R C I – What Does It Mean For You?
2 years ago
Associate, Judith Vandecasteele explains the new Registers of Persons Holding a Controlled Interest in Land and what it means for you, your trust or your organisation.
Register of Persons Holding a Controlled Interest in Land
On 1st April 2022, Registers of Scotland will open a new register, the snappily titled “Register of Persons Holding a Controlled Interest in Land”, or RCI for short. The purpose of the Register is to increase and encourage transparency as to who controls land in Scotland. Until the RCI goes live, we don’t know exactly how it will look, but here is what we do know.
Duties to Report
The RCI will place reporting duties on two categories of people, “Recorded Persons” and “Associates.
According to the legislation, “Recorded Persons” are those who are recorded or registered in the titles as being the owners of the land or property. Recorded Persons are easily searchable on Scotland’s Land Registers for a modest fee, meaning that anyone can ask Registers of Scotland for information as to who owns a particular area of land. This can be useful in establishing the legal owners to organise common repairs, or request formal rights of access, for example.
The difficulty arises where the person or persons named on the title are not actually those who make decisions or are actually in control of the land. To use a company as an example, the title deeds may state that land is owned by XYZ Limited, but a search of Companies House discloses that the majority shareholder of XYZ Limited is actually John Smith. Any decisions which are taken in relation to that land will be made by John Smith, and not by the company, which is under his control.
This is less of a concern for UK Companies and Limited Liability Partnerships (“LLPs”), as they are already under a duty of transparency, which requires that they notify Companies House of any person or persons in “significant control” of the entity.
The same is not, however, the case with partnerships or trusts, or community groups or bodies who hold title. It is not uncommon for the title deeds to name partners or trustees who may have long-since retired or died, or who have now been joined by additional new partners or trustees, who are not named in the Land Register.
The intention behind the new RCI therefore is to create a separate register of persons who are in control of land, but who are not named on the title deeds. The legislation refers to “Associates”, who are in control of or have influence and can make decisions relating to the land, even though they are not named in the titles.
Who are Associates?
Below are some examples of types of owners, and who may be considered to be Associates for the purposes of the legislation:
|Type of Owner||Possible Associates|
|Individuals, eg Mr and Mrs Smith||Anyone who has a contractual or other arrangement with the owners which gives them influence or control over significant decisions in relation to the land – this is likely to be relatively rare in practice, and would not include mortgage lenders, tenants, etc. This also would generally not include couples where title is held in the name of one party only, unless specific circumstances apply.|
|Firm or Partnership||Any current partners who are not named on the title deeds, or anyone who has the ability to appoint or remove partners, or influence decision-making|
|Trusts||Any current trustees who are not named on the title deeds, or anyone who has the right to remove or appoint trustees, direct investments or distribution of assets, revoke the trust or amend the trust deed, or who can influence decision-making|
|Unincorporated Associations such as charities, community groups, sports clubs, etc||Anyone who is responsible for the general control and management of the administration of the body who is not named on the title deeds, namely the office bearers, such as the chair, treasurer, etc. It does not seem to be the intention of the legislation that ordinary committee members would be considered as “Associates”, although the structure of each organisation would need to be considered in each case to be sure.|
Points to Consider
So what does all this mean? In short, anyone who is a Recorded Person should consider whether there are any corresponding Associates who should be included on the RCI.
Recorded Persons who have identified possible Associates should inform these Associates of their obligations under the legislation, and highlight the timescales for compliance and the consequences of failing to do so. They should also take reasonable steps to verify the accuracy of all information provided by an Associate, and make sure that the Associate is aware of the need to inform the Recorded Person of any changes in address etc.
Possible Associates should also consider whether they would fall into any of the above categories, and so would need to get in touch with any Recorded Persons to ensure that the correct notification is made.
Associate information required
The Register is not yet open, however the guidance indicates that each Associate will have to provide details of the date on which they became an Associate, their full name, contact address, date of birth (although this will not be made public on the register!) and any previous Unique Reference Number allocated to them in the RCI.
The legislation recognises that in some cases there may be legitimate reasons why an Associate would not wish their details to be made public in this way, and so there is a possibility for Associates to make what is referred to as a “security declaration”. There are preconditions which must be met, and evidence must be provided to the Keeper of the Land Register to enable them to assess whether an Associate would be at risk of violence, abuse, threat of violence or abuse or intimidation if their details were published. If the Keeper is satisfied that this would be the case, a note will be added to the RCI to state that a security declaration has been made, and the information will be kept confidential.
The Register goes live on 1st April 2022, and a grace period of one year is being given to allow Recorded Persons and Associates to consider whether any submissions require to be made. From 1st April 2023, failure to provide information within 60 days of any change is an offence, and can be punishable by a fine of up to £5,000. It is important, therefore, that Recorded Persons begin assessing their circumstances now, so that any necessary disclosures can be made in good time.
Until the Register itself is open, it is not yet clear of the form of which these submissions will take, although it is anticipated that the information can be provided to Registers of Scotland by the affected parties directly, without the need for a solicitor.
We appreciate, however, that some clients may be unsure about whether the legislation applies to them, or who needs to submit information to the RCI, and so we are happy to assist clients in considering whether any such submissions are required, and undertaking these on their behalf where necessary.
We will issue further guidance on this point once the Register is up and running, but if you have any queries, please do not hesitate to contact one of our solicitors for further information.