Before we get into the detail of the latest developments, it is worthwhile recapping on where we currently are and what it means in practice:

Re-Cap

As of 5pm on Tuesday 24^th March, Registers of Scotland stopped accepting paper applications for registration and closed the "Application Record" for such matters. The Registers indicated that the on-line Application Record remained open. The difficulty that poses is that the only useful application which can currently be submitted electronically is for an Advance Notice over the whole of a registered title.

An Advance Notice has the effect of freezing the Property Register for a period of 35 days -- essentially this means that if someone else tries to submit an application in relation to a title over which the Advance Notice has been registered, then that 3^rd party will sit behind you in the registration queue.  (This is important since whichever title hits the register first will get a real right -- any subsequent application to register title would merely have a claim for breach of contract against a duplicitous seller who had tried to sell the same property to two different people.) This works in much the same way as a "priority period" in England and Wales.

So, we are currently in the position of being able to submit new applications for Advance Notices, but we cannot complete the title registration, since that would require a paper application. Although we have the comfort of knowing that the Advance Notice will protect the disposition's place in the registration queue for up to 35 days, we cannot tell whether the Property Register will be fully functioning within that period, so there are practical problems with actually completing a conveyancing deal under these circumstances.

What happened last week?

Last week, the Registers and Law Society announced a small work around for Advance Notices which were already on the Register before the paper Application Record closed on 24 March. In effect, the  protection period offered by these advance notices was extended so that it now expires 10 working days after the Application Record re-opens to allow e.g. a disposition to be registered.

This only helps a small number of deals which were on the cusp of completing. In addition, there is an added risk of seller insolvency occurring prior to the buyer's title being properly registered and the Registers' proposal of last week did nothing to address the underlying problem of the closure of the Property Register.

So what has changed this week?

Emergency legislation will be tabled for debate by the Scottish Parliament on 1 April. The proposed Bill will:

1. allow all Advance Notices to benefit from the extended protection period (10 working days after the re-opening of the Application Record), whether the Advance Notice application was made before, on or after the date of closure of the Application Record; and

2. allow the Registers to accept an electronic copy of a deed for registration purposes as though it was the original. So, in theory at least, the Application Record could remain closed for new paper applications, but titles could still be registered via an on-line application.

This second point is really what property lawyers have been wanting to see happen, although there is still a big "but".  If passed, all the legislation will do is to open the door for the Registers to find a solution -- it would remove the existing legislative block, but would not compel the Registers to accept deeds for registration electronically. The proposed legislation leaves it to the Registers to decide whether and how to accept deeds electronically, so it is now with the Registers to consider the implications of this.

If the Bill passes parliamentary scrutiny, we expect that it will go for Royal Assent by the end of this week.

Clearly there will be concerns around increased risk of fraud, so any solution that the Registers choose to implement will need to have the approval of the major mortgage lenders as well as the Scottish Law Society. However, we know that all major stakeholders have been in close discussion over the last week, so our hope is that the technical aspects of this Bill have been crafted with the Registers' input.

We appear to be moving closer to a much needed practical solution, but we aren’t quite there yet.