The Act Part 1 – Residential Standard Securities Etc.: Creditor’s Rights on Default
4.Part 1 of the Act amends the Heritable Securities (Scotland) Act 1894 (“the 1894 Act”), the Conveyancing and Feudal Reform (Scotland) Act 1970 (“the 1970 Act”) and the Mortgage Rights (Scotland) Act 2001 (“the 2001 Act”).
5.Under section 5 of the 1894 Act a creditor may take proceedings to eject a proprietor in personal occupation of property given in security where the debtor has failed to pay the principal sum or interest due under the security.
6.The 1970 Act is the principal statutory provision dealing with standard securities in Scotland. The 1970 Act provides three ways in which a creditor may seek to repossess the property against which a debtor’s borrowing is secured: calling up a standard security under section 19; serving a notice of default under section 21; and applying to the court for a warrant to exercise remedies on default under section 24.
7.The 2001 Act modifies the 1970 Act and the 1894 Act to allow certain residents to apply to court to suspend enforcement rights of a creditor in a standard security over property used for residential purposes. They can also apply for the continuation of proceedings raised by the creditor relating to those rights. The 2001 Act also makes provision for notifying tenants and other occupiers of enforcement action by a creditor in a standard security.
8.The main effects of Part 1 of the Act are to:
	Require all repossession cases relating to residential property to call in court, except in cases of voluntary surrender (which require written confirmation that the surrender was voluntary). This ensures shrieval scrutiny on the extent to which creditors have complied with the pre-action requirements. In cases where the debtor appears or is represented it also allows sheriffs to consider wider circumstances about the debtor and those living in the property before any decree for repossession is granted (sections 1, 2 and 3).
	Set out pre-action requirements for creditors. These require creditors, before applying to repossess a residential property, to provide the debtor with information and to take reasonable steps to avoid repossessions occurring. They also require creditors to refrain from taking repossession proceedings in certain circumstances (section 4).
	Preserve and extend the right of certain residents other than the debtor (entitled residents) to make representations to a court considering a repossession application (section 5).
	Provide a right to seek recall of a decree for repossession already granted for the debtor and each entitled resident provided the person seeking recall has made no previous representations to the court (section 6). The creditor is also able to seek recall.
	Give those facing repossession and entitled residents who make applications to the court the right to be represented in court by an approved lay representative (section 7).
9.A considerable number of technical amendments to the 1894 and 1970 Acts are made to give effect to the above. Much of the 2001 Act is repealed as the relevant provisions will be incorporated in the 1894 and 1970 Acts. In addition to subordinate legislation under the Act, the Sheriff Court Rules Council will be considering making provision in court rules to facilitate the operation of the procedures that the Act introduces.