August 2017 – Property Factors and Who is a “homeowner”

Author: Mitchells Roberton
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The Bullet Point Update for October 2013 gave an outline of the Property Factors (Scotland) Act 2011. By way of a brief re-cap, before the 2011 Act was passed property factors in Scotland were not subject to regulation or any minimum standards of practice. In particular, disputes between property factors and homeowners could only be resolved by litigation in the courts. The 2011 Act changed that as indicated by the preamble to the Act which says:

“An Act of the Scottish Parliament to establish a register of property factors and require property factors to be registered; to make provision in relation to the resolution of disputes between homeowners and property factors; and for connected purposes.”

One of the things the Act did was to provide that “Scottish Ministers must from time to time prepare a code of conduct setting out minimum standards of practice for registered property factors.” The current Code can be found here: https://beta.gov.scot/publications/property-factors-scotland-act-2011-code-conduct-property-factors/

This Bullet Point Update is not aimed at giving an overview of either the 2011 Act or the Property Factors Code of Conduct generally but to focus on one particular aspect following a decision this month  – in fact, the first decision – of the new Upper Tribunal for Scotland. The case is referred to below as “the August decision”. That particular aspect is: “who counts as a homeowner”?

Background

  • The 2011 Act allows “homeowners” to make an application to  a tribunal (now called the First-tier Tribunal (Housing and Property Chamber)) (for short, “the First Tribunal”) to decide whether their property factor has failed to carry out their factoring duties, or failed to comply with the Property Factors Code.
  • The August decision concerns a case where “homeowners” made applications to the First Tribunal concerning their property factor but the Tribunal rejected the applications. It did so on the basis that, in terms of the 2011 Act, the applicants did not qualify as “homeowners”.
  • The Tribunal’s rejection of the applications was appealed by the “homeowners” to the new Upper Tribunal for Scotland (for short, “the Upper Tribunal”) which, in particular, now hears appeals on decisions of the First Tribunal.
  • In the August decision, the Upper Tribunal over-ruled the First Tribunal and said the applications should go ahead and be considered by the First Tribunal on the basis that the applicants did qualify as “homeowners” in terms of the 2011 and so were entitled to have their applications considered.

The August decision

  • The August decision focused on the definition of “homeowner” in the 2011 Act and its proper interpretation.
  • The Act says: “a homeowner may apply to [the First Tribunal] for determination of whether a property factor has failed (a) to carry out the property factor’s duties, (b) to ensure compliance with the property factor code of conduct …”
  • So, one thing seems clear: in order to apply to the First Tribunal you must be a “homeowner”. As often with legislation, the Act provides a definition of “homeowner”. In this case the definition is (essentially) that a “homeowner” means “an owner of [residential] land … the common parts of which are managed by a property factor …”
  • In legal terms, in order to count as an “owner” of land – residential or otherwise – you need to have your ownership of it registered in the appropriate public register kept by “Registers of Scotland”. If your ownership or “title” is not so registered then in legal-speak you do not qualify as “owner”.
  • In the August case, the applicants had sold their “land” and, it appears, were no longer registered as “owners” of it in the public registers when they applied to the First Tribunal asking it to determine their complaints against their property factors.
  • In other words, at the time they made their applications to the First Tribunal they did not count as “owners” in terms of the legal meaning of that word.  And, if not “owners” then, one might have thought, they could not be “homeowners” – because the 2011 Act defines that term by reference to being an “owner”.  On that basis (it appears), the First Tribunal rejected their applications.
  • The homeowners appealed that rejection to the Upper Tribunal. The Upper Tribunal considered the Act as a whole and what its aims and purposes were and, against that background, they interpreted the definition of “homeowner” more widely than the First Tribunal had done.
  • The Upper Tribunal decided that the applicants did qualify as “homeowners” in terms of the Act even if at the time the applications were made they no longer actually “owned” the relevant property. What mattered was the fact that at the time of the alleged failures on the part of the property factors they were “homeowners” in terms of the Act’s definitions. That was enough.

Final thought

  • The decision appears sensible. But one is left asking the question: if that was the intention of Parliament in enacting the legislation could not the Act have been worded to make the position clear?
  • After all, in other legislation (e.g. the Title Conditions etc (Scotland) Act 2003) the term “owner” is specifically defined so as to depart from the general legal meaning of that word i.e. that an “owner” of land must be “registered” as such. That then allows a particular Act to apply to someone who is either no longer  – or not yet – an “owner” of land in terms of the general legal meaning of the word “owner” (i.e. by being “registered” as such in the public registers) if that is the result that the Act in question is intended to achieve.

Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Paul Neillypdn@mitchells-roberton.co.uk

 

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