Buying a property in Scotland, how does the system work?

If you wish to buy a property in Scotland your solicitor will prepare an offer for you. The contract to buy your property consists of your offer, your offer will have attached to it a number of clauses called the Scottish Standard Clauses. This is a booklet of standard clauses that all solicitors in Scotland abide by and who sell property are familiar with. It aims to cover property transactions ranging from new build properties to old country properties. As a result there are a number of conditions which will not apply to your property; however, it is standard practise for the whole booklet of conditions to be sent with your offer.

Once I have put in an offer how will this be accepted?

Your offer will be excepted verbally. This is often done so that your solicitor can get on with doing the legal work pending the issuing of a written offer.

What is suspensive condition?

A suspensive condition is a condition is that your solicitor will put in your offer which means that going ahead with buying the property is dependent on some conditions. These can be:

  • Subject to you obtaining your own survey;
  • Subject to you obtaining your own valuation;
  • Subject to you obtaining an offer of mortgage;
  • Subject of you obtaining planning permission if you are buying a plot in order to build a house or a property where you intend to carry out extensive alterations or a conversion.
How does the suspensive condition get taking out of my contract?

The settling solicitor will take the suspensive condition out of your offer when they issue your qualified expectance. This means they are accepted the core terms of your offer but now expect you to purify the suspensive conditions. So, if, for example, your offer Is subject to survey the seller will accept your offer but deleting the subject survey clause. This means that they expect you to instruct your survey and if you are satisfied with the terms survey you can then accept deleting of that clause.  Your offer is accepted and the document is called a qualified acceptance. This is a letter which accepts the terms of your offer but will have in a number of qualifications or deletions. It will then be up to your solicitor to ask you whether you are in a position to accept the qualifications or deletions which come from the sellers lawyer.

Will my offer ever be able to be accepted and be binding upon me?

The answer to this is yes. If you make a straight cash offer, which is not subject to any suspensive conditions then your offer can be immediately accepted and the contract must proceed. This means that you must come up with the funds at the date of entry. Accordingly you should not offer on a property unless you are absolutely certain that you will have the funds available. If obtaining the funds is dependent upon you selling a property or obtaining a mortgage you should include a suspensive (subject to)  condition.

When I am buying a property who do I give the money to?

To buy a property you will need to send any money that you are paying to your solicitor. Your solicitor will ask you for original funds. This is because your solicitor needs to know where the funds are coming form.

Can I pay my solicitor cash?

You cannot pay your solicitor a cash sum to purchase a property. On some occasions solicitors can accept cash for payment of their fees but in general terms they will need payment for property purchases by a transfer from another bank account or into your solicitors bank account or by way of a cheque.

How do my mortgage funds get paid?

Your solicitor will apply for your mortgage funds for you and will arrange for these to be in your solicitors account in time to be paid over at the date of entry.

Can I give my solicitor my bank details and ask them to take the funds direct?

No, you cannot do this. Your solicitor’s professional regulations are such that they cannot access or take money from a client’s bank account. There are some acceptations to this where your solicitor is also acting as an executor or a guardian but this will generally not apply to conventual house purchases. You will need to make sure you transfer your funds to your solicitor.

When will I be expected to pay my fees and outlays?

Herd Law’s letter of engagement with you tells you that you need to pay your fees and outlays at the same time as settlement of your transaction.

How long does the process take?

The process from submitting your offer to completing your transaction and obtaining the title deed to transfer the title into your name take approximately 6 weeks. In exceptional circumstances it can be done more quickly but there is a legal process to be gone through, which is explained fully under ‘Legal Process’.

My solicitor has told me that I’m buying from an executor and this may hold things up, why would this take extra time?

If you’re buying an executory this means that the person that was the last legal owner of the house has died and their family relatives of executives under a Will, will now be selling the house for them. The family or executor may have no knowledge of the house, its condition or its system. They also have duties to any beneficiaries under the Will to obtain the best value for the price so they may not be able to accept an offer without putting the matter to a closing date, see under “Closing Date”. The executor may also not necessarily be local and papers for the executors to sign may require to be dispatched anywhere in the world for signature. It is not unusual for there to be several executors, all of whom are required to sign the principle documents.  Other agencies are involved in an executory including Scottish courts administration and the insurance companies for the executor. As you will understand, the more agencies that are involved in a transition, the lengthier the process can take.

