The landlord's hypothec arises automatically and gives a landlord a right in security over moveable property belonging to the tenant within let premises. It is available only in respect of unpaid rent and subsists as long as the rent remains unpaid.

The hypothec operates in a similar way to a standard security, giving the landlord priority in any claim where there is ranking. If a tenant is subject to insolvency proceedings such as bankruptcy or liquidation, the landlord has a priority over other creditors regarding the property secured by the hypothec. If the tenant is not subject to an insolvency procedure, the landlord's methods of recovery are the same as for any other creditor.

The hypothec is not available over property which is kept in a dwellinghouse, on agricultural land, or on a croft nor is it available over property which does not belong to the tenant, or property which has been acquired by a third party in good faith.

The rules regarding the landlord's hypothec are largely in common law although certain aspects were modified by the commencement of section 208 of the Bankruptcy and Diligence etc. (Scotland) Act 2007 on 1 April 2008.

This section of the website is intended to give a broad overview of diligence. It is not a full statement of the law nor does it provide a full description of each of the processes.