a guide to
scottish conveyancing

PURCHASE OUTLINE

Client Gets in Touch

Phone estate agents. Note interest, ask whether closing date (unless there is a fixed price), ask for schedule of sale particulars.

Ask for a copy of the Home Report and discuss with client.

Talk to client about survey and arrangements for financing the purchase. If client wishes, instruct survey. Check lender will accept surveyor in Home Report.

Take instructions for the offer, taking into account home report. If offer is to be subject to purchaser’s own survey, warn client it may be less attractive.

Send client Terms of Engagement letter, fee quote, consider ADS implications and ask for money laundering ID. Where company, check Companies House website to make sure it exists. Offer Goes Out

Send offer to estate agents.

Hear from estate agents whether offer has been accepted and inform client.

Await qualified acceptance. Qualified Acceptance and Titles Come In

Receive qualified acceptance (and usually also title deeds and seller’s drafts: Legal Report, Application for Advance Notice (Disposition), Discharge of Standard Security and Letter of Undertaking but note variation in purchase transaction in project where seller’s solicitor does not have titles) from seller’s solicitors and take instructions from client.

Reply to Qualified Acceptance

Send formal letter in reply. Revise Seller’s Drafts, Examine Title and Draft Disposition

Revise seller’s solicitors’ draft Legal Report, draft Application for Advance Notice (Disposition), draft Discharge and draft Letter of Undertaking.

Examine and note title. Raise observations on title.

Draft Disposition (taking instructions on how title is to be taken and which kind of destination (survivorship, etc. the client wants). Send these to seller’s solicitors.

Mortgage Instructions Come In

Receive mortgage instructions.

Draft Standard Security and (if appropriate) Matrimonial Homes and Civil Partnership Declaration.

Explain conditions in offer of loan, mortgage conditions, and meaning and effect of Standard Security and Declaration to client, preferably in writing.

Have Standard Security and Declaration (if appropriate) signed.

Complete lenders’ Certificate of Title and Request for Loan Funds and send (by fax as well as post) to lenders.

Put testing clause on Standard Security, and draft Application for Registration form for the Standard Security. Keep Standard Security (and Declaration) and Application for Registration form on file to await settlement. Draft LBTT Form

Draft LBTT Return, explain it to client and have it (and also, if applicable, the letter of authority for online submission of the return) signed by client. Keep signed form (and letter of authority) on file to await settlement. Property Enquiry Certificate and Other Reports and Factors’ Letter Come In

Receive property enquiry certificate, coal mining report (if appropriate) and EnviroSearch (if appropriate). Check no adverse entries.

Receive factors’ letter and common insurance policy details. Check survey report to see that level of common insurance is adequate and advise client of policy details and any significant comments about policy by letter.

Send Application for Advance Notice (Standard Security) to the Keeper Missives are Finalised and Concluded

Receive formal letter from seller’s solicitors concluding missives or continue to exchange formal letters, taking instructions from client in relation to each, until missives are concluded.

When missives are concluded, advise client there is now a binding contract.

Engrossed Disposition Goes Out

Send engrossed Disposition with draft to seller’s solicitors. Ask Client for Balance of Price, LBTT, Registration Dues and Fee for Advance Notice (Standard security) and Fee

Ask client for any balance of price, Land and Buildings Transaction Tax, registration dues, fee for Advance Notice (standard security) and fee. Ensure you receive these in time for funds to have cleared before settlement.

Lodge Application for Advance Notice (standard security) with Keeper.

Receive Advance Notice from Keeper (Standard Security)

Searches Come In

Receive Legal Report and (if appropriate) Search of the Register of Community Interests in Land from seller’s solicitors. Check no adverse entries. Check Legal Report discloses the Advance Notices. (Disposition and Standard Security) Answer Remaining Observations on Title

Check all observations on title answered prior to settlement. Settle

Send cheque with settlement letter (or arrange for bank transfer and send settlement letter) to seller’s solicitors.

Phone Seller’s solicitors and settle. Advise client that keys now available and remind of time limit for complaints about central heating, etc.

