Standard security: what it means for business borrowing

A standard security is the form of fixed security over heritable property (land and buildings) in Scotland. Any lender taking property as security in Scotland, whether for a commercial mortgage, a secured business loan or a bridging loan, does it with a standard security.

01The legal basis

Part II of the Conveyancing and Feudal Reform (Scotland) Act 1970 created the standard security as a new form of heritable security, and it is the only way to create a fixed security over land in Scotland. The security is registered in the Land Register of Scotland, kept by Registers of Scotland; it takes effect from registration. A company granting one must also register it at Companies House, as with a charge in England and Wales (GOV.UK guidance).

02How it compares with England and Wales

03An example

An Aberdeen engineering firm borrows to buy its workshop. The lender's solicitor prepares a standard security over the building, the company signs it, and it is registered with Registers of Scotland and at Companies House. If the firm later adds a second loan against the same building, the two lenders agree in a ranking agreement which is repaid first.

04How it affects borrowing

Not every lender lends on Scottish property, and some exclude certain postcodes, so the choice of lender is narrower than in England. Legal work is done by Scottish solicitors, and timescales depend on registration. See business loans in Scotland and secured business loans; we search for lenders that lend on property in your area. Any broker fee depends on the lender, with nothing to pay upfront.

05Related terms

• Loan to value
• First and second charge
• Debentures, fixed and floating charges

06Sources

• Conveyancing and Feudal Reform (Scotland) Act 1970
• Registers of Scotland