13 March, 2019

Sheriff Appeal Court tackles ‘issue of considerable significance’ for property lawyers

Common or amenity areas in housing developments have been the subject of significant litigation in recent years. Such areas are usually owned or managed in one of two separate ways: the ‘common ownership’ model, in which all of the residents in the development own the area in common or the ‘owner-manager’ model, in which a company both owns and manages the area for the benefit of the residents. The residents in the owner-manager model are obliged to pay for the maintenance of the common ground by means of a real burden.

Legal difficulties have arisen as a result of the common ownership model as a result of a failure precisely to identify the area of property to be conveyed to the residents. The owner-manager model, in contrast, was considered in more favourable terms by the Lands Tribunal in Marriott v Greenbelt Group Ltd (2015, unreported). The Lands Tribunal, however, was divided on the important question of whether the owner-manager model (under which a real burden requires the residents to pay for the services of the owner-manager company) was unenforceable as a result of the prohibition in s 3(7) of the Title Conditions (Scotland) Act 2003 on the creation of a monopoly by means of a real burden. There were, accordingly, doubts as to the enforceability of the real burdens in question.

This issue has now been considered by the Sheriff Appeal Court in the case of Greenbelt Group Ltd v Walsh & Others [2019] SAC (Civ) 9. The Sheriff Appeal Court held, allowing the appeal, that the real burdens obliging the residents to pay for maintenance do not create a monopoly. The manager’s right to maintain the land does not arise from the real burdens but from its ownership of the land itself. Such ownership is ‘inherently monopolistic’. The owner-manager model and the burdens which underpin it are, accordingly, enforceable.

This decision is, as the Sheriff Appeal Court identified, one of ‘considerable significance’ for this area of the law. The Sheriff Appeal Court’s decision will provide welcome clarity to developers and residents as to the legal status of one of the major ways of managing common or amenity areas.

Giles Reid of Ampersand was junior counsel for the appellants.

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