What could hold my purchase up?

There are a number of reason that could hold your purchase up. If you are buying a house which has been converted then your solicitor will want to see any building warrants, planning permissions or completion certificates in connection to any conversion work. It is not unusual, in particularly in legal areas for conversation works to have been done without the necessary certificates. If you do not have a mortgage then it will be a matter for you to risk going ahead with the purchase. If you do have a mortgage then this may be an essential condition of your mortgage application and these permissions are all in place. As your solicitor is also responsible for satisfying any preconditions of your mortgage, your transaction can be held up while these matters are resolved.

What is a SEPA Registration?

If you’re buying a property which is not connected to the main sewerage or drainage it will require to have some means of discharging its effluence. All properties in Scotland now require to have their discharge system registered with SEPA. Your lawyer will ask the seller to provide a copy of the SEPA discharge certificate. Please note that this means that the property is registered with SEPA but there is no guarantee that the discharge system complies with new regulations.

What is a closing date?

If you are interested in buying a property your solicitor will note that that interest for you. Sometimes the seller will wish to retrieve the quickest and best price with the least number of conditions and sometimes the sellers are simply interested in achieving the best price. To achieve the best price, they will need to fix a closing date which is a blind bidding system. If you wish to place an offer on a property which is going to a closing date you must submit your best price. There will not be any opportunity for negotiation at a later stage and you will not be given a chance to reoffer.

What is an advance notice?

Once your offer has been accepted by a property, the seller needs to let the Keeper of the Land Registers Scotland know that they were about to enter into a land transactions to sell their property.  They will need to tell their keeper at the intent to grant document in your favour called a Disposition and to give the Keeper your name and address as the intendant transferee of the title.

I am buying a property, does my lawyer need to lodge an advance notice?

If you have a mortgage your lawyer will need to tell the keeper of the Land Register in advance that you are intending to obtain a mortgage  against the property once you have purchased it.

What is LBTT?

LBTT is short for Land and Buildings Transfer Tax.  On any land transaction in Scotland your solicitor requires to complete a land transaction return for you. This is done to Revenues Scotland and is similar to submitting of a tax return. It requires it to be accurate and inaccuracies can lead to penalties. The Land and Buildings Transfer Tax is calculated at the rate of the transfer and must be paid immediately upon transfer of the property to you.  The Land Register of Scotland will not let your solicitor register the title in your favour without payment of the LBTT. To register your LBTT payment, your solicitor will need your national insurance number.

What is ADS?

ADS is called the Additional Dwelling Supplement. This is a tax due to the Scottish government where you aquired a second home. A second home includes an interest in any heritable property where you already have a main residence anywhere else in the world. The legislation is very much “catch-all” legislation, and so is designed to catch any second homes, interests in second homes.

What is a first registration?

The Land Registers of Scotland is presently going through a number of changes and there are three ways that a title can be registered. In principle these are in the general register which is known as the Sassine register, this contains all the entitled deeds in Scotland which are registered up until 1979. The properties are described by their boundaries and measurements and their North, South, East and West alignments. Some of these documents will have plans attached and some wont. After the introduction of the Land Registration Act 1979 a new provision was put into place whereby any titles transferring had to be accompanied by a plan. A plan is an outlet of  the boundaries and the plan must be able to match against the coordinates on the ordinate survey maps. This was a two dimensional mapping system. Although this had been gradually rolled out over Scotland since 1979 less than 50% of Scottish properties have achieved first registration through this system. In 2012 further legislation was introduced with the view to introducing a cadastral map. This is a three dimensional mapping system and is intended to be much more accurate. Accordingly all properties changing hands now, require to have the existing plans checked against the existing Land Register Map. If you are going through a first registration or a first cadastral registration your solicitor will need to make sure that the plan attached to your title deed will meet the requirements of the Keeper’s Regulations. This is something that must be done before your purchase goes ahead.

Can I buy the main property and sort out the title boundaries later?

In general the best legal advice to you would not to do this, whilst parties are in the process of a sale, everyone is focussed in getting the sale through but once the property has been sold there is little chance of seeking a remedy without considerable time and legal expense being involved.

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