Send LBTT form online to Revenue Scotland with cheque or bank transfer for Land and Buildings Transaction Tax

Receive signed Disposition, Declaration (if appropriate), title deeds, signed Discharge with Application for Registration form and registration dues (or if appropriate, letter of undertaking), any consents and permissions. If dual registration, also receive seller’s solicitors’ Application for Registration form and registration dues.

Put testing clause on Disposition.

Advise Council Tax Office of the change of ownership (only applies in some parts of Scotland).

Receive computer generated acknowledgement of receipt of LBTT Return from Revenue Scotland. Print and file LBTT acknowledgement.

Send Disposition, Application for Registration form, cheque or bank transfer for registration dues, any Declaration and Standard Security with Application for Registration form and cheque in favour of Revenue Scotland for LBTT to the Keeper. Also, where dual registration, extra Application for Registration form and cheque or bank transfer for registration dues

Send client receipted fee note and cash statement.

Receive email acknowledgment from Keeper regarding application for registration

Receive email Title sheet from Keeper

Receive return of Disposition and Standard Security and any Declaration from Keeper.

Send title deeds, any Declaration relating to Standard Security and any consents and permissions to lenders.

Advise client title deeds may be held by lenders as condition of mortgage until loan is repaid.

Write “implemented” on seller’s solicitors’ letter of undertaking and return it to them.

Questions you should know the answer to:

– Do I need to fix the defects in the Home Report?

– Do I need to disclose any defects and problems to the seller?

– What is the benefit of appointing a solicitor before getting an offer?

– What should I not discuss with any potential buyer?

A survey is required to provide value and comment on the structure.

You should always have a good read at the survey report and discuss its contents before your surveyor publishes it. This defines the ball park value of the property and comes as part of the Home Report. Among other things, you should check the value the surveyor has placed on the property and any recommendations for repairs that are required. You may also wish to see if the surveyor has made any comment as to whether or not the property has been altered or extended as this could affect the value and structure. The survey also contains other information such as the age of the property and comment regarding the area and surroundings, as well as suitability for mortgage lending.

Prepare your property before you place it on the market or receive an offer - Being legally prepared before you receive an offer could be the difference between selling or not. We always advise you that everything is in place for your property before you receive your offer to buy. Your legal team should organise your titles, alteration documents, permissions, insurances etc. early. Sometimes (due to defects found in your title deeds or lenders) this can take several weeks. Within 48hrs of any offer you should have your acceptance of the offer along with your titles back to the purchasing solicitor. Your appointed solicitor is best placed to ensure that your property is legally in the bast place to maximise your value before putting it on the market or even approaching an estate agent.

Written or verbal offers? Offers made in Scotland that are to be binding need to be in writing. Verbal offers can be made, although this would usually be an informal agreement made between a seller and a prospective purchaser. Occasionally, a verbal intimation of a price may be used where the offer is speculative. For an offer to proceed to the stages of contract, it must however be in writing.

So you have a written Offer. Warning – At this stage remember that you do not have a binding contract (missives are not concluded). As such the purchaser can withdraw and decide to buy another property (withdraw the offer). Although not ethical it does happen, so be sure to tell your Estate Agent to keep marketing your property until missives are concluded. You must protect yourself. Also if you take your property off the market and then have to re-market your property again the law requires you to purchase a new Home Report! If you do go ahead and start booking removals and making plans please remember that no one has been bound by contract to purchase, you are not bound to sell the property either.

What will the purchasers Lawyer Look for? Purchasing a property in Scotland is very much a case of ‘Buyer Beware’. There are normally limited warranties provided by Sellers after the date of entry and as such the purchasing solicitor must know what to check, examine and look for. It is not for you or your lawyer to disclose problems (unless actively asked). Ensure that you point all questions to your lawyer who in the best place to word any answer. To this end the purchasers lawyers asks and the sellers lawyers must provide the answers, searches and more often than not the persuasive facts to keep the deal moving and get agreement on the missives. Sasine vs Land Register of Scotland - Scotland is in a transition between 2 property registers. As such the purchasing Solicitors require to fix all and every minor property discrepancy before they can register the purchaser as the new owner. Due to the fact that the majority of ownership titles are based on deeds that can be a far back as the 1800’s, it is now surprise that the purchasing solicitors have many requests and questions. Ensure that your appointed lawyer is a property expert. It is our belief that this is not the time to appoint a multi disciplinary lawyer.

