Guide to buying a property in Scotland
Buying a property in Scotland for the first time may seem rather mysterious, even alarming. The following guide should help explain the various procedures involved, with unfamiliar terms emboldened and explained in the glossary at the end.
Adam Gillingham, from Scottish solicitor firm Turcan Connell, explains how property purchases work north of the border.
The most obvious linguistic difference is that in Scotland, we talk of sellers (not vendors) and purchasers (not buyers). When in doubt, consult your solicitor, but make sure he or she is an expert in Scottish conveyancing law.
Declaring an interest in a property
Once you have identified a suitable property and obtained a set of sales particulars, if available, you should immediately contact your solicitor, who will then talk you through the necessary procedures. At the same time, you should request an estimate of fees and outlays.
Your solicitor will then contact the seller's agent to note on your behalf an interest in the property that may be set at a fixed price or offers over. Your solicitor will then normally organise a survey and valuation report (and additional specialist reports if required) on your behalf in anticipation of making an offer at the closing date. It is possible to make an offer conditional on survey, but this is not a recommended route to follow at a closing date as this will make the offer unattractive to a seller.
Making an offer
Assuming the survey and valuation report are acceptable, you then need to identify through your solicitor whether or not the seller is likely to accept a quick offer, or whether you will have to wait for a closing date to be set. Either way, you will need to decide what to offer. The amount required will depend upon how much you can afford, how much competing interest there is in the property, prices recently paid for comparable properties (assuming that information is available), what you wish to include in the price (such as moveables) and your preferred date of entry (or completion).
Your solicitor will then submit a written offer on your behalf, either immediately, or at the specified time on the closing date. Normally, acceptance or rejection of the offer will be communicated by telephone later the same day. It should, however, be noted that, in a competing situation, the seller is not bound to accept the highest offer. The seller and his solicitor will inevitably compare the various offers received and will take into account the conditions contained in each offer, proposed date of entry and other such matters. Sometimes, the seller's agent will seek clarification regarding certain aspects of the offer from your solicitor.
Having an offer accepted
Assuming your offer is accepted, the seller's solicitor will issue a qualified acceptance, together with a package of papers relating to the property, such as the property titles, planning papers, specialist reports and property enquiry reports. Your solicitor will then have a number of working days to check through these and raise further queries as appropriate. At this stage, there is no legally binding contract in place between the seller and the purchaser, and it is open to either party to withdraw from discussions at any point, though this rarely happens.
After your solicitor has carried out an inspection of the titles and other papers, he will provide a report to you with recommendations. Quite often, a contractual letter containing further qualifications is issued on your behalf by your solicitor. If the terms are acceptable to the seller, the seller's solicitor will issue a final formal letter, thereby concluding the contract. At this stage both parties are bound by the terms of the contract constituted by the offer, the qualified acceptance and subsequent formal letters.
Between the conclusion of the contract and the settlement date, your solicitor will complete all necessary conveyancing formalities, including liaising, where appropriate, with the mortgage provider. In most cases, your solicitor will act for both you and the mortgage provider.
Managing the funds
In anticipation of settlement, your solicitor will issue a state for settlement. Cleared funds must be in the hands of your solicitor in advance of settlement. Often these funds will come from the mortgage provider, with the balance being provided by you. These funds have to be sufficient to cover all sums as per the state for settlement, which includes the purchase price, stamp duty (if applicable) and registration dues on the title. The matter of insurance cover for the property will also have to be considered and arrangements with the appropriate broker made so that insurance cover is in place, it is recommended, immediately prior to settlement.
On the date of entry, the purchase price (less the deposit if it has already been paid) will be sent by your solicitor to the seller's solicitor. In exchange, your solicitor will receive on your behalf the disposition and all relative prior property titles, planning papers, specialist treatment papers and property enquiry reports. Assuming the funds reach the seller's solicitors within banking hours on the settlement date, keys for the property will be made available to you either at your solicitor's office or another mutually agreed location.
Your solicitor will then arrange for the disposition to be stamped and presented for registration together with any mortgage document on the Sasine/Land Register. Immediately following settlement, you should inspect the property and notify your solicitor of any defects in such things as central heating systems, etc. within the time limits specified in the contract. If such defects exist, then your solicitor will intimate these defects to the seller's solicitor calling upon the seller to make these good.
