The Conveyancing and Feudal Reform (Scotland) Act 1970 introduced the standard security, the only permissible form of heritable security – the legal term in Scotland for a mortgage – and it is now being reviewed by the Scottish Law Commission.

The commission asked in a discussion paper whether the 1970 act should be repealed and replaced with a new statute regulating heritable securities.

“The Faculty considers that there would be benefit in producing a new statute rather than simply amending the 1970 Act,” the Faculty said in a response.

Under the act, standard conditions are applied by default to all standard securities, but the scheme has been found to be inconsistent and out of date.

The Faculty stated: “In our experience, the standard conditions are almost always varied by larger lenders (and often combined with further sets of default terms and conditions). As such, it seems to us likely that major lenders will wish to use a single, standard set of conditions. The present interaction between these lenders’ standard terms and conditions and the standard conditions in the…Act is unsatisfactory (and often produces security documentation that is hard to read or, worse, contradictory).

“In our view, therefore, it would be best if the new standard conditions remained default conditions only, with parties free to disapply them in their entirety.

“In drafting the standard conditions, we would suggest that the most likely users of the default conditions would be smaller lenders and borrowers. The emphasis, in our view, should therefore be on a relatively simple set of conditions which can be used for a basic security by those who do not necessarily have the resources to produce more complex documentation.”