DEED OF CONDITIONS
Guidance Notes
Introduction
This document is intended to be used as a template for a Deed of Conditions, which could apply to a
development such as a retail park, housing development or industrial estate. It is intended to provide
a structure that addresses the principal issues that need to be taken into account to ensure that the
Deed complies with the provisions of the Title Conditions (Scotland) Act 2003 (the "2003 Act"), such
as the need to identify real burdens and servitudes separately, identifying relevant burdens as
community burdens, providing for variation and discharge and a suitable manager burden. It is left to
the individual drafter to produce wording for the actual community burdens that are to be imposed on
the development according to circumstances.
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Narrative
Although no narrative of the circumstances of the development to which the Deed of
Conditions relates is strictly necessary, it can assist understanding of the provision if a brief
"scene-setting" description is provided. This may be no more than "in connection with the
development by us of a retail park".
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Condition 1: Definitions, Interpretation and Construction - General
All necessary definitions should be inserted in this part of the Deed according to the particular
circumstances of the Development to which the conditions will apply. Generally this will
include a definition of the Development itself, using a conveyancing description, as well as
definitions of such things as common parts and the plan.
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Condition 1: Definition of Manager
One of the definitions we have suggested in the style is that of "Manager". This expression is
used for simplicity but may be substituted by "Managing Agent" or "Management Company" if
preferred according to circumstances.
"Manager" can mean not only the person appointed in terms of the manager burden in
Condition 7, but also any manager appointed by an Owners' Association, once the manager
burden has expired. The drafting of the definition will allow you to add in reference to other
general appointment provisions you may produce elsewhere in the Deed.
4
Condition 1: Definition of Consent
Deeds of Conditions frequently contain conditions that permit something to be done with the
consent of others in the Development, or prohibit something from being done without such
consent. In the days of feudal tenure, the consent of the feudal superior was usually specified,
and in non-feudal Deeds of Conditions, the consent of the Developer is often stated, although
the Deed may provide that the consent of other proprietors in the Development, or
"successors of the Developer as proprietors of the Development" may also be required.
To cover the situation that usually arises, namely that the Developer wants to retain control
while it is developing the Development and still owns parts of the Development, but thereafter
other proprietors or adjoining proprietors are more appropriately the parties from whom
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consent should be sought, the Deed provides a definition of "Consent" which defines those
Owners whose consent would be required in the latter circumstances, but for so long as the
Developer owns parts of the Development, its consent is required. The defined term can be
incorporated in the drafting of any specific real burdens where consent in this form is required.
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Condition 2: Community Burdens
The purpose of this Condition is to identify which of the conditions in the Deed are real
burdens (to comply with the requirements of Section 4(2) of the 2003 Act). Where the real
burdens are being imposed on two or more units the burdens can be created as community
burdens. By using this expression Section 27 of the 2003 Act provides that each unit will be
both a benefited and a burdened property automatically without the need to express this in
the Deed. Not all of the burdens that are imposed in a Deed of Conditions will necessarily be
a community burden, and it will be necessary to differentiate those that are not, to ensure that
the appropriate benefited and burdened properties are correctly defined.
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Condition 2: The Community
When identifying the property to which the community burdens will apply, care must be taken
to ensure that no parts of the Development, which may be held in separate ownership, but
which do not form part of one of the Units, are inadvertently included as a burdened or a
benefited property. The Development may for example consist of a number of Units which
are conveyed to individuals, and extensive Common Parts which are retained in the
ownership of the Developer or held by a Management Company. It is not the intention for the
Common Parts either to have burdens imposed on them, or to be entitled to enforce the
burdens against the Units. In such a case, the community burdens should be imposed on the
Units in the Development rather than the whole Development.
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Condition 2.2: Date of Creation and application
Section 4(1) of the 2003 Act allows the deed creating the real burden (called the "constitutive
deed" in the 2003 Act) to provide for postponement of the coming into effect of a real burden
by reference to some fixed date or the date of registration of a specified deed. Otherwise the
conditions contained in the Deed of Conditions will be effective against all the land affected by
the Deed on registration of the Deed. The Developer may be content for that to be the case,
in which case this Condition should be removed.
However, if this Condition is included in the Deed, so that the effect of the title conditions is
postponed, then it will be necessary to ensure that a clause applying the terms of the Deed of
Conditions to particular units is included in the Dispositions by the Developer (or any
successor in title) of individual Units, and that this is done consistently to all relevant Units.
Otherwise there is a risk that some maintenance costs may be irrecoverable.
There is no particular form of words required in the Disposition to apply the provisions of the
Deed of Conditions to a Unit that is being conveyed, where Condition 2.2 has been used. It is
sufficient to insert details of the Deed of Conditions in the burdens section of the Disposition,
such as – "but always with and under the real burdens contained in the Deed of Conditions by
[
] dated [
] and registered in the Land Register for Scotland under Title Number
[
]." Note in particular that the wording in Schedule 1 of the Title Conditions Act,
required under section 6 of the Act only applies to transitional circumstances, where the Deed
of Conditions was already recorded or registered before 28 November 2004, but the
application of its terms were postponed by disapplying section 17 of the Land Registration
(Scotland) Act 1979.
It is also particularly important to ensure, if using this Condition, that the Development is fully
identified in terms of the Deed, preferably including being clearly identified on a plan, and not
simply by a mere reference to a Title Number, to avoid any risk of references to a diminishing
parent title distorting the entitlement of the proprietors in the Development to enforcement
rights in respect of the title conditions.
