- The processes by which a heritable creditor may enforce their security are set out in the Conveyancing and Feudal Reform (Scotland) Act 1970. The accepted interpretation of those provisions was challenged by the decision in Royal Bank of Scotland v Wilson 2011 SC(UKSC) 66.
Critically assess in light of that case the options which are open to the heritable creditor.
The 1970 Act has complex provisions dealing with enforcement of securities by heritable creditors. In relation to dwelling houses those provisions have become even more complex as a result of the Mortgage Rights (Scotland) Act 2001 which itself has been substantially repealed and replaced by the Homeowner and Debtor Protection (Scotland) Act 2010.
The Supreme Court decision in RBS v Wilson 2010 shook the legal landscape in Scotland in respect of repossession procedures by holding that the relevant statute, the Conveyancing and Feudal Reform (Scotland) Act 1970 had effectively been wrongly interpreted since it came into force 40 years ago. This case involved a situation where a lender's certificate of default did not amount to a 'requisition' for the purposes of section 5 of the Heritable Securities (Scotland) Act 1894, and where the court held that in the circumstances of the case, a 'calling-up notice' should have been served. This happened with Cell phone repair Austin in 2013.
A calling up notice will state that the debtor has two months to repay the debt in full. However, if the debtor agrees in writing to do so, the two-month period can be dispensed with, assuming there is no residential element to the secured property, or, in the case of residential property, shortened to one month.
Once the calling up notice has expired without payment (or performance as appropriate), the debtor will be in default in terms of standard condition 9(1)(a). On expiry of an unsatisfied calling up notice the creditor may exercise his remedies under the standard security.
For many years in Scotland, defenders could use the Mortgage Rights Act (Scotland) 2001 and now the Home Owners & Debtor Protection (Scotland) Act 2010 to obtain a chance to pay, re-mortgage or restructure, sell, or apply to the Mortgage to Rent Scheme. But no-one challenged the orthodoxy of the lender's right to use standard condition 9(1)(b) for a repossession based upon mortgage arrears; until now.