Summary diligence is the way in which a person who has won a court action for payment can enforce the court's decision. A lease registered for execution allows a landlord to recover arrears by using summary diligence. This is because an extract of the lease has the same force and effect as a court decision. This means that landlords can take immediate steps to recover arrears under the lease that would otherwise only be available after a court case has been decided in their favour. It therefore saves landlords time and money in their pursuit of arrears.
The summary diligence process can be delayed, or even frustrated, if the lease documents are not in order. Difficulties can arise if principal leases can no longer be found to allow registration or if there were difficulties in having documents fully signed. Problems can increase if there has been an onward sale of the property.
So what does a creditor need to proceed with summary diligence?
For summary diligence to be competently carried out based on a document such as a lease or lease document, the following conditions must be met;
- The document must be registered for preservation and execution in the Books of Council and Session. The explicit consent of the parties' is required for the document to be registered for execution;
- The document must be validly signed by the granter/parties and properly witnessed;
- The document must concern an obligation regarding the payment of a sum of money. The sum can be stipulated as paid by a lump sum or instalments, with any applicable interest; and
- The sum of money due must also be capable of being ascertained from the registered document itself. This has been discussed on a few occasions in court and it has been determined that (i) the amount due, (ii) the timeframe for payment and (iii) the identification of the creditor and debtor, must all be clearly and precisely identifiable from the document.
What if you don't have the lease?
The above requirements mean that it is possible to carry out summary diligence without an extract lease. If there is, for example an assignation of the tenant's interest in the lease which annexes the lease and contains the parties consent to preservation and execution, there is no reason in principle why all of the above requirements might not be met. Similar considerations could apply to a variation of a lease.
This means that if there are issues with the lease (or any other core documents) it might be possible that these could be cured by the registration for preservation and execution of later documents such as an assignation or variation. That would allow the landlord to continue to pursue the arrears using summary diligence.