Agreeing the Missives. For the seller there are more pitfalls to avoid and ensure that any warranties/guarantees that you provide are satisfied before the date of entry (the day of the sale). The missives tend to seek assurances from the seller. Many Scottish lawyers tend to use the ‘Standard Clauses’ which in general can be be more onerous on the seller. A list of the actual Standard Classes can be found by contacting us.

The Titles in brief- The titles to any property are similar to the log book for your car. Unfortunately they are a bit more complex an can throw up grey areas, especially if the deeds were drafted ambiguously. Which happens more than you may think and more than we like. The Titles Contain - Who owns the property, what debt is secured over the property, the boundaries, the burdens (rules of ownership) and a list of any other rights or people/companies who have an interest in the property (e.g. a public right of way, a shared access or shared septic tank). They will also go into detail in areas such as the owners rights to access the property, draw water, use services such as pipes, electricity and managing maintenance in the case of flats. All of these areas may raise questions by the purchasing solicitor. Tiles can easily date back to before the 1800’s and are in some cases incomplete. If you have further questions you can call and ask us as this is a very complex area.

Time to move. Once you have concluded missives you are contracted to sell and move out. Remember that you must not remove any items built in to the fabric of the property unless specified in the missives. You must not damage or leave the property full of rubbish. Also note that your lawyer cannot obtain the funds for the sale untill you have cleared the property and he/she can release the keys. So the sooner that you can remove all your property and have the house cleared the sooner your lawyer can have the property sold. In Scotland, settlement tends to be done by ‘Solicitors Cheque’ a guaranteed payment method. These funds will require to clear in your lawyers client account before he/she can CHAP’s or BACs the funds to you. Ensure that you keep your phone charged and your lawyer knows this number as your land line has no doubt been switched off. If you are Buying on the back of the Sale – If you are buying on the back of your sale the sooner your lawyer can use the sale funds the sooner he/she can get you into your new home. Again the sooner that you can clear the house, the sooner you can be in your new Home.

Mortgage Lenders, Payments and Debts? After the sale the settlement cheque is banked and the debts start to be paid off (or ‘redeemed’). This may include any estate agency account, factors bills, government and loans/mortgages to be paid. As soon as all the debts are settled the remaining funds will be forwarded to the seller. Please ensure that you let your lender know and arrange to stop your payments to your bank at a mutual time agreed. It may be that if you have paid off to much due to when the loans are repaid, in this case the lenders either return the over payments direct to the seller or send to his/her solicitor (in this case your solicitors will forward this to the seller.

SALE OUTLINE Receiving the Offer

A brief outline of the steps in a sale transaction

Estate agents send you offer from buyer’s solicitors. Taking Instructions

Send copy to client and take instructions.

If not already done, get title deeds and send out fee quote and Terms of Engagement letter and request for money laundering ID. Preparing the Qualified Acceptance

Prepare qualified acceptance. (note in project title and other related documentation is available).

Send copy of the qualified acceptance to client. Seller’s Drafts

If title deeds are (or as soon as they are) available, or using a Registers Direct copy title sheet, draft Discharge, application for Advance Notice (Disposition), Legal Report and Letter of Undertaking

Apply for Legal Report.

If appropriate, write to factors and ask for confirmation re common charges and repairs and for details of the common insurance policy.

If first registration, also apply for Level 3 Plan Report Obtaining Reports

Apply for property enquiry certificate and (if property is in coal mining area) a coal mining report.

Request any other report (e.g. EnviroSearch) client has agreed in qualified acceptance to get.

Sending out Qualified Acceptance and Seller’s Drafts

Send qualified acceptance, title deeds (with any consents and guarantees), draft Discharge, draft Legal Report (or Legal Report and draft continuation thereof) draft Application for Advance Notice (Disposition) and draft Letter of Undertaking to buyer’s solicitors.

If first registration, also send Level 3 Plan Report as soon as available.

Formal Letter Replying to Qualified Acceptance Comes In with Seller’s Drafts (Revised) and Buyer’s Drafts

Receive from buyer’s solicitors formal letter replying to qualified acceptance, also title deeds and your drafts back marked as “revised”, and buyer’s solicitors’ draft Disposition and observations on title.

