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Right of redemption. Under Section 11 of the Land Tenure Reform (Scotland) Act 1974, the granter of any
standard security has an absolute right, on giving appropriate notice, to redeem that standard security once it has
subsisted for a period of twenty years, subject only to the payment of the sums specified in that Section. These
consist essentially of the principal monies advanced by the lender, interest thereon and expenses incurred by the
lender in relation to that standard security.
Enforcement of Security
Standard Securities
A standard security can only be enforced in accordance with the procedures prescribed by the
Conveyancing and Feudal Reform (Scotland) Act 1970. These must be initiated by service on the granter of the
standard security of a specified form of notice and/or (depending upon the circumstances) by direct court
application. The heritable creditor can then have resort to four principal remedies:
Sale. The heritable credit may sell the secured property, subject to various duties to ensure that the sale
price is the best that can reasonably be obtained. The proceeds of sale will then be applied in satisfaction of the
secured obligations.
Entry into possession. The heritable creditor may enter into possession of the secured property (including
the collection of rents). If it does so, it does so in its own right and not as agent of the borrower, and so may be
personally liable for mismanagement of the property and to third parties as occupier of the property.
Leasing. The heritable creditor may grant leases of the secured property of up to seven years (or longer
with permission of court).
Foreclosure. The heritable creditor may, in the event that a sale cannot be achieved, foreclose on the
property. Under this procedure the borrower’s title to the secured property is extinguished so that the heritable
creditor becomes the owner of the property. This remedy is however rarely used in practice.
In contrast to the position in England and Wales, a heritable creditor under a standard security (or the holder
of any other fixed charge) has no power to appoint a receiver.
Rent Assignations
Since the effect of an intimated Rent Assignation is to transfer the relevant rents to the control of the
assignee, on the establishment of a default by the assignor the assignee can apply the relevant rents in
satisfaction of the secured liabilities without the necessary of further procedure.
Floating Charges
Under Scots law, the only method of enforcing a floating charge is by the appointment of a receiver over all
(but not part only) of the assets over which the charge extends. The principal function of a receiver is to recover
the debt due to the appointing chargor.
Leases
Duration. As noted under “—Certain Matters of English Law—Leases—Duration” above, commercial
leases of property in the United Kingdom are typically entered into for a fixed term, which is usually ten to
fifteen years.
Renewal rights. Neither the Landlord and Tenant Act 1954 nor the Landlord and Tenant (Covenants) Act
1995 apply in Scotland and accordingly tenants of commercial properties in Scotland do not have the benefit of
the rights of renewal described under “—Certain Matters of English Law—Leases—Renewal Rights” above.
There are no equivalent statutory rights under Scots law in relation to tenants of commercial properties, save
that, in the case of retail premises, the Tenancy of Shops (Scotland) Act 1949 entitles a tenant, whose tenancy
has been terminated by notice, to apply to the court for an extension to its lease of up to one year (and, if such
extension is granted, to apply for further renewals thereafter).
Rent Adjustments during the Term of the Lease. As in the remainder of the United Kingdom, most
commercial leases of property in Scotland provide for upwards-only rent reviews every five years.
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