Once the disposition has been registered, it, together with all other titles and papers, will either be sent to the mortgage provider or, if there is no mortgage provider, held by your solicitor for safe keeping. If any alterations requiring planning permission/building control consents are carried out by you subsequent to settlement, it is recommended that you pass those papers to your solicitor for placing with the other titles.
Legal terms used in conveyancing in Scotland
Once a number of parties have noted an interest, the sellers may set a closing date for offers. This is usually noon on a certain date, and offers should be submitted before that time on that day. You will normally be advised how many other parties have noted an interest, but not what they will be offering. It is at this stage that you must decide how much you are willing to offer, depending on the valuation and level of interest. If your offer is unsuccessful, your solicitor is not permitted to re-submit a higher offer on your behalf, unless invited to do so by the selling agents.
Concluding the contract
This occurs once the terms of the last contractual letter between the purchaser's and the seller's solicitors have been agreed. It is at this point that the contract becomes binding on both parties. Henceforth neither party can withdraw without incurring certain penalties.
In the case of more expensive properties it is not unusual for a deposit to be payable as an indication of the purchaser's good faith. It is usually 10% of the purchase price and should be paid within 14 days of the contract being concluded. It may or may not be refundable in the event of the sale not proceeding, and this should be established with your solicitor at the time.
The property transfer document sent to your solicitor by the seller's solicitor at the end of the purchase process. Your solicitor will arrange for it to be stamped and presented for registration together with any mortgage document on the Sasine/Land Register. Once it has been registered, it will either be sent to the mortgage provider or back to your solicitor for safe keeping.
A price may be stated as being a fixed price of, for example, £200,000. In this case, it is normal for the first written offer for this amount to be accepted. That is not to say, however, if there were two or three parties interested, a closing date would be set.
These are items such as furniture, carpets, curtains, etc., and other items that are not of a fixed nature. They should be specifically referred to in the offer if they are to be included in the price, although it is not uncommon for such items to be sold separately. Moveables do not attract stamp duty.
Note of interest
Your solicitor will note an interest for you formally by contacting the selling agents and intimating your interest in the property. It is then professional courtesy on the part of the selling agents to formally advise all parties who have noted an interest through their solicitors once a closing date has been set. The sellers are not however obliged to set a closing date and may accept an offer from any party at any time.
This is the formal written offer prepared by your solicitor. It contains the names of the parties, the property, the price, date of entry, details of any furniture to be included in the sale, and the other standard legal terms required in order to complete the conveyancing and to take legal title to the property. A time limit for acceptance is normally included in the offer.
The purchase price may be stated as being offers over a specified sum. This normally means that the seller is expecting an offer in excess of the specified sum and will not usually accept anything less.
This is the selling solicitor's formal written acceptance of the offer in which a number of the offer conditions are usually deleted and the titles and other papers exhibited for examination.
The brochure containing photos and a description of the property, prepared and circulated by the selling agents. They usually also contain details of any furniture, etc., is to be included in the price and the purchase price. In certain cases the purchase price is not disclosed and is available on request from the selling agents.
This is the date of entry provided for in the contract and on which settlement will take place. At this time the purchase price is paid over to the seller's solicitor in exchange for the title deeds, other documentation and the keys to the property. It is very important that you are in a position to settle at this time as if not then interest will normally be payable to the sellers on the purchase price until you were in a position to do so.
This is provided by a specialist as recommended by the surveyor in the survey report and may cover such matters as timber treatment, electrical wiring and the structural condition of the property. Again, this should be done prior to offering as it is not normally open to the purchaser to carry out any further surveys after the offer has been submitted.
State for settlement
This will be prepared by your solicitor prior to settlement and will provide details of the purchase price and outlays required at settlement.
It is for you as purchaser to establish the condition of the property and normally there is no recourse in this regard against the sellers after you have purchased the property. It is therefore recommended that you instruct a surveyor to carry out a survey of the property prior to offering. Depending on the age and apparent condition of the property there are various levels of survey to consider.
A Scheme I Mortgage Valuation Survey Report is a basic walk-around survey that provides a valuation and may disclose material defects in the property that require further investigation, but that is all. A Scheme II Homebuyer's Report is more detailed and would disclose more information on the property. If the surveyor uncovers material problems in the property he or she may recommend a further Specialist Report, and this would be strongly recommended in order to ascertain the cost of any repairs required in this regard.
Adam Gillingham is a qualified solicitor practising in Scottish Law and is a partner at Turcan Connell specialising in all aspects of both urban and rural property law.
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