They say the world is getting smaller – physically and with great speeds of travel and communication.  At the same time there is a convergence of laws amongst countries and states especially in Europe where the influence of the European Union is increasing and growing in diverse areas of the lives of its citizens.  But at the same time individual countries and states retain their own distinctive laws and procedures, with which a failure to comply can lead to unintended consequences.

The law of Scotland is a case in point.  It can be said that Scotland was the first country to establish a system of registration of title to real property with registers being maintained in Edinburgh Castle from the thirteenth century whereby the evidence and quality of a right to real property could be viewed and demonstrated.  Consequently registration of a title was required to vest ownership.  However, from as early as the sixteenth century, a principle has been developed in Scots law to the effect that in given circumstances a registered title can be challenged, notwithstanding its registration.  That principle is generally known as the "off-side goals rule".

In football, a goal is scored when the ball passes completely over the goal line between the goal posts and under the crossbar with none of the rules having been violated but when the goal has been scored from an "off-side" position notwithstanding the physical movement of the ball into the goal area, the goal is dis-allowed.  In terms familiar to lawyers, the goal is void. 

The same can apply to the registration of the title – the title has been registered (equivalent to the ball entering the goal area) but due to other circumstances the title is challengeable by a third party.  The football comparison is not entirely correct in that the goal scored from the off-side position is void whereas the challengeable registered title is voidable.

A purchaser of real property for value in Scotland acting in good faith is not affected by any personal obligations of the seller to third parties.  Accordingly if the seller (X) had also contracted to sell the same property to a third party (Z), on completion of the registration of the purchaser's title to the property the purchaser would be vested in the property free of any rights of Z (who may have rights in damages against X).  However if the purchaser knew of the contract between X and Z, the purchaser would be deemed to be acting in bad faith and its registered title to the property could be challenged by Z.  The off-side goals rule would apply.


 

Roddy MacLennan

Partner at MacRoberts LLP

Roddy.maclennan@macroberts.com

0131 229 5046