Head 14: Involuntary Transfer Flashcards
What is derivative acquisition?
Derivative acquisition requires the consent of both transferor and transferee. Transferor A must intend to transfer ownership to B; and transferee B must intend to receive ownership from A. So if A does not intend a transfer to take place, there can be no transfer, for an owner is not to be deprived of his property without his consent.
What is the exception to the rule of consent in derivation acquisition?
For in certain limited circumstances the law dispenses with the consent of the transferor (although not of the transferee). Transfer without the consent of the transferor is known as involuntary transfer. It is still derivative, not original, acquisition. A’s right of ownership passes to B, albeit without A’s consent. The transfer is subject to the nemo plus rule.
A’s right of ownership passes to B (whereas in original acquisition A’s right of ownership is extinguished and a new title is created in B).
What are the principal cases of involuntary transfer?
(1) compulsory purchase
(2) sale by a secured creditor
(3) diligence
(4) sequestration
(5) death.
What is the necessary when the powers of compulsory acquisition of land are exercised by a number of public bodies, for example local authorities and government departments (Scottish Government)?
Where these powers are exercised, land can be acquired without the consent of the existing owner, but compensation must be paid. This is necessary as a matter of fairness and not least to conform to Article 1 of Protocol 1 to the ECHR.
A typical case of compulsory purchase is the acquisition of land for the construction of roads.
What happens where agreement cannot be reached on the appropriate figure for compensation?
Where agreement cannot be reached it is determined by the Lands Tribunal. See Land Compensation (Scotland) Act 1973 s 8.
What are the two stages of compulsory purchase?
First there is the service of a compulsory purchase order (CPO).
And secondly there is the actual transfer of ownership, which may be effected either by a schedule conveyance or by a general vesting declaration (GVD).
What is a CPO?
Compulsory purchase is instigated by the preparation of a CPO in the prescribed form. The procedure is contained in sch 1 of the Acquisition of Land (Authorisation Procedure) (Scotland) Act 1947 (as amended). Once prepared the CPO is served on the parties affected by the proposals, and also publicised through newspaper advertisements. There is a period for objections (which must not be shorter than 21 days), after which the CPO may be confirmed by the “confirming authority” (usually the Scottish Ministers or a Secretary of State as appropriate). If objections are made the confirming authority must either allow the objector a hearing or hold a public local inquiry. Assuming the CPO is ultimately confirmed the fact of confirmation is intimated to the affected parties, and the CPO registered in the Sasine or Land Register.
Once a CPO has been confirmed the conveyancing can proceed. What are the two ways of doing this? When are they used?
Once a CPO has been confirmed the conveyancing can proceed. There are two ways of going about it. Either the transferor can be asked to execute a special form of disposition, known as a schedule conveyance, or the acquiring authority can proceed without the transferor and execute a general vesting declaration (GVD) on its own. Both methods are widely used.
The choice depends partly on whether the transferor is willing to play ball. (If he is not, a GVD must be used). A single GVD can be used for more than one property and so is useful if a number of different properties are to be acquired. A schedule conveyance is, however, rather quicker than a GVD.
How are Schedule conveyances regulated?
Schedule conveyances are regulated by the Lands Clauses Consolidation (Scotland) Act 1845. There is a statutory form of disposition set out in a schedule to the Act (hence the name “schedule” conveyance) but the form is rather peculiar - eg several standard clauses are omitted - and, like much of the rest of the 1845 Act, it displays a tenuous grasp of Scots property law.
The transfer process begins with the preparation of a statutory notice to treat which, on service on the transferor, operates as a binding contract of sale. Thereafter things proceed much like in an ordinary transfer of land. So the transferor executes and delivers the conveyance, and on registration in the Sasine or Land Register ownership passes to the acquiring authority.
What is a General vesting declaration (GVD)?
Strictly, a transfer by schedule conveyance is not properly classified as “involuntary”, because the transferor does actually consent to the transfer by executing the disposition (albeit under the stimulus of the CPO). A GVD is different. Here the transferor does nothing. A GVD is drawn up in the prescribed form and executed by the acquiring authority. The governing legislation is sch 15 of the Town and Country Planning (Scotland) Act 1997. On registration of the GVD in the Register of Sasines or Land Register ownership is transferred to the acquiring authority.
What does a power of sale mean?
Most rights in security confer on the creditor a power of sale. This means that if the debtor defaults on the loan the creditor can sell the security subjects and recover the loan out of the proceeds. (The balance left, after deduction of expenses, then goes to the debtor).
The important point for present purposes is that on a sale by a secured creditor the transfer following thereon is involuntary, which is to say, that there is no role for the transferor (the defaulting debtor). So although the debtor owns the property and the creditor does not, the act of transfer is effected by the creditor and not by the debtor. One way of looking at this is to say that a creditor exercising a power of sale acts as a kind of compulsory agent for the debtor.
How is the transfer in a power of sale carried out?
The transfer itself is carried out in the usual way for the type of property in question. Thus where the secured property is land the creditor executes a disposition, where it is incorporeal property he executes an assignation, and where the property is corporeal moveable the sale is governed by the Sale of Goods Act 1979.
What is diligence?
Diligence is the process by which a creditor (typically an unsecured creditor) attaches the property of his debtor as a means of enforcing payment of an unpaid debt. Diligences are sometimes divided into seize diligences and freeze diligences. In a seize diligence the creditor “seizes” property belonging to the debtor; in a “freeze” diligence he prevents the debtor disposing of the property.
What are seize diligences? What is their effect?
The main examples are attachment, adjudication and arrestment and furthcoming. Attachment seizes corporeal moveables. Adjudication seizes land. Arrestment and furthcoming seize moveable property (both corporeal and incorporeal) of the debtor which is in the hands of a third party (eg a bank account). All three require a court action. If and when the relevant part of the Bankruptcy and Diligence etc (Scotland) Act 2007 comes fully into force, adjudication will be replaced by land attachment.
The effect of seize diligences has not been the subject of proper judicial analysis, but it seems likely that the creditor acquires, not ownership, but a right in security over the property seized. He is then able to sell or realise the property to recover his debt in much the same way as any other secured creditor. Hence, for reasons already given, this is another example of involuntary transfer.
When is a person sequestrated?
When an individual (a natural person) becomes insolvent he may be sequestrated. This means that a trustee in sequestration is appointed by the court to realise the assets and distribute the proceeds in rateably amongst the various creditors who are owed money.
