Rectification, realignment and indemnity in Scottish and Swiss land registration law

The thesis is the first comparison of the land registration systems of Scotland and Switzerland. Although the history here differs significantly (national rules have existed in Scotland since 1617, in Switzerland since 1912), there are nowadays an increasing number of similarities. Switzerland has followed the German “Grundbuch” model of registration of title since 1912. Scotland has moved closer to that system in time. First, the Land Registration (Scotland) Act 1979 introduced a system of registration of title to replace the system of registration of deeds first introduced in 1617, but English law heavily influenced this. Secondly, the Land Registration etc (Scotland) Act 2012 moved the system closer to the German model. Unlike under the English system, registration of an invalid deed does not cure the invalidity (“immediate indefeasibility) but a third party in good faith relying on the incorrect register entry, subject to certain conditions being satisfied, will become owner (“deferred indefeasibility”). Due to the word limit, the thesis focuses principally on three important issues. The first is rectification, the process for correcting mistakes in the register. The second is realignment, whereby what appears to be the case when reading the register becomes legal reality when the good faith parties register certain deeds in their favour. The third is indemnity, the rules under which the register will pay financial compensation to those who suffer financial loss because of it. For example, the former owner of land is usually compensated where a good faith acquirer acquires it because of realignment. In relation to rectification, the officials responsible for the land registers in both countries are not judges. They have only limited possibilities to correct wrong register content. The Scottish concept of the referral to the Lands Tribunal is notable in terms of giving the Keeper of the Land Register a wider scope of action. In realignment, Scotland is unique internationally in imposing one year of possession as a condition for an acquirer in good faith to become owner. The thesis will assess whether this extra requirement could improve Swiss law. Finally, on indemnity, the Scottish concept of the Keeper’s warranty is unknown in Switzerland. While at first sight this seems to evidence a more generous compensation system, it will be shown that the position in the two countries is in fact closer. COMPARISON ON RECTIFICATION: The comparison shows that the approach taken in Scotland and Switzerland is quite similar due to the limited power of review of the Keeper of the Land Register. The Scottish rule, that the Keeper can only rectify ‘manifest inaccuracies’ of her own volition (‘manifest’ both in terms of the error itself and in terms of the process due) is comparable to the Swiss rule that the administrator may only rectify if there is a ‘clearly supervening inaccuracy’. Examples are entries for rights that are limited in time and have lost their legal significance as they have expired or if there is a clerical error caused by the administrator himself, like a misspelled name. Before the electronic land register was introduced, the administrator was allowed also to rectify serious errors, provided that no third party had noticed these yet. With the introduction of direct access to electronic land registration data to lawyers, public notaries, banks etc., wrong entries can be noticed ‘at once’, with the consequence that the administrator has to ask the parties for their permission to rectify. COMPARISON ON REALIGNMENT: In Switzerland and Germany there is no requirement for a transferor to a good faith acquirer to be in possession of the land in order for the acquirer to become owner, as contrasted with s 86 of the Land Registration etc (Scotland) Act 2012. The reliance on the inaccurate land register entry is sufficient. According to German and Swiss legal thinking, possession is a suitable means of publicity for moveable property, but not for land, since possession can have many reasons (ownership, rent, neighbour looking after the house during an absence of the owner, squatters etc.). The lack of possession requirement in the Swiss system is more acquirer friendly, because it makes it easier for him to acquire title. The Scottish solution, however, can be praised for appropriately balancing the interests of the true owner with those of the acquirer. It seems very reasonable to protect the real owner, because an ‘easy come easy go’ approach, which only focuses on the integrity of transactions can go against the same acquirer later. COMPARISON ON INDEMNITY: While there is only one provision in the Swiss Civil Code that deals with state compensation in land registration law, the 2012 Act has several discrete provisions. Nevertheless, as judgements of the Federal Swiss Supreme Court show, the single provision is usually interpreted generously in a wide sense. Both in Scotland and Switzerland the registration of a voidable deed will not result in a compensation claim. The Scottish position seems to be more generous with regard to transactional errors involving void deeds, but this is tempered by the provisions imposing duties on applicants and their solicitors. The concept of shared responsibility between the land register administrator and lawyers is also known in Switzerland, where a notary public is responsible for checking the identity of the parties, their capacity to act and their agreement to transfer. The administrator may rely on these checks. In the case of a forgery, the Scottish position is in principle to award compensation, if the Keeper (by mistake) warrants the title as being good. The question has not been decided yet by the Swiss Federal Supreme Court, but there are good reasons to justify compensation, since it is the administrator’s duty to check the authenticity of the deed. The Swiss state liability is a strict one, which means, that the State must compensate losses although the administrator was not personally at fault, eg if he was not able to detect a forgery that looks genuine