Austin Lafferty’s Guide to Selling a House in Scotland
The sale of a property cannot be concluded without signed missives and then the transfer of title deeds. The missives consist of a written and signed offer by the purchaser's solicitors, a written acceptance of that offer, and any additional missives intended to iron out any disputed legal clauses.
In our guide to selling a house in Scotland, we take a look at the key missives you need to be aware of and everything else you need to know about the process.
The offer and acceptance, also known as a qualified acceptance due to the fact it contains qualifications or amendments to the terms of the offer, contains various legal clauses and conditions. These are designed to protect the respective interests of the seller and purchaser. They can vary from transaction to transaction depending on the property and the wishes of both clients. It is crucial that you realise that once a written offer is received, you have not formed a binding contract to sell the property. At this point you are not bound to sell the property nor can you insist on selling it. You require, through your solicitors, to issue a qualified acceptance. The purchaser then has an opportunity to instruct a written response to any conditions in the qualified acceptance with which they don’t agree and they do so in writing with a further missive. To complete the contract you need to instruct your solicitors to write back to the purchaser’s solicitor confirming that the additional clauses or any changes are agreed upon. Once the clauses have been agreed upon, a binding contract is created meaning neither party can back out from the sale without agreement from the other party.
Concluded Missives and Legal Obligations on the Purchaser and Seller
When missives are concluded, the conveyancing proceeds and once the date of entry comes around, it is legally binding on the purchaser to pay over the full sum. The seller is not responsible for any delays in the purchaser’s mortgage being made available, that is the responsibility of the purchaser him/herself (and of course their lenders and mortgage brokers). The seller’s solicitors' job is to bring together the title deeds, searches and various reports that the purchasers are entitled to see. Your solicitor requires your cooperation and information at all stages, and will do their best to get all documentation together in time. However, if the date of entry is very soon after the conclusion of missives, or if there are other reasons beyond your solicitors' control that make it difficult or impossible to get the title deeds or other documents, then any delay in the settlement will be the liability of the seller.
Alterations, Planning Permission, Building Control and other Property Considerations
One particular matter to note is that the purchaser is entitled to receive any documentation that covers alterations made to the property (and indeed that covers its overall construction if it is recently built). It is the seller’s responsibility to provide the likes of planning permission and building control documentation, and ideally, this should be with your title deeds. If it is not, then your solicitor may require you to obtain duplicate documentation, or, if the proper permissions were not granted when the work was done, to obtain fresh documentation from the local authorities. This may be what is generally known as a letter of comfort from the building control department, confirming that although permission was not granted at the time of construction, building control is prepared to allow the building to remain as it is without requiring remedial work. If you have carried out alterations since you moved into your property, please look out for the relevant paperwork for your solicitor as soon as possible.
For properties that contain heating and other working systems, it is common for the purchaser to include a clause that allows them to have the seller pay for any repairs in defective systems or equipment in the offer. This payment is only required if such defects are intimated in writing within a set number of days after the purchaser takes entry. Please be aware of this, and if selling, let your solicitor know if there are any defects likely to come to the purchaser’s attention in his way, as the seller will then be liable for the cost of repair or replacement. This does not apply to the general fabric of the building, the purchaser takes it as they find it, and usually with the benefit of a survey to guide them beforehand.
Financial Calculations and Mortgage Redemption
As the completion of the transaction approaches, your solicitor shall advise you of the financial calculations, including the money to pay back any mortgage on the property. They shall pay the redemption of the mortgage from the price when it is received by your solicitor from the purchaser’s solicitor, and complete a full cash statement showing you the monies expended on your behalf and sending any balance to you. If by any chance the redemption of the mortgage is a figure higher than the sale price of the house, then this is obviously a problem as the purchaser cannot get a clear title to the property. The mortgage lender will refuse to discharge their security without full repayment of the mortgage, or some other agreed outcome. Such a position is very rare, but you should advise your solicitor at the very earliest stage if this is a possibility.
Buying a House and Selling your House on the Same Day
If you are buying a house and selling on the same day, then it is usually essential that your solicitors have the money in from the sale of your old house in order to complete the purchase of the new house. Note that solicitors usually still complete transactions by way of cheques drawn on their own bank accounts. These cheques are always honoured, and solicitors are obliged to trust each other that if a cheque is issued, the funds are there to cover it. Thus solicitors do not require to await clearance of cheques before releasing keys. However, if cleared funds are needed for any reason (some developers insist on payment by way of bank transfer which requires funds to be cleared), then it is the client’s responsibility to ensure that your solicitors are in receipt of cleared funds or to let them know at the outset that they must (exceptionally) insist on payment of the price of your old house by bank transfer. If the need for cleared funds emerges later, you may have to obtain bridging finance to cover the days of clearance. Your solicitor can make an introduction to lenders for this purpose but are not acting as financial advisers in that regard.
On a related note, when settling with you after the sale, your solicitors can immediately give/send you a cheque for any balance due to you after deduction of fees, searches, mortgage redemption and any out outlays, but they must await bank clearance on the incoming cheque from the purchaser’s solicitor before doing any kind of electronic transfer to your nominated account.
Note that there may also be a bank charge for this kind of payment to you.
Completion of the Sale, Title Deeds and other Considerations
Following completion of the transaction, your solicitor will send the title deed (which will already have been signed by you) to the purchaser’s solicitor. Your solicitor will send all necessary documentation and any remaining funds to you as soon as they can after completion. If they have to retain any money, for factor’s fees or for additional necessary expenses, this will be shown in your cash statement and accounted for in full.
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