Land-owning maintenance model upheld by Scottish tribunal

However, the Lands Tribunal ruled in favour of the homeowners in this case, on what it described as "a relatively narrow and technical issue", based on whether the affected land was sufficiently identified in the title deeds. The owners of a house in the Menstrie Mains Housing Development had challenged their obligation to pay Greenbelt Group Limited a share of the estate maintenance costs, specified as a condition in their title.

The homeowners had challenged the provision on a wide variety of grounds, the majority of which were rejected by the tribunal. These included whether the condition was in fact 'praedial', meaning related to the land; whether it was anti-competitive; and whether it was an "unreasonable restraint of trade, repugnant with ownership and illegal".

This made it "a very helpful case, partly due to the pursuers' wide-ranging attack on aspects of the land-owning maintenance model which forced the tribunal to decide on quite a large number of points", said property law expert Ewan Alexander of Pinsent Masons, the law firm behind Out-Law.com.

"It is of comfort to see that the basic structure of the model was upheld, but the opinion again highlights the importance of precision and certainty in framing title burdens in these circumstances," he said.

Under the land-owning maintenance model, all of the open ground in a particular housing development is transferred to a management company, in this case the Greenbelt Group. 'Open ground' refers to all the unbuilt-on areas of the housing development including play parks, landscaped areas and woodlands. In this model, the owners of the houses on the development do not have rights to use the open ground included in their property titles, but are obliged to pay a share of the maintenance costs "in perpetuity".

In this case, the owners of one of the houses in the development challenged the title condition requiring them to pay a share of the maintenance costs. Their house was built as part of the second phase of a large-scale development, by which time around 70 houses had already been sold. The whole development was granted outline planning permission in March 2002 but by the time of its completion, eight subsequent planning applications later, was "somewhat different" in character to the proposals that received outline planning permission.

In their wide-ranging opinion, the tribunal judges found that the common law 'four corners' rule, which requires burdens over property to be clearly set out "within the four corners of the deed" without reference to other documents or sources, was still in existence. However, any argument on these grounds was "beside the point" in this case. The judges also rejected the owners' claim that the burden did not relate to their property, and that the management company was "obtaining a purely monetary benefit" from the condition.

The tribunal was "divided" on whether the burden created an anti-competitive monopoly, but ultimately ruled two to one that it did not. As a burden for the payment of a share of the maintenance costs relating to the open ground which had to be made to the providers of those services, it could be said to "reflect a monopoly ... but it does not create one", two of the tribunal judges said.

The owners' challenge was ultimately upheld on the grounds that the condition was in breach of the Title Conditions (Scotland) Act 2003, which require the land benefitting from a title condition to be "nominated and identified in the constitutive deed". The judges said that the wording in the title "nominates the benefited land, in the sense that it contains a general, non-geographic, description of it. But on no ordinary meaning of the word can it be said to identify the benefited land" without reference to the planning permission, which the tribunal had already established was not permitted under the four corners rule, the judges said.

However, in their closing remarks the judges reinforced that the homeowners did not succeed because of "any structural flaw" in the land-owning maintenance model, but "because the benefited land property was not adequately identified in the constitutive deed".

"The requirement for such identification has the potential to cause difficulty more widely, given developers' need for flexibility," the tribunal said. "But it is possible to exaggerate that difficulty. In many small developments the developer will, we imagine, be sufficiently confident that things will go according to plan that the amenity areas can be identified precisely from the outset."

"In larger developments, involving more uncertainty, there will be, at the very least, an indicative layout plan from the outset which could be incorporated into the constitutive deed, the text of which could be worded to the effect that the area to be maintained will not exceed that shown on the plan. That may be sufficient to solve the problem but we express no concluded view," it said.

In this case, it would be up to the management company and the homeowners on the estate to resolve the "difficulties" caused by the failure of the condition, the judges said.