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Variation and discharge
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Section 33 of the 2003 Act provides a mechanism for variation or discharge of community
burdens by a majority of owners in the Development, or such proportion as the constitutive
deed specifies. If a larger percentage that a straight majority is to be required, this can be
specified in this condition, or authority can be given to the Manager within the Deed –
although it might be preferred to restrict the Manager's power to vary to certain specific
burdens only.
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Application to the Lands Tribunal
If the parties agree the clause preventing applications to the Lands Tribunal to vary the terms
of the burdens or servitudes for up to a maximum of five years can be included. This will then
have the statutory effect provided for in section 92 of the 2003 Act.
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Condition 3 - Development Management Scheme
The Development Management Scheme (DMS), introduced by Part 6 of the 2003 Act was
brought into force on 1 June 2009, through the Title Conditions (Scotland) Act 2003
(Development
Management
Scheme)
Order
2009.
http://www.opsi.gov.uk/si/si2009/uksi_20090729_en_1
The DMS consists of a set of rules to manage the shared facilities in a new development,
such as any common ground, play parks, shared car parking etc. The rules are similar to real
burdens and can be applied to land, which it is intended to develop with a number of units that
will be subject to the same provisons, in the same way as conditions in a Deed of Conditions.
The DMS provides for an owners' association to be formed to manage the shared facilities on
behalf of the Owners. Each Owner will automatically become a member of the Owners'
Association. The DMS provides that a manager will be appointed by the Owners' Association
to deal with the day to day management of the shared facilities.
The DMS rules regulate a number of administrative matters such as appointment of, and
duties of the manager; convening meetings, and procedures at such meetings, including what
will constitute a quorum and voting arrangements; instructing emergency work; and financial
matters such as fixing a budget and applying a service charge.
Functionally, these rules will operate like real burdens, and in particular, community burdens,
and specific provisions of the Title Conditions Act will apply to these rules, in the same way as
they apply to real burdens.
The Owners' Association is a body corporate and it will be able to own property in its own
name, enter in to contracts, sue and be sued in its own name without the burdens normally
associated with limited liability companies. The functions and powers of the Owners'
Association are narrowly defined in the DMS to ensure that the Owners' Association can only
manage the development for the benefit of its members and cannot go off on a frolic of its
own buying other property or starting to manufacture widgets
The DMS does not automatically apply to developments – it has to be specifically applied to
them. There is no specific style of wording required, and there appears to be no reason why
words of application cannot be incorporated within the Deed of Conditions for the
development. A definition of the DMS, by reference to the 2009 Order has been incorporated
in the Deed of Conditions.
The DMS refers to "scheme property", more usually described in Deeds of Conditions as
"Common Parts", although there may be circumstances where not all of the Common Parts
are to be treated as scheme property, in which case a separate definition of scheme property
will be required.
There is a high degree of flexibility in using the provisions of the DMS. Most of the provisions
of the DMS (other than those in Part 2) may be varied, and again any variations to the terms
of the Rules can be incorporated into the Deed of Conditions. It is also permissible for
different provision for the taking effect of the DMS to be made for different parts of the
development.
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The DMS contains provisions concerning the appointment and dismissal of a manager.
These provisions will need to be adjusted or suspended if Condition 7, which creates a
manager burden, is being used. Condition 3.3 will need to be tailored according to how the
manager is to be appointed.
Individual unit owners are probably unlikely to be familiar with the details of the actual Rules
in the DMS, and the Group has decided that it would be helpful to those who will actually be
subject to these rules, to set them out at length in the Deed. The rules as they appear in the
2009 Order have been repeated verbatim (subject only to adjustment of some of the
definitions to conform with the definitions in the main body of the Deed) in a Schedule to the
Deed of Conditions.
Any variations to these Rules can be dealt with in one of two ways. Either the terms of the
variations can be set out in Condition 3 specifying which rule is being amended and, ideally,
for clarity, cancelling whichever rule is affected and restating the varied rule in full.
Alternatively, users may prefer to incorporate the Rules into the body of the Deed of
Conditions, either as they stand, or by varying the text in the Schedule, in which case the
words in square brackets in Condition 3.1 and Condition 3.4 would not be required.
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Manager Burden
This Condition provides for a manager burden in favour of the Developer of the type identified
in Section 63 of the 2003 Act. It allows the Developer to be or to appoint a Manager, to act as
the manager of related properties, such as the Units in the Development, and means that
such Manager may not be dismissed by the owners until the expiry of the statutory 5 year
period unless the Developer ceases to own one of the related properties prior to expiry of that
period. The meaning of "related properties" for this purpose is outlined in Section 66 of the
2003 Act. In the case of sheltered housing the period is 3 years and there are special
provisions relating to right to buy housing.
As indicated in paragraph 10 above, this wording may need to be adjusted if using the DMS.
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Servitudes
All of the servitudes affecting the Development are assembled together in Condition 8 of the
Deed. Often, different types of servitude will apply to different categories of property in a
typical Development and not all servitudes will apply to all of the Units in the Development.
The template identifies different types of servitude and in each case nominates the benefited
and burdened properties (dominant and servient tenements) particular to that category of
servitude.
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Statutory Undertakers
We have incorporated in this draft the typical condition, which appears in most Deeds of
Conditions, providing for access rights to be preserved in favour of statutory undertakers.
Strictly speaking this is not a real burden, as there is no benefited property, nor is it a
community burden. However we consider that it might be useful to continue to include such a
provision, if only to highlight the position to individual purchasers who may not have realised
that such statutory rights existed, and may try to claim against the Developer.
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