Insights

North of the border

September 2015

North of the border

As the Scottish legal landscape continues to evolve, Denise Loney, Head of Litigation Services, Optima Legal Scotland, summarises the impact of recent changes on secured lenders in Scotland. 

Scottish Court Reform

The Scottish courts continue to experience delays, due in large part to the recent closure of many of its Sherrif Courts. These delays have a particular impact on localised consumer actions and as such have the potential to significantly disrupt lenders processes in recovery and possession proceedings. Those remaining Courts are inevitably struggling to manage their additional workloads, with many hearings listed many months in advance. Court users also report higher than normal last minute cancellations due to lack of available resources on the day.

Whilst the introduction of the “Summary Sheriff” (a more junior Sherriff allocated to lower value and complexity issues) expected early next year may theoretically ease these resource issues, the delays currently faced by secured lenders could in fact be further compounded when its exclusive jurisdiction is extended from £5000 to £100,000.

The Homeowner Support Fund 

A number of recent changes have been made to the fund, designed to support customers in financial difficulty, which will impact customers and secured lenders, most notably: 

1.A pilot scheme will be running until March 2016 to allow customers whose mortgage has reached its full term to apply for support subject to meeting certain conditions.

2.The criteria for the Mortgage to Shared Equity scheme (part of the fund) has been widened, allowing eligible customers to sell up to 80% of the equity in the property rather than the previous 75%.

3.The method of calculating the open market value of a customer’s property have been changed in an effort to achieve more transparency, and should result in lenders receiving the full market value share of the property under the fund.

The Legal Writings (Counterparts and Delivery) (Scotland) Act 2015

From 1 July 2015, Scotland has been in line with the rest of the UK in its ability to validly execute documents in counterpart. This can be done in a number of ways as set out in the Act itself. The Act also enables the delivery of legal documents by either fax or email. This is likely to be particularly helpful for property solicitors trying to conclude missives quickly and should allow transactions to progress more smoothly.

 

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