Legal issues

The most common are:

• Establishing whether there are any restrictions on the use or development of the asset which may have been imposed in the past but can restrict what all future owners of the asset can do with it. For example some land or buildings may have been gifted, for example, common good land, or created for the benefit of a charity or a certain use (e.g. a playground or recreation ground) or may have rights of way granted over it to other people.
• Choosing a legal structure for the establishment of a new organisation to undertake the development (where necessary) and final ownership of the asset.
• The sale or transfer of ownership (often described as an 'interest') of the asset.
• The form and content of contracts and partnership agreements with other stakeholders, professional advisors and contractors.
• Taxation issues - Value Added Tax, Land and Buildings Transaction Tax.

Whatever the issue to be dealt with it will be necessary to take legal advice - partly because what is proposed for use of the asset will affect the legal issues that arise and partly because the law does change.

Negotiating an Asset Transfer

Negotiating a stake in land or a building that is the subject of development or transfer is probably the most important agreement that needs to be undertaken in the whole process. The terms of this agreement are a key determinant for the financial viability of any transfer or development project and can have a significant impact on its funding and implementation (rent/acquisition price). The final formal acquisition of a stake can take place either at the start of a process of building development/refurbishment or at the end. It can be the subject of a protracted negotiation or a relatively straightforward transaction depending on the project.

Check the Title: there may be legal restrictions already placed on a property, such as title conditions.  The current owner ought to have this information in their title to the property.  The owner's title will be recorded in the Register of Sasines or registered in the Land Register of Scotland, which are the public records of property ownership.

These title conditions may determine how a property is used and can be an obstacle to the feasibility and viability of a project. A guide to what to consider when checking property titles can be downloaded at the bottom of this page.

It is also imperative that any licences to operate from the property are obtained, if appropriate, as well as planning permissions, e.g. for use. 

Common Good Land

Some assets controlled by local authorities fall under the definition of common good land.  Such land may have been gifted to the local authority to hold for the common good of the residents of the former burghs or council area.  Communities should firstly determine whether the land is in fact common good and secondly consider whether it is alienable (can be disposed of) or inalienable (cannot be disposed of except by court order).  The area of common good law is not without its uncertainties and interpretations.  Our resources area contains articles about this and we are, of course, available for the provision of advice.

The 2015 Act obliges local authorities to maintain common good registers and hear representations from community councils and interested community bodies (a) on the registers and (b) in deciding whether to dispose of, or change the use of, common good land.

Leases - some detail

The following table is a standard "heads of terms" for a lease. Once agreed, this is used as the basis for instructing lawyers to agree the missives (contract) and lease.

When purchasing or leasing an established or new retail space you may find it useful to refer to RICS and use their standard lease which can be downloaded below.  (Please note that a more detailed lease may be required e.g. in a multi-occupancy situation, and that the RICS Guide, below, requires to be updated to alert tenants to the application of Land and Buildings Transaction Tax, rather than Stamp Duty Land Tax.)