The Scottish conveyancing process is quite different to that in England and Wales. Not only do contracts tend to be agreed much sooner, but once the seller accepts an offer it is legally binding.
A key advantage of this is that the practices of gazumping and gazundering – common in England and Wales – are rare in Scotland.
In the past, the system did have the disadvantage of requiring a purchaser to pay for a survey before making an offer – with no guarantee it would be accepted. Since the introduction of Scottish Home Reports in December 2008, however, this is generally no longer an issue since the Home Report contains a survey (known as the Single Survey) that the purchaser can rely on.
Another important consideration is to have an “agreement in principle” from your mortgage lender before making an offer. Otherwise you could end up being legally committed to buying a property without the money to do so!
Declaring (noting) an interest
Once a purchaser finds a property they are interested in they should contact their solicitor. Their solicitor will then contact the seller’s solicitor or estate agent and formally declare (or note) the purchaser’s interest in the property.
If more than one party is interested in the property the seller’s agent or solicitor will normally ask for written bids to be submitted by a set closing date. It’s important to note, however, that the seller may accept an offer at any time.
Making an offer
In Scotland sellers will tend to ask for “offers over” a certain price. It is then the purchaser’s job to decide how much they should bid, based on market conditions, the level of interest in the property, etc. This is very different from England and Wales where sellers usually set the price above what they expect to achieve, giving room to negotiate downwards.
Once the purchaser has decided on an offer price it will be formally submitted in writing by their solicitor, together with any additional conditions, such as the proposed date of entry, the seller having good title (i.e., owning the property!) and there being no serious issues with the property.
Note that if there are competing offers the seller is not obliged to accept the highest offer and the quality of the bids will also be an important factor in their decision.
Once an offer has been made the seller will normally give their response within a day of either receiving the offer or of the closing date, if applicable.
If the offer is accepted the seller’s solicitor will confirm their qualified acceptance of the offer and will send the papers relating to the property to the purchaser’s solicitor for review.
Assuming the offer is accepted it is at this point that any additional survey work will usually be carried out.
As stated above, Scottish Home Reports contain a “Single Survey”, which a purchaser can rely on. However, a purchaser may still wish to carry out additional survey work if the Single Survey has raised issues of concern or if the property is of an age or type that would warrant additional investigations. In this case their offer will have been made “subject to survey”.
The purchaser will normally be expected to carry out any additional survey work and come back with any resulting price adjustments within a couple of days (though this may take longer if further specialist reports are needed).
Following the qualified acceptance of an offer and any additional survey work, the respective solicitors will negotiate any outstanding contractual terms.
Once these terms are agreed the purchaser’s solicitor will issue a formal letter – known as a “concluding letter” – to conclude the “bargain”.
So, the overall sequence is as follows:
- qualified acceptance
- concluding letter
Together they are known as “the Missives”, hence the expression “conclusion of the Missives” once the concluding letter has been sent.
Once the Missives have been concluded there is a legally binding contract.
Neither purchaser nor seller can now withdraw from the contract or vary the terms (unless by mutual agreement) without being in breach of contract. The contract will, however, still be conditional upon the seller having good title and the property searches returning no adverse entries.
Title deeds and searches
The purchaser’s solicitor will now examine the title deeds to the property and carry out the required searches. (Note that the costs of the searches are paid by the seller.)
Once this has been done the purchaser’s solicitor will provide the purchaser with a “title report” confirming who owns the property, and setting out any restrictions and conditions on its use.
The purchaser’s solicitor will then draft the “disposition”, which is the document that transfers ownership of the property. This will be sent to the seller’s solicitors to be signed by the seller prior to settlement.
The purchaser’s solicitor will normally also act for the lender and is responsible for preparing the mortgage deed (also known as the “standard security”), which must be signed by the purchaser before funds can be drawn down.
State for settlement
The purchaser’s solicitor will also prepare what is known as the “state for settlement”, setting out the amounts that must be paid on or prior to settlement.
These include any deposit, the balance of the purchase price, any stamp duty, land registration fees and, of course, the solicitors own fees! The funds to cover these costs must be in place (and any deposit paid) before settlement can take place.
Date of entry or settlement date
This is the date on which the purchaser will pay the purchase price (less any deposit) and receive the title deeds and the keys to the property from the seller. In England and Wales this is known as “completion”.
On the settlement date the purchaser’s solicitor will draw down the mortgage funds. Any funds being provided by the purchaser should already be with their solicitor by this stage.
The purchaser’s solicitor will then send the balance of the purchase price to the seller’s solicitor – usually by solicitor’s cheque, though it may be done by bank transfer.
This is unlike England and Wales where purchase monies are always sent by telegraphic transfer. The reason it is safe to send a cheque in Scotland is because solicitor’s cheques are guaranteed by the Law Society of Scotland.
In exchange, the seller’s solicitor will return the signed disposition and hand over the keys and title deeds to the purchaser’s solicitor. The purchaser can then pick up the keys to their property!
Immediately after settlement the purchaser should check for any defects in the property. Any defects should be notified to their solicitor, who in turn will inform the seller’s solicitor.
Providing this is done within the contractual time limits the seller will be responsible for fixing (or providing compensation for) the defects.
Stamp Duty and the Land Registry
Following settlement, the purchaser’s solicitor will pay any stamp duty that is due and get the disposition stamped by the stamp office.
Finally, they will register the purchaser’s title to the property at the Land Register (Sasine) and pay the registration fee.
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