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Bankruptcy and Diligence etc. (Scotland) Act 2007

Section 125 – Land attachment subsequent to reduction of deed granted in breach of inhibition

365.Section 125 provides for the situation where a debtor has been inhibited, breaches the inhibition by disposing of the property affected and the inhibiting creditor reduces the transaction which breached the inhibition. Taking the example of the sale of inhibited land, the reduction of the disposition granted by the debtor is ex capite inhibitionis. This means that, in any question between the creditor and the debtor, the debtor is regarded as still having title to the land. However, the person who purchased the land from the debtor, in a question with anyone other than the creditor, has that title.

366.Land attachment is normally competent only against land in respect of which the debtor has a recorded or registered title (see section 82(2)). Where the disposition granted in breach of inhibition is reduced, the debtor does not have recorded or registered title. Section 125 provides that, notwithstanding section 82(2) and this rule from the law of inhibition, the inhibiting creditor who has reduced the disposition may proceed to register a notice of land attachment over the land. A land attachment may subsequently be created and this section makes the necessary modifications to other sections in this Chapter to take account of the fact that the purchaser from the debtor (the “third party”) needs to be involved in the land attachment process.

367.In addition, subsection (2) provides that the land attachment registered in the circumstances mentioned in subsection (1) enjoys preference in ranking in any competition with a security granted in favour of, and a land attachment executed by, a creditor of the third party.

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