Case Study
Your Guide to Moving House
Monday 28th April 2008
Your Guide to Purchasing a Property
For anyone buying property in Scotland it is important to be aware of the correct way to go about it. This is particularly the case for anyone moving from England, as there are fundamental differences between the Scottish system and that operating south of the border. Although the basics are the same it is the timing of when the contract becomes legally binding that has led to two different approaches. It is important to understand that there is no second step in the Scottish procedure and that the contract can become legally binding at a relatively early stage, unlike in England where contracts are often exchanged towards the end of the process. Here in Scotland we prefer not to wait until the removal men are at the door before binding the deal! Here are the steps involved in Scotland...
NOTING INTEREST
If you are house hunting, take advantage of T C Young's local knowledge. It could avoid a lot of wasted effort. When you see a house/property you like, contact T C Young and we can note interest for you with the selling agent. A "Note of Interest" does not oblige you to buy, so you are not committing yourself in any way. It simply indicates that you are interested in the property and wish to be kept informed of developments, such as fixing a closing date for offers.
CLOSING DATES
A closing date may be fixed when there is 1 or more note of interest in a property e.g. 12 noon 17/05/2008...this means that if you want to offer for the property your offer has to be in on or before the particular deadline. If you advise T C Young that you want to make an offer at the closing date we will attend to everything on your behalf and thereafter report to you on the outcome.
SURVEYS
T C Young can advise you on the options available and the costs involved and can instruct a surveyor on your behalf. You should discuss the survey report with T C Young before making an offer. However, it is now common for purchasers to offer "subject to survey"
THE LOAN
Your Bank/Building Society will arrange your mortgage or loan. There are hundreds of mortgage products available in the current market, make sure you agree to a product which meets your needs and circumstances...you may wish to seek independent advice from a Financial Advisor.
ALTERATIONS & ADDITIONS
This is an area which gives rise to many problems. If you are aware from the survey report or from your observation that the house has been altered, or extended, you must let T C Young know, so that we can check whether planning permission and/or a building warrant were required and, if so, whether they were obtained and whether a Completion Certificate was issued when the works were finished. This may of vital importance when, in turn, you come to sell your house.
MAKING THE OFFER
We will discuss with you, and advise you on, the terms of your offer. Offers are long and complex documents designed to protect you against all the pitfalls of buying a house and it is important to get them right first time. T C Young's expertise is vital here. You will receive a copy of the Offer for reference purposes.
ACCEPTANCE
If the sellers accept your offer, then the seller's solicitor will send your solicitor a formal acceptance, in which the seller will include conditions which attempt to modify the conditions in your offer. This is because the conditions in your offer were framed to force the seller to disclose certain facts about the property and the title to it. These conditions by the seller are described as "qualifications" and the acceptance is therefore referred to as a "qualified acceptance". T C Young will discuss the qualifications with you and give you advice so that you can decide on those qualifications which you are prepared to accept and those which you are not. This may lead to a further exchange of formal letters before both sides are in agreement and your offer, subject to these negotiated modifications, is finally accepted.
CONCLUDING THE BARGAIN
The offer, acceptance and any subsequent letters, which are described as "formal" because they are intended to be part of a legal contract, are known as "missives". When the final acceptance is issued, it is said that missives are "concluded", which means that you and the seller have entered into a legally binding contract. T C Young will consult and advise you at each stage of this process and will give you copies of the correspondence which forms the missives. You should never at any stage assume that because you have submitted an offer for a property that the contract if fully concluded/binding. T C Young will advise you that the contract is fully binding and only when you receive confirmation of this, do you know that the missives are actually concluded. If you are unsure whether the contract is binding or not, please don't hesitate to telephone and ask. It is an urban myth that you as a purchaser have to sign missives. Your solicitor signs for you.
THE TITLE
T C Young must carry out a thorough examination of the title deeds to make sure that the seller is genuinely the owner of the property and that his or her right to sell is not restricted in any way. The title deeds also describe the precise extent of the property. T C Young will ask you to confirm that the property described in the title deeds is precisely what you think you are buying. The examination of the title will also reveal whether these are conditions relating to the property about which you should be aware e.g. restrictions on business use, or a requirement to contribute to the maintenance of common ground (i.e. through property factors). You will receive a full Report on Title from T C Young.
