We have many years of experience in buying properties for a wide range of clients and offer quality conveyancing services at a competitive price. Below we provide a brief guide to the main legal and financial elements involved in buying a domestic property which we hope will be useful.
The Mortgage – Before you go house hunting you need to know how much you can afford. Most purchases are completed with a loan from a bank or building society. Some buyers may be eligible for the Scottish Government Help to Buy or LIFT Open Market Shared Equity Scheme (known as ” the LIFT scheme”) and we have acted for many clients who have bought their first home with the assistance of these schemes. We can refer you to an independent mortgage advisor who will assist in securing the best loan for your needs and circumstances.
The Deposit – Part of the price will most likely be coming from your own funds, perhaps from savings or from the sale proceeds of another property. Where you are relying on sale proceeds remember to get a reasonably accurate figure from your lender for the amount needed to pay off your current mortgage – this must be done on sale and is sometimes higher than expected.
Legal Fees and Expenses – We can provide an accurate estimate of our fees and the other anticipated expenses eg Land and Buildings Transaction Tax (otherwise LBTT) Depending on your circumstances, you might also have to pay the “second homes tax”, called the Additional Dwelling Supplement (ADS). These are government taxes payable on the transaction and have to be paid immediately the transaction settles. Your title can not be registered without paying it. Please ask if you would like more information from us on this tax liability.
Once you have seen a property you like there are several steps that can be taken to protect your interest, even if you are not quite in a position to submit an offer.
Noting interest – If you are interested in a particular property let us know and we will note your interest with the selling agent. If that is done the selling agent should tell us if another offer is received or if a closing date is to be fixed and so on.
The Home Report – All properties marketed for sale must have a Home Report.
If you buy the property the surveyor who carried out the home report is liable to you for any erroneous statements even although the report was instructed by the Seller. The Surveyor must also act impartially in the preparation of the report.
Most Lenders will accept the terms of the Home Report for the purpose of their mortgage, although some may not. Also, if the report is more than 3 months old a lender may require the report to be updated.
Offering for a property
Unless you have still to sell your existing property you should now be in a position to submit an offer.
Items to be included in the offer