Send buyer’s solicitors’ formal letter to client and take instructions. Ask client for any information needed to answer observations on title. Check draft disposition is correct.

Send Discharge and any Retrocession of life policy to lenders for signature, ask for redemption statement. In fact most, if not all lenders at present will not release the signed Discharge until the loan has been redeemed at settlement of the sale in which event you will provide the buyers solicitor with a letter of undertaking at settlement. Most lenders do not require a formal Retrocession of life policy to restore ownership of the policy to a seller once the loan has been redeemed.

Replying to Buyer’s Formal Letter and Returning Buyer’s Drafts

Send to buyer’s solicitors a formal letter replying to theirs, return their drafts marked as revised and answer their observations on title. Signed Discharge Comes Back and Redemption Statement Comes In

Receive signed Discharge (and any Retrocession) from lenders and redemption statement.

Put testing clause on Discharge and draft Application for Registration form for it. Keep signed Discharge and completed Application for Registration form on file to await settlement. This will not apply to those lenders who do not release Discharges prior to redemption of the loan in which case the Letter of Undertaking procedure will apply.

Check with client that amount shown on redemption statement is correct. Explain you will pay this at settlement out of sale proceeds.

Put testing clause on any Retrocession and intimate to insurance company. Property Enquiry Certificate and Coal Mining Report Come In

Receive property enquiry certificate and coal mining report and send them to the buyer’s solicitors.

Finalising and Concluding Missives

Continue to exchange formal letters with buyer’s solicitors (sending each incoming letter to client and taking instructions from client for each exchange) until missives are concluded.

When missives are concluded advise client there is now a binding contract. Getting Disposition and Affidavit/Declaration Signed and Registering Application for Advance Notice (Disposition)

Receive from buyer’s solicitor’s engrossment (i.e. final finished version) of Disposition, with draft.

Compare Disposition with draft to ensure any corrections in draft are reflected in engrossment.

Arrange for client to sign Disposition and (if appropriate) Matrimonial Homes/Civil Partnership Affidavit or Declaration, unless there is a Matrimonial Homes/Civil Partnership declaration in the Disposition instead.

Complete Signing Schedule with details of where and when deed signed and name and address of witness.

Keep signed deeds and completed Schedule on file to await settlement.

Submit Application for Registration of Advance Notice (Disposition) to Keeper. Getting Searches

Apply for Legal Report or continuation thereof.

Send Legal Report or continuation thereof to buyer’s solicitors (the final legal report should disclose the Advance Notices for the Disposition and Standard Security).

Fee Note and Cash Statement

Prepare fee note and cash statement. Keep on file. Settle

Receive price, by solicitors cheque or bank transfer. Check whether covering letter contains instruction to hold as unencashed or undelivered until call from buyer’s solicitors.

When cheque can be cashed, or funds used, release (or authorise release) of keys.

Send cheque to lenders to redeem loan (note most lenders prefer that solicitors’ cheques have cleared and that the loan is redeemed some days after settlement allowing for clearance by electronic payment or CHAPS). Pay estate agents and any other outstanding accounts (if client has confirmed he wishes you to do this).

Send signed Disposition with Signing Schedule, any signed Declaration, signed Discharge with Application for Registration form and cheque for registration dues (or letter of Undertaking together with draft), title deeds with any consents and guarantees to the buyer’s solicitors. These days the arrangements are that the seller’s solicitor provides the purchaser’s solicitor no later than the date of entry with a signed Disposition and other settlement items to be held by the purchaser’s solicitor as “undelivered” pending it being agreed that settlement has taken place.

Sending Free Proceeds of Sale to Client

Deduct fee and outlays from remainder of price.

Send balance to client with receipted fee note and cash statement. Also send client any life policy with Assignation, Retrocession and copy intimation where appropriate and where the policy has not already been separately transferred by the lenders direct to the seller.

Finally

Advise Council Tax Office of the change of ownership. Only in certain areas of Scotland is it necessary for the solicitor to do this. In others, the seller and buyer make the necessary intimation themselves.