Your island dream...



The initial concept was to share the freehold of the island, however the gap between the practical and pragmatic principle and the legal process to achieve it appeared incredibly complex. Following exhaustive analysis it became clear that sharing the freehold would be a very difficult proposition. We therefore looked for a more simple legal mechanism that would achieve our wish to legally share the island with a clarity that would make the arrangement capable of interpretation by a layperson.

Consequently having examined various legal arrangements including Companies Limited by Shares, Trusts and Companies Limited by Guarantee, and given their complexity, we concluded that as the offer was simple, i.e. ‘Share an Island Dream’, the arrangement to effect that should be equally clear and simple. My background in engineering led me to the process of a simple and straightforward contractual arrangement to provide the desired clarity.

The Contract designates you an “Associate Owner” whereby the Company guarantees clear lifetime rights in line with our aspiration to share the enjoyment of the island. The Company, Friends of Sgarabhaigh Limited (FoSL) will hold the Freehold Title of the island and will be responsible for all management and administration of the island. The whole project is a joint Scottish / English venture and as Friends of Sgarabhaigh Limited is a company registered in England the Contract will be subject to, and governed by, English Law. Associate Owners will have no liabilities or responsibilities regarding the management of the island but will have responsibility for their own and their visitors’ safety when visiting but most importantly they will enjoy the key ownership rights as set out below. We also, however, expect them to have regard to, and support for, our joint interest in protecting the environment of the island.

The respective fundamental contractual rights and obligations are :

Friends of Sgarabhaigh Limited – will manage the island organisationally and financially for all Associate Owner’s for their lifetimes and agree to :

  1. Conserve the island of Sgarabhaigh for their enjoyment;
  2. Allow free access to the island within the terms of access set from time to time by the Company.
  3. Provide a package of artefacts to support the ‘Holding’;
  4. Provide each Associate Owner with the right to nominate a relative to repurchase their Associate Ownership rights when they become available at preferential rates;
  5. Distribute all net proceeds of any sale of the freehold of the island equally between all Associate Owners in the, currently inconceivable, event of the island being sold;

Associate Owners – will abide by the regulation and guidance of the Company in relation to island use and to ensure that the island is treated in a respectful and environmentally acceptable way and also agree to :

  1. Take full responsibility for their own and their guests safety when visiting the island;
  2. Take out adequate insurance for themselves and their guests to cover all risks when visiting the island.

The purchase of a ‘Holding’ is not a financial investment as the island’s value is seen as being in its role as an unchanging place in a rapidly changing world and a perpetual nature reserve and is never intended to be sold. The sale issue has only been raised to identify what would happen if the unlikely event ever occurred and to illustrate the level of commitment to Associate Owners interests reflected in the contractual arrangements.

The Company considers that this approach provides each Associate Owner with clear contractual rights related to the positive elements of ownership. It provides this commitment without imposing freehold or leasehold liabilities on the Associate Owner effectively providing an ‘ownership without responsibility’ in terms of management risk of the Company and its island asset. It therefore logically follows that, as the Board of the Company will be responsible for all aspects of managing the island along with the project risk and associated Company liabilities, the Company Articles provide a freedom to manage all aspects of the arrangements within the context of the contractual rights granted to you. It is equally valid to state that the Company considers Associate Owner status confers the informal right to also be called informally an ‘Island Owner’ under the terms of the contract. This is the basis on which the package contains artefacts attributing an Associate as an ‘Island Owner’.

The Contract, whilst not providing a legal freehold or leasehold right or easement, has a clear intent – it provides an equal interest in the island for the Associate’s lifetime in the form of the defined contractual rights conferred. It also offers the potential for it to pass on perpetually if a family member is nominated or wishes to apply for retention of the holding in their own name, when it becomes available, through a preferential rate repurchase process. In these circumstances there are two preferential rate options available :

  • Repurchase and a personalised Passport at a cost of 10% of the full sale price at the time of repurchase.
  • Repurchase and a full personalised package of artefacts relevant at that time at a cost of 85% of the full sale price at the time of repurchase.

These options allow subsequent Associate Owners to decide whether to consolidate their own interest in Sgarabhaigh on the original box and its contents or to get their own full package of artefacts to supplement the originals. It should be noted that Holdings are not transferable at any time other than the demise of an Associate Owner and renewals are at the discretion of the Company. The currently adopted policy of the Company is to preserve Sgarabhaigh for its Associate Owners in perpetuity.

Clarity and simplicity is the basis of this contractual arrangement and we hope that you feel it is a refreshingly simple approach in which you can have total confidence. You can take pride in the knowledge that you and the other Associate Owners are contributing to the care and maintenance of a small part of the heritage of the Western Isles of Scotland and its preservation in its unspoilt state. We can also all enjoy our island knowing there is equity of holding, a clarity of purpose in conserving our unchanging place and a knowledge that we will always have our own special place in a very special part of Scotland.

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