LOCAL AUTHORITY MATTERS
You will want to know whether the roads and sewers are public or private, whether there are any planning proposals which might affect the property and whether the local authority has made any statutory orders or notices affecting the property. T C Young would check all these items on your behalf.
THE SECURITY OR
MORTGAGE TRANSACTION
In most cases your lender will instruct us to carry out their legal work as well. This saves time and money. You should understand however, that the security (sometimes called "a mortgage") is really a separate legal transaction in which we, acting for the lender as well as for you, must have the same regard to the lender's interests as to yours. While these interests are broadly the same, T C Young will, if possible, resolve any differences which emerge. The lender will issue lengthy and detailed instructions to T C Young in connection with the loan (usually at the same time as you receive your "offer of loan"). We must then complete a formal Report or Certificate of Title before the loan funds are issued to us on your behalf.
Provided that you have completed your loan application for in good time and supplied the lender with all the information it needs and we have received our loan instructions from your lender we should be able to ensure that your loan funds are available when the purchase price of the house is due to be paid.
There will be various documents for you to sign in connection with the transaction, the most important being the Standard Security, the deed which secured the loan over your new property. We at T C Young will explain the effect of all documents which you have to sign and will ensure that they are properly signed in good time.
PREPARING FOR SETTLEMENT
As the date for settlement of the purchase approaches T C Young will draw together all strands of the transaction. T C Young must ensure that there are no outstanding queries about the property or the title, that all necessary documents have been obtained, if necessary, signed and that your funds and the mortgage funds are in our hands. T C Young will also explain to you what will actually happen on the date of settlement and where and when you will obtain keys for your new house.
THE DATE OF ENTRY/SETTLEMENT
Provided we receive the funds timeously we will ensure that the purchase price is in the seller's solicitor's hands on the agreed date of entry. In exchange you are entitled to get the keys and the title.
TAKING ENTRY
T C Young will have advised you on the steps you should take immediately on taking entry to check that the property is in good order, that any extras (carpets, curtains, oven & hob and other items) which you are buying are present and that items like the central heating system are in working order (if that is what "the missives" provide). T C Young will also explain what has to be done if you discover any problems in this connection and what legal remedies, if any, you have.
STAMP DUTY
If the property which you are buying is over £125,000 you are required to pay Stamp Duty to the Inland Revenue. We would complete the appropriate paperwork to the Revenue on your behalf (we usually do this on-line). In order for us to complete the appropriate documentation on your behalf we would require you to sign a Mandate authorising us to do this on your behalf. The Revenue payable is directly in line with the purchase price of the property as follows:-
- If under £125,000 nil stamp duty
- If over £125,000 but under £250,000 1% of price
- If over £250,000 but under £500,000 3% of price
- If over £500,000 4% of price
AFTER SETTLEMENT
Following conclusion of the transaction T C Young will report to you detailing any matters that remain to be dealt with and in particular any financial matters which are still outstanding and send the title deeds for registration in the Land Register of Scotland (or Register of Sasines), which is the final step to complete your title. When the registration process is complete, T C Young will again check the documentation before sending it to your lender for safe keeping or retaining at T C Young.
For further information please do not hesitate contact us. Any one of the following people who work in our "Private Client" Department will be able to help you with any questions you have i.e. fee quote/costs involved etc.:-
Isabel Ewing (Partner) E-mail: iee@tcyoung.co.uk
Direct Dial Telephone: 0141 225 2563
Lesley Hurst (Partner) E-mail: lah@tcyoung.co.uk
Direct Dial Telephone: 0141 225 2579
Alison Hempsey (Trainee Solicitor) E-mail: amh@tcyoung.co.uk
Direct Dial Telephone: 0141 225 2573
Arleen McDonald (Paralegal) E-mail: axm@tcyoung.co.uk
Direct Dial Telephone: 0141 225 2554