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Modern Title and Condition Deeds in Scotland and their Effectiveness in Securing Common Repairs - Research Findings

DescriptionExamines whether modern Title and Condition Deeds in Scotland deal better than older Deeds with the management of repairs and maintenance
ISBN0-7559-3519-5
Official Print Publication Date
Website Publication DateMarch 13, 2003

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    No.160/2003
    Research Findings
    Development Department Research Programme


    Modern Title and Condition Deeds in Scotland and their Effectiveness in Securing Common Repairs

    This document is also available in pdf format (104k)

    This report was commissioned to inform the work of the Housing Improvement Task Force. Deeds of Conditions for older tenements are known to be problematical and to frustrate the process of achieving common repairs. It has generally been thought that title deeds for properties built more recently, in the last 20 years, are more likely to deal adequately with the management of repairs and maintenance. The study sought evidence to support or negate this view.

    Main Findings
    • There are some 15 provisions which should be included in Deeds to constitute best practice. However, 78% of Deeds examined contained less than half of these best practice elements. Most recent Deeds are more likely to contain best practice than the older Deeds examined.
    • A large majority of Modern Deeds ensure that basic management tasks, such as simple majority decision making on repairs and management tasks; equal division of repairs costs; the use of a property manager; provisions for the property manager to sue non-contributing owners and making basic provisions for arranging meetings of owners are completed with a minimum of difficulty from unco-operative owners. On the other hand, few deeds make any provision for dealing with improvements or problematical situations such as making decisions binding on incoming owners in situations where the turnover of owners can be high.
    • Substantial majorities of the Deeds examined contained the majority of provisions in the proposed Tenement Management Scheme contained in the proposed Tenements (Scotland) Bill.
    • A "list and method" style of writing was found to be most flexible in allowing new common facilities, e.g. communal aerials, to be included. Repair costs were generally shared equally amongst owners.
    • Whilst Deeds tended to set out how meetings of owners should be arranged, few Deeds made specific provisions for an owners association.
    • The survey suggests that owners are generally not bothered about the terms of their Deeds, either at the time of purchase or subsequently, However, practical property management arrangements, such as cleaning and maintenance, along with the lesser need to have to deal with repairs, were an important factor in their decision to buy a new flat.
    • Compared with the only other survey of flat owners that asked these questions, owners of more modern blocks were more willing to buy their way out of property management and maintenance problems, prepared to spend more on their property management bill and purchasing higher levels of service such as grounds maintenance. Apathy amongst co-owners was one of the main sources of dissatisfaction amongst the owners interviewed.
    Analysis of Deeds

    Deeds of Condition are owners' first point of information about their exact responsibilities for property maintenance and the parts of the building that are subject to collective responsibilities. In setting out key definitions, 59% of Deeds used the list and method technique of defining common areas; 38% used a list alone. 23% defined scheme costs but only a very small number defined common repairs and management tasks. 88% of Deeds allowed for management and repair decisions to be made by a simple majority of those present at a meeting. However only 22% of Deeds made any provision for decision making on improvements. A small minority of deeds required unanimous decisions which can be difficult to achieve

    Repair costs were shared equally between owners in 86% of Deeds. Where individuals would not pay their share, 81% of Deeds allowed a property manager to take a defaulting owner to court on behalf of other owners. If this were to prove unsuccessful in obtaining payment, in 57% of cases these costs would be shared out amongst other owners. In less than a quarter of cases could interest be added to the outstanding debt. No deeds provided for mediation between disputing owners but about half provided for arbitration.

    Appointment of a property manager was specified in 88% of cases with exceptions being found in a few properties in Edinburgh and Stirling, where there is less of a history of using factors. The establishment of an owners association was mandatory in 22% of Deeds. Delegation of decision making over repairs to the factor was allowed in almost 80% of cases but sums of money were often not mentioned - expert legal opinion was that this type of clause was currently unenforceable.

    The role of the Superior will be generally abolished with the passing of the Title Conditions (Scotland) Bill but 97% of the Deeds allowed the Superior (often the developer) to enforce the terms of the Deeds and only 50% allowed the owners / proprietors to enforce the deeds themselves.

    Best practice

    Following discussion with property managers and examination of the Deeds, a list of best practice elements was defined. The table shows how many Deeds included these particular aspects of best practice.

    The Development Management Scheme (DMS), contained in the draft Title Conditions Bill, accorded more closely to best practice than the Tenement Management Scheme contained in the Tenements Bill. The extent of delegation to the property manager contained in the DMS may have been exactly what many owners wanted. The DMS however relied on the use of an incorporated owners association, expensive to run for a small development and beyond the Scottish Parliament's role to introduce. A statutory provision for a DMS is to be incorporated in the Bill, the contents to be determined by Ministerial Order at a future date.

