A disposition in Scots law is a formal deed transferring ownership of corporeal heritable property. It acts as the conveyancing stage as the second of three stages required in order to voluntarily transfer ownership of land in Scotland. The three stages are:
The Contractual Stage (The Missives of Sale) The Conveyancing Stage The Registration Stage
In the conveyancing stage of the transfer of ownership of land, a formal document called a disposition, is created and subscribed by the Disponer (the person granting the disposition or 'the Seller') and the Disponee (the person receiving the disposition or 'the Buyer'). Example dispositions are available to view on the Property Standardisation Group website.
Principles of transfer: why dispositions are required in Scots Law
An absolute singular (unititular) right of ownership Scots law follows the Roman law principle that the right of ownership in property (for definition of term see above) is absolute. Other legal systems such as United States jurisdictions consider ownership as a 'bundle of rights' which can be separated into different components and separated amongst different individuals.Steven, A. and Gretton, G. (2017). Property, Trusts and Succession 3rd edn., page 24. Instead in Scots law, ownership is a singular unitary right, that cannot be broken down into different components, it can only be transferred to another in whole or be encumbered through the creation of inferior real rights. The owner of a 'thing' has the right to usus, fructus, abusus - the right to use, to the fruits (enjoyment) and the right to abuse or destroy the property.Stair Memorial Encyclopaedia, Vol 18, para 5.
In contrast to historically feudal systems such as England and Wales or Scotland (Davidian Revolution - 28 November 2004), ownership is not split among individuals, such as interests held by a feudal superior. Because ownership is a single right, when it is transferred, it transfers instantaneously, with the previous Owner being deprived of all ownership in the property, at the moment of registration in the Land Register.
Principle of traditio Scots law follows the principle that traditionibus non nudis pactis dominia rerum transferuntur: ownership is transferred by delivery (or other conveyance) and not by bare contract.Stair Memorial Encyclopaedia,PROPERTY - PART I: GENERAL LAW (Volume 18), Ch. 13. TRANSFER OF OWNERSHIP, para 606. As discussed above, a contract or delict only creates binding personal obligations, rights in rem (real rights) are not capable of transfer by contract alone. Instead a conveyance (Ie: a formal transfer of the property) is required. Personal rights, rights in personam, such as those like the Missives of Sale (i.e.: a contract for the sale of corporeal heritable property) alone does not transfer the real right of ownership in itself.Stair Memorial Encyclopaedia, Vol 18, Property, Ch 13, Transfer of Ownership, para 642. Without a conveyance, i.e.: the deed of disposition, and public act (see below), real rights cannot be validly created in Scots law.
Intent and consent Where a voluntary transfer is made, the conveyance itself must be made with the intent and consent of both parties. The disponer (usually a Seller under a prior contract of sale) must have the intention to be divested of ownership and the disponee (usually a Buyer under a prior contract of sale) must have the intent to acquire the property. The intent and consent of both parties will be expressed in the disposition deed itself.
Principle of abstraction Only a conveyance, as a separate legal act, can effect the transfer agreed to by contract between the parties. Scotland has an abstract property legal system, meaning the conveyance does rely on the causa of the transfer. In Scots law the recognised causae traditionis for transfer of property are: loan for consumption (mutuum), gift excambion (i.e. an exchange) sale ex facie absolute disposition (prospectively abolished in 1970) transfer in trust, expressly or otherwise.Stair Memorial Encyclopaedia, vol. 18: Property, ch 13, para 609.
The validity of the conveyance (i.e. the transfer of property) does not depend on the validity of these causae, as Viscount StairViscount Stair is an institutional writer and as such is an authoritative source of law in Scots law. describes:"We do not follow that subtility of annulling deeds, because they are sine causa [i.e. without a cause (see above)] … and therefore narratives expressing the cause of the disposition, are never inquired into, because, though there were no cause, the disposition is good.’Stair, II, 3.14. [Brackets added]Therefore, Scotland differs from common-law jurisdictions such as England & Wales, who operate on a causal system where the cause of the transfer is capable of annulling the transfer overall. By requiring a conveyance stage as well as the formation of a contract, Scots law adopts the traditio system where the cause of the transfer may be void or voidable, but the conveyance remains legally valid. Areas of Scots law, such as the law of sale in contract law have been, what is termed by some Scots legal academics as, "anglicised",van Vliet, Lars (May 2008). "The Transfer of Moveables in Scotland and England". Edinburgh Law Review. 12 (2): 173–199. doi:10.3366/E1364980908000309. ISSN 1364-9809. as a result of UK parliament legislation that was based on English law principles but introduced into Scots law: such as the introduction of the floating charge or the sale of moveable property into Scots law. In all other cases bar the sale of corporeal moveable property, the principle of abstraction is evident in Scots law.
