Deed of Variation Solicitors in Scotland

Three different documents with one name

The phrase "deed of variation" is used in Scotland for three different things, and the work involved is quite different for each:

1. Varying an inheritance. Beneficiaries under a will, or under the intestacy rules if there was no will, agree to change who receives what from the estate of someone who has died. This is the most common meaning, and where property is involved, it is where we are most often asked to help.
2. Varying a lease. A landlord and tenant agree to change the terms of an existing lease, for example the rent, the length of the lease or the permitted use. This is usually called a minute of variation.
3. Varying a title condition. An owner asks for a real burden in the title deeds, such as a ban on building or on a particular use, to be varied or discharged.

Redirecting an inherited property

A deed of variation after a death is often used to:

• pass a house to the next generation, for example from a surviving parent to the grandchildren
• share a property more fairly among siblings when the will left it to only one of them
• give a share of a house to someone the will did not mention, such as a carer or a partner
• reduce the Inheritance Tax payable on the estate, with advice from the estate's tax adviser

For the variation to be read back into the will for Inheritance Tax, it must be made in writing within two years of the death, be signed by the beneficiaries who are giving something up, and include a statement that they intend the variation to be treated as if the person who died had made it. The executors must also sign if the variation increases the tax payable. Similar rules apply for Capital Gains Tax. A variation is not effective for tax if the person giving up the benefit receives anything in return, apart from another variation in their favour.

Scots law points that change the answer

Inheritance in Scotland follows Scots succession law, which differs from the law in England and Wales in ways that often matter when a house is involved:

• Legal rights do not attach to the house. A surviving spouse, civil partner or children can claim legal rights from the moveable estate, but not from heritable property such as a home.
• Survivorship destinations can override a will. If the title says the property is held "to A and B and the survivor", the share of the person who died may pass automatically to the survivor rather than to the executors, which changes who needs to sign the variation and how the house is transferred.
• The house has to be transferred properly. An executor who has obtained confirmation can transfer the house to the beneficiary by a disposition, which is registered in the Land Register of Scotland. A docket on the confirmation is sometimes used instead, but it cannot be registered, so the beneficiary is not shown as owner on the title sheet until a later deed is registered.

We check the title at the outset, so everyone knows what the variation can and cannot achieve.

Our part in the process

A deed of variation is a legal document with tax consequences, so it is usually prepared alongside the executor's solicitor and the estate's tax adviser. Our role is the property side:

1. examining the title of the inherited property, including any survivorship destination, mortgage or title conditions
2. working with the executors and advisers on the wording of the variation where it affects the property
3. preparing the disposition that transfers the property to the new beneficiary, or advising on a docket where that is the better route
4. confirming that the exemption from Land and Buildings Transaction Tax applies, which it normally will where the variation is made within two years and nothing is paid
5. registering the new owner in the Land Register, and dealing with any mortgage that has to be repaid or taken over

If the new owner then wants to sell, we can act on the sale as well.

Varying a lease or a title condition

Where a landlord and tenant want to change an existing lease, we prepare or review the minute of variation, and if the lease is registered in the Land Register, we register the variation too. For business premises, see our commercial lease review service.

Where a real burden stands in the way of an extension, a change of use or a sale, the options include asking the owners who benefit from the burden to sign a minute of waiver, or applying to the Lands Tribunal for Scotland to vary or discharge it under the Title Conditions (Scotland) Act 2003. Unopposed applications to the Tribunal are usually granted. Our guide to real burdens in Scotland explains the background, and our article on what a deed of variation is covers the inheritance side in more depth.

Fees

Because every variation is different, we quote for each one once we have seen the will, the title and the proposed change. The quote includes the Registers of Scotland dues for registering the new owner.