Guide to conveyancing in Scotland
Selling in Scotland
The solicitor plays a more prominent role in selling homes in Scotland, than solicitors generally do in the rest of the UK. Firstly many Scottish solicitors are also Estate agents and as such will act in the marketing process as well as in the legal work. Most solicitors firms which are Estate Agents also, are members of Solicitors’ Property Centres. These are actually cooperatives of law firms. The Centres have property showrooms and newspapers in which all the members’ properties for sale are displayed or advertised. Estate agents do operate in Scotland of course but they have a lesser share of the market than solicitors. Typically in Scotland the solicitor will be the first point of contact for someone planning to sell. The Scottish contracts system is quite different from that in England and early conclusion of the contract is generally expected. Consequently the solicitor will be expected to take all the necessary preparatory steps such as checking the title at the same time as the property is marketed. The solicitor thereafter generally plays a key role in managing the transaction, ensuring all of the documentation is available and negotiating the contract on your behalf with the buyer's solicitor.
Step 1: Getting the Title Deeds together
Your solicitor needs to get hold of your title deeds. If you have a mortgage, these are usually kept with your mortgage provider. The solicitor will check these titles and in the course of the transaction have a search of the land register carried out to confirm that there are no impediments to the sale of the property. At an appropriate point the solicitor will obtain the Property Certificates from the local authority (or a searching company) which will disclose the planning status of the property, ownership roads and sewers and other issues about which the purchaser is likely to enquire.
Step 2: The Scottish Marketing System
Scottish properties are marketed in the same way as in England, with newspaper advertising and exposure of properties on internet portals being the most common media used. However the process is governed by conventions which are different from those in the rest of the UK. Most properties are advertised on an “offers over” basis. The seller expects offers above the price mentioned and most sales will achieve that. Some properties are offered at a “fixed price” which means the seller will accept the first received at that price. This means the first formal written offer from a buyer’s solicitor.
Where a property is being sold “offers over” buyers who are seriously interested will generally “note interest” with the seller. This means the buyer’s solicitor will phone or fax the selling agent “noting interest” on behalf of his or her client. Where there are two or more “noted interests” the seller will normally fix a closing date and time. It would then be expected that the prospective purchasers’ solicitors would submit written offers to the sellers agent in time for the closing date deadline. Usually the highest offer is accepted and it is considered improper for any negotiation on price to be undertaken after a closing date. Where there is only one interested party no closing date is fixed and there can be negotiation on price – but in Scotland this is almost always done by the buyers solicitor with the seller’s agent – the parties generally do not deal direct with each other. Most offers are made nowadays “subject to survey” with the buyer being expected to have a survey carried out within 48 hours of being told the price is acceptable.
Step 3: The Contract.
The purchase and sale contract in Scotland comprises letters between the solicitor of the purchaser and seller. These letters are often referred to as “missives”. The initial offer from the purchasers’ solicitor will be a letter with clauses outlining the price, the date of entry or settlement, what items are included in the sale, as well as a whole series of other clauses regarding the title to the property. These basically spell out the conditions of the offer. The seller’s solicitor will accept or reject some of these clauses and an exchange of letters takes place until all the clauses in the contract are agreed. The point of agreement is often referred to as “concluded missives” and once reached both parties is obligated to complete the transaction. Missives can sometimes be concluded in just a few days in Scotland – but also can take many weeks. Occasionally parties hold off concluding missives for reasons not connected with that actual transaction – if so their solicitor is duty bound to disclose this. The concluded missives contain a fixed date of entry and both parties are expected to work towards that – with financial penalties usually being in the contract should the date not be met.
Step 4: Finalising the transaction
Typically the date of settlement or “entry” as it is sometimes called will be 6 or 8 weeks after the date of conclusion of missives.
During that period your solicitor will need to manage the paperwork involved in the legal transfer of the property and to collect and disburse the money appropriately. You will need to sign a disposition, transferring the Title to the new owner. At settlement, this is transferred to the new owner, and your solicitor receives the money. They then pay off your existing loans on the property and after deducting their own fees and any other expenses due; they will pay you the balance of the money. If you are purchasing a new house, the solicitor may retain your share, to put towards the deposit on the new property.
Guide to Buying in Scotland
Most people employ a solicitor when buying a property, due to the amount of money being spent and the complexity of contracts entered into. Although solicitors in Scotland are central to much of the property transaction, due to the fact that they often market the property on behalf of the seller, their key task is in negotiating and checking the contracts and handling the transfer of the Title and cash. It is useful to employ a solicitor early on in the process of buying a property, as they undoubtedly will have more experience in the process than you and most work on a fixed fee basis, so the timing rarely affects the cost. There are a number of steps to purchase a property, which can take a number of weeks.
Step 1: Preparations
Usually in Scotland prior to taking any steps towards buying, parties make arrangements to finance the purchase. Typically this will involve setting up a mortgage in principle at least – thus giving the buyer a budget for the purchase. Solicitors, brokers or lenders direct will be involved in this process. Once the buyer knows what funds are likely to be available he or she can search for an appropriate property.
Once you have found a property, for which you are keen to make an offer, your solicitor will "note interest" for you. This provides no obligation to purchase the property; it simply lets the seller know of your interest. They will most likely invite you to make an offer, when a closing date for the purchase is fixed. Alternatively if there is no other noted interest an invitation to offer may be made, and in these circumstances there is sometimes negotiation on the price.
Step 2: Making an offer
You will need to make a conditional offer and propose a ‘date of entry’ which is the proposed date for moving in. The ‘conditional’ offer is so called because it depends on certain conditions being acceptable such as the fact the seller having the right to sell the property, that there are no planning issues to blight the property, an inventory of fixtures and fittings, any necessary building approvals etc.
Such an offer is only binding if the seller and buyer confirm in writing the offer and any qualifications attached. (This is the “missives” procedure mentioned above) If your offer is accepted it is a binding contract under Scots Law and you will need to proceed with the purchase. Sometimes buyers will have a property surveyed prior to offering – but often nowadays offers are submitted ‘subject to survey” and the survey only instructed if the offer is to be accepted.
Step 3: Formalising the agreement
After receiving the formal offer, the seller’s solicitor sends your solicitor the title deeds and search report plus any other documents agreed in the contract. The seller signs the transfer of the title deed, known as the ‘disposition’.
Step 4: Settlement
As the buyer, you will need to arrange your mortgage and the seller’s solicitor will prepare the Land Transaction Return for you to sign. The seller’s solicitor will request the funds from your lender and any other associated fees in preparation for the date of entry.
Your solicitor will complete the transaction by paying the Stamp Duty Land Tax and arrange for the signed title deed to be registered with the Land Register.
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