or he would rescind contract
• Upon expiry of time limit, he agreed missives with new purchaser
• Seller told second purchaser that the prior contract was no longer in force
• Disposition granted to second purchaser - which was recorded immediately
• First purchaser brough action to have disposition reduced
  HELD - granted decree craved, where intending purchaser of heritable property is aware of prior contract, it is their duty to inquire as to the nature of that contract.

Question 27

Why did the rules set out in ‘Fawdry’ not apply in the case of ‘Wallace v Simmers 1960’

Answer 27

In this case, A allowed B to use cottage (personal right). A then sold cottage to C

• “off-side goals” rule did not apply because B’s personal right was an ordinary personal right
• In Fawdry it was a personal right capable of being made a real right.

Question 28

What is meant by the term accretion?

Answer 28

Accretion is where a grant from a non-owner to another can be retrospectively validated if non-owner subsequently gains title.

Question 29

What would happen in this scenario;

A holds void title. A transfers property to B. At a later date A acquires title from the true owner Z.

Answer 29

ACCRETION

Title will automatically pass to B without a further deed between A and B.

Question 30

How would one acquire ownership of heritable property?

Answer 30

(a) Contract (missives)
(b) Settlement (delivery of disposition)
(c) Registration (of disposition)

Question 31

What is the role of the seller and the purchaser in settlement?

Answer 31

(a) Seller(granter) delivers disposition and gives vacant possession
(b) Purchaser (or grantee) pay the purchase price (if any)

Question 32

What happens after registration of a disposition?

Answer 32

On registration, the purchaser will acquire a real right

Question 33

Describe ‘simple warrandice’.

Answer 33

• Implied in gratuitous deeds

- Granter will not grant any subsequent deeds which could prejudice the transfer

Question 34

Example;

Jane owns a flat and, due to love for her boyfriend Liam, dispones it to him. He DOES NOT register the disposition and following an argument she grants a disposition to her new boyfriend Steven, which he then registers.
Q.(a) What type of warrandice does Liam have?
(b) Who is the owner?
(c) Does Liam have a right to sue?

Answer 34

(a) Liam would have ‘simple warrandice’ as the flat transferred to him was done so gratuitously by Jane.
(b) The owner of the flat would be Steven as he has won the “race to register’
(c) Liam would have a right to sue as Jane has breached her warrandice to him

Question 35

What is ‘Fact and Deed warrandice’?

Answer 35

• Where granter guarantees against past and future acts by the granter which prejudice the transfer.

Question 36

What is ‘absolute warrandice’?

Answer 36

• regulated by the Titles to Land Consolidation (Scotland) Act 1868, s8
• the highest level of warrandice

Question 37

What did the case of ‘Welsh v Russell (1984)’ in relation to absolute warrandice establish?

Answer 37

That the remedy for breach of warrandice in the disposition was damages.

Question 38

Absolute Warrandice is a guarantee of what?

Answer 38

(a) the grantee will acquire the real right being granted
(b) the title obtained by the grantee will be unencumbered by;
- subordinate real rights (eg standard security)
- title conditions (real burdens and servitudes) - breach only if unknown to the grantee and is unduly onerous (ie of an unusual type and causes a material decrease in value of the property).

Question 39

What did the case of ‘Lothian & Border Farmers Ltd v McCutcheon 1952’ seem to establish?

Answer 39

A possible special position for leases.

• Case established that the existence of a lease does not mean breach of warrandice
• Logic being that a lease in existence does not cause diminution in value of property

Question 40

What issue arised from ‘Lothian & Border Farmers Ltd v McCutcheon 1952’?

Answer 40

That in practice the buyer expects vacant possession and both the missive and the disposition will have a guarantee of that.

Question 41

What is the gap period?

Answer 41

• Gap exists between settlement and registration

- grantee is at risk - price paid but no real right obtained

Question 42

What protection is available to the grantee during the gap period?

Answer 42

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