    Total % of deeds mentioning

    Decision Making on Repairs (simple majority)

    88%

    Non-Contributing owners - Manager can take court action

    81%

    Finance: Float

    59%

    Non-Contributing owners - joint and several liability amongst other owners

    57%

    Block (Common) Insurance

    55%

    Mediation) Dispute Resolution (Arbitration or

    55%

    Other Owners can Enforce Deeds

    50%

    Non-Contributing owners - Accrual of outstanding interest

    22%

    Owners Association Provision

    22%

    Decision Making on Improvements (special majority)

    22%

    Finance: Sinking Fund

    12%

    Annual advances (alternative to floats)

    12%

    Emergency Works Procurement

    9%

    Finance: Contingency Fund

    2%

    Decision Making Binding on other owners

    2%

    Decisions binding on successors

    2%

    Owners Assoc. to be Notified of ownership Changes

    2%

    TOTAL DEEDS

    58

    Owners views

    The Deeds are dense documents, filled with technical language and complex structure. They are not easy for the layman to approach and this limits their usefulness to owners. The research sought to interview owners who were most closely involved with the management of the property. Levels of knowledge of the Deeds were therefore perhaps higher than might be expected otherwise but less than 40% said the Deeds were easy to understand. The Deeds were not an important factor in many owners decisions to purchase though practical property management arrangements, the appointment of a property manager and the perceived lesser need for repairs inherent in newer properties were important to owners.

    Those owners who were involved with owners associations said that the problem of owner apathy was one of the biggest with which they had to contend. Owners' high spend in "factors" bills reflected the purchase of additional services such as cleaning and grounds maintenance. They were willing to spend more on their properties; however many of the owners contacted were retired and must obviously be living on limited incomes.

    About two thirds of developments had owners associations. Where they were present, owners associations tended to be effective. Owners were more satisfied with their buildings overall, more prepared to spend on their properties, were slightly more aware of the various property management tools and much more satisfied with communications and advice. The results suggest that owners associations are a good thing and should be supported and that, in particular, a model constitution should be devised and promoted. One owners association was able to send us a very formal constitution with substantial provisions, however another told us they were using a constitution prepared by the Tenant Participation Advisory Service for a completely different purpose.

    Developers practice in drawing up Deeds

    Developers use solicitors to draw up Deeds, in half of cases assisted by property managers. A template was generally used, amended for the particulars of each development. Close appraisal by a legal expert however showed that the practice of word processing amendments leads to inconsistencies within the Deeds.

    Good Deeds are important to developers in maintaining the look of the development both as their shop window and in the interests of their purchasers. Many developers have a shortlist of property managers from whom they will make the first appointment for any development. Some take a proactive approach to including owners' comments in developing future deeds.

    Developers knowledge of the Title Conditions Bill was low _ despite the imminence of new legislation, many developers still wrote themselves into the Deeds as Superiors with specific rights to enforce the terms of the Deeds.

    Conclusions

    The analysis of the Deeds against good practice shows that Deeds of Conditions are getting better and more comprehensive over time. If developers are informed of best practice and seek feedback from owners then continued improvement seems likely.

    Lack of ability to enforce parts of the Deeds was found to be a problem. The proposed Title Conditions legislation and the introduction of the Tenements Bill will remove many of these problems, whether through general or specific provisions, but the question of enforceability will probably remain one which can only be answered by an expert on the subject.

    The Deeds even for larger blocks do not match up in a large number of respects to the property management provisions of DMS. Considering this, and the drafting issues mentioned above, future problems may still therefore be anticipated. There must therefore be opportunities for owners in these developments to be able to update their Deeds in the future. The current approach, contained in the Title Conditions Bill, for provisions to apply to properties of all ages equally, should be maintained in future legislation e.g. the Tenements Bill.

    Only a small proportion of Deeds (12%) made provision for a sinking fund though legal opinion was that these funds could be withdrawn by the owner on sale of the property. Logically, sinking fund contributions would be set with reference to a repair condition survey, however counsel indicates that this way of setting out sums would not be enforceable. The Title Conditions Bill will remedy many of these problems of enforceability though it is not clear whether the ability to refer to external documentation in allocating shares of repair costs can be said to include sinking fund contributions.

    Some commentators call for Deeds to be standardised. This could lead to some inflexibility and it is likely that enough amendments would need to be made to customise a standard Deed that drafting could still introduce inconsistencies. Good practice can be promoted through the use of model provisions and a recommended written structure.

    Methodology

    The research reviewed 58 Deeds of Conditions covering a range of developments built over the past 20 years, in Edinburgh, Glasgow and Stirling. These areas were chosen to reflect different property management traditions. A number of Deeds were referred to an advocate to establish if certain provisions were enforceable. Owners and property managers were also contacted to see if better Title Deeds and Deeds of Conditions led to better property management and more satisfied owners. Developers were interviewed to establish their practice in drawing up Deeds of Conditions.

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