The price is right?

In a newbuild housing development, a developer may sometimes offer incentives that result in the price actually paid by the purchaser being lower than that at which the property was originally offered for sale. Registers of Scotland (RoS) takes the view that it is the price actually paid that should be reflected in the disposition granted by the developer. If the price stated in the disposition does not reflect the actual price, this potentially affects the accuracy of the Land Register and will impact on the integrity of RoS data as a means of price comparison.

RoS is aware that the Council of Mortgage Lenders (CML) has issued guidance on the question of arrangements where a developer offers a discount or other incentive to a purchaser of a newbuild house. As part of the CML Lenders’ Handbook instructions, there is a requirement that a “Disclosure of Incentives” form is given to the lender’s solicitor. The CML guidance states that the discounted price actually paid is the amount that should be stated in the conveyancing deed and provided to RoS.

The Land Registration (Scotland) Rules 2006 prescribe the duties of the applicant and the Keeper in relation to the price or other consideration where the transfer of title to land leads to an application for registration in the Land Register. The applicant (or their solicitor) is required to state on the application form the monetary and/or non-monetary consideration, and to certify that the information provided is correct to the best of their knowledge.

The Keeper is required to enter in the title sheet “any consideration stated” for the transfer of the interest. If the consideration stated on the application form matches the amount stated in the deed, then – provided that stamp duty land tax and registration dues have been paid on the basis of that amount – the Keeper will be unaware of any discrepancy between the amount stated and the amount actually paid.

Our policy at RoS is that the price stated in the disposition and narrated on the application form should be the price actually paid by the purchaser, rather than any higher (or lower) price at which the property was initially offered for sale. This is the amount that should appear in the title sheet. The registration fee should be paid on the basis of the actual price. RoS would appreciate the co-operation of solicitors in ensuring that applications for registration accurately reflect the price paid by the purchaser.

The Law Society of Scotland comments: “Solicitors acting for newbuild purchasers should be mindful of the CML guidance and should ensure that the actual passing price is stated in the disposition. Transparency is key.”

ARTL update

As at 6 March 2012

• 56,389 transactions have taken place
• 681 solicitors’ firms are currently on the ARTL system
• 29 lenders are currently on the ARTL system
• 13 local authorities are using the system

For up-to-date information and a full list of participating practices and companies, go to www.ros.gov.uk/artl

ARTL can now process applications containing a transfer with a value of more than £1 million.

Registers of Scotland is encouraging voluntary applications for registration of titles in the Land Register: see the feature at Journal, October 2011, 22.