Labes reales or vitium reale While a conveyance may be valid irrespective of the causa traditionis, the reasons for the causa's invalidity under the law of obligations, succession, etc. may also extend to invalidate the intent to transfer as a vitium reale or labes reales (i.e. a 'real vice') in property law.T. B. Smith, 'Error and transfer of title' (1967) The journal of the Law Society of Scotland. A contract may fail for numerous reasons, e.g.: it may not be formally valid, the parties may lack capacity or some other mental defect affecting capacity generally or there may be no consensus in idem (i.e. a meeting of the minds in which the parties agree on the essential elements of the contract). However, only such defect in the contract, that are capable of being a vitium reale can serve to invalidate the transfer.Stair Memorial Encyclopaedia, vol. 18: Property, ch 13, para 600. Therefore, it is often termed that 'a good conveyance is capable of saving a bad contract' because property continues to be owned by the disponee irrespective of the failure of the causa.
Absolutely good, void and voidable transfers Accordingly, a transfer of ownership of property can therefore be (1) absolutely good, (2) void or (3) voidable.
(1) An absolutely good transfer will give the disponee (or buyer) an absolutely good title. This means that an owner with absolutely good title will be immune from challenge of his ownership.Stair Memorial Encyclopaedia, vol. 18: Property, ch 13, para 601.
(2) A void title is one where the ostensible (i.e. the apparent) owner has no legal basis for ownership. A void voluntary transfer commonly occurs where the disponer (i.e. the seller) has no ownership of the property sold or he lacks transactional capacity and has transferred the property to the disponee (i.e. the buyer). The term void transfer can be characterised as a void ab initio (i.e. void from the beginning) and is null and no effect. The effect of a transfer or other act that is void with null and no effect can be explained as if the documents of the transfer were blank pieces of paper. UKSC 41, Lady Hale at 69.
(3) A voidable transfer results in the disponee (typically a buyer or receiver of a gift, a donee) obtaining a valid title, a subsistent title, to the property but this title can be defeated by challenge in court, i.e. it can be reduced (judicially terminated by court order), by someone of a better legal claim to the property. This arises typically where there is a vice of consent.
Publicity principle A large feature of Scots property law, is the publicity principle and the legal doctrine surrounding it. The publicity principle requires that in transfers of all property, there is a need for an external (i.e.: public) act in order to create or transfer real rights (or rights in rem). In Scots law, the publicity principle has not been analysed in great detail. However, the Scottish Law Commission have noted that the reliance on the public register provides certainty and security for the parties engaging the sale of land.Discussion Paper on Sharp v Thomson (Scot Law Com DP No 114, 2001), para 2.14. The rationale for the requirement of an external act is subject to academic debate but it is broadly recognised that the publicity principles serves the purposes of (1) providing legal certainty of ownership without reliance on litigation, (2) securing an Owner's real right (or right in rem) by way of reference to a recorded public act and, (3) protects third parties who may be unaware of any private agreements an Owner may be subject to.Sharp v Thomson (Scot Law Com DP No 114, 2001).
The race to the registers Historically in Scotland, it was common for Sellers to grant multiple dispositions in one piece of land, often as an attempt to defraud multiple Buyers. The passage of the Registration Act 1617 by the estates of parliament of the Kingdom of Scotland was as an attempt to curtail this fraud by placing a registration requirement on transfers of ownership; allowing Buyers to act on reliance of the public register when they contracted. Importantly, the Real Rights Act 1693 provided that dispositions would rank in order of the date of registration'. This legal rule, still in force today, gives rise to the concept of the 'race to the registers in which the disponee (commonly, the Buyer following the conclusion of missives of sale) must record the disposition granted to him in the Land Register, thwarting all other potential third party claims to ownership. UKSC 41. The race has been characterised by the distinguished judge, Lord Rodger of Earlsferry: "a struggle in deadly earnest with the aim of destroying the other competitor's chance to obtain the real right by recording the relevant deed and infefting himself first. Those taking part in this race are no Corinthians and swear no Olympic oath of sportsmanship. If your opponent is slow off the mark, mistakes the way or stumbles, you do not chivalrously wait for him to catch up: you take full advantage of his mistakes. Nice guys finish last and don't get the real right."Burnett's Trustee v Grainger and Another UKHL 8, Lord Rodger of Earlsferry at para 141.In practice, the introduction of Advance Notices under the Land Registration (Scotland) Act 2012 has reduced the 'struggle' in the race to the register. However, it still remains valid that only registration in the Land Register is capable of transferring or creating real rights (or rights in rem).Land Registration (Scotland) Act 2012 s.50
The above three principles together create three stages of transfer:
The Causa The Conveyance The Public Act
All three steps must be fulfilled in order to validly transfer real rights in Scots law.
Prior communings rule and clauses