Scots law follows the principle that traditionibus non nudis pactis dominia rerum transferuntur: ownership is transferred by delivery (or other conveyance) and not by bare contract.
[5] Without a conveyance, i.e.: the deed of disposition, and public act (see below), real rights cannot be validly created in Scots law.
In all other cases bar the sale of corporeal moveable property, the principle of abstraction is evident in Scots law.
[13] Therefore, it is often termed that 'a good conveyance is capable of saving a bad contract' because property continues to be owned by the disponee irrespective of the failure of the causa.
However, the Scottish Law Commission have noted that the reliance on the public register provides certainty and security for the parties engaging the sale of land.
[16] The rationale for the requirement of an external act is subject to academic debate but it is broadly recognised that the publicity principles serves the purposes of (1) providing legal certainty of ownership without reliance on litigation, (2) securing an Owner's real right (or right in rem) by way of reference to a recorded public act and, (3) protects third parties who may be unaware of any private agreements an Owner may be subject to.
[18] The race has been characterised by the distinguished judge, Lord Rodger of Earlsferry: "a struggle in deadly earnest with the aim of destroying the other competitor's chance to obtain the real right by recording the relevant deed and infefting himself first.
"[19]In practice, the introduction of Advance Notices under the Land Registration (Scotland) Act 2012 has reduced the 'struggle' in the race to the register.
At common law, following Winston v Patrick,[22] the delivery of a disposition to a disponee supersedes any personal obligations in the contract, even if collateral in nature under operation of the prior communings rule.
The Contract (Scotland) Act 1997 altered this common law rule, so that the missives are no longer superseded by the disposition.
[23] However, many conveyancers still include the use of a 2-year supersession clause in the Missives of Sale to ensure that contractual obligations come to end after 2 years rather than the running the full statutory 20-year period under the Prescription and Limitation (Scotland) Act 1973.
[21] The Inner House of the Court of Session notes that a disposition: “operates as an actual alienation of the subject to the disponee; and it vests in him most of the essential attributes of ownership.
[29] Under the operation of the prior communings rule, see above, the disposition may supersede any previous contractual obligations found in the Missives of Sale.
A further exception is where the property is acquired under-value and only a fact and deed warrandice is granted under the disposition (covering (1), (2) and (3) below).
[37] The warrant also covers that the Seller's right of ownership (title) is absolutely good, and not voidable or excluded from the Keeper of the Register of Scotland's indemnity.
[37][38] Hume, the institutional writer, and source of law in Scotland, says the Seller must furnish the Buyer with evidence that the title is good.
An example of this can be commonly found in case law where the Seller contracts to transfer the entire land, that is to say a coele usuque ad centrum (from the heavens to the centre of the Earth) but the mineral rights, found in the strata of the land as a separate conventional tenement, are not owned by the Seller but by a third party but would be warranted to be transferred to the Buyer.
[40] Following Holms v Ashford Estates Ltd,[41] it is settled that a warrant that the land transferred is fit for the purpose the Buyer has informed the Seller it was to be used does not fall within this warranty.
Older legal authorities from the 16th and 17th century Kingdom of Scotland courts appear to suggest that the implied warranty does not cover leases.
However, there is academic criticism that this decision was incorrect, and remains a first instance judgment of the Outer House of the Court of Session.
[36] It was established definitively in 1835 that real conditions, such as servitudes and burdens, were covered by the absolute warranty made by the Seller.
[53] Where the court finds that a Buyer acted with negligence and inexcusabill ignorance, thereby rejecting the warranty claim; parties who acted through a solicitor may pursue a claim against the agent handling the sale for professional negligence, as a more appropriate and effective remedy where the solicitor failed to exercise reasonable care.
The fourth warranty guarantees that the Seller will take no future acts that would prejudice the Buyer's contractual right to ownership.
[54] Where land is given gratuitously (i.e.: a gift), the giftee only receives a simple warrandice covering no future prejudicial acts.
Where the holder of a warranty believes there to be a breach, it might prove impossible to trace the Seller or their predecessors following the completion of the transfer process.
[59] If the breach is that the Seller has no right of ownership to all or part of the subjects conveyed, damages are calculated by reference to the current value of the land, without regard to whether that value is greater or smaller than the original price.