Landlord's hypothec in Scots law

Abstract

This thesis considers the law of the landlord’s hypothec in Scots law. It is divided into three parts. Part A examines the history of the hypothec from its introduction into Scotland in the sixteenth century to the passing of the Bankruptcy and Diligence etc (Scotland) Act in 2007 (“the 2007 Act”). Part B addressesthe creation, variation and extinction of the hypothec (“the life-cycle of the hypothec”). Part C focuses on the enforcement of the hypothec, both before the tenant is insolvent and whilst the tenant is in insolvency proceedings. Throughout the thesis there is a focus on two key aspects: (1) the hypothec as a real right in security, and (2) the effects of the 2007 Act. The fact that the hypothec is a real right in the individual goods brought into the premises is often forgotten. Instead, the hypothec is sometimes seen as a form of floating charge or a preference in the tenant’s insolvency. The floating charge prior to attachment (or an insolvency preference), however, does not grant the chargee (or preferred creditor) a real right in the property of the charger (or debtor). Due to a failure to make a clear distinction between the hypothec and the floating charge, the effects of the hypothec have often been forgotten. Therefore, throughout this thesis, the hypothec is analysed as a real right in specific goods that are brought into the premises, and the effects of such an analysis are discussed. Existing uncertainties in the law were exacerbated by the 2007 Act. By abolishing sequestration for rent, and restricting the rent secured by the hypothec, the 2007 Act has disrupted areas that were previously settled. This becomes most apparent when the tenant becomes insolvent, and this thesis contains an in-depth analysis of the landlord’s rights in such cases. This thesis does not take a view on whether the landlord’s right of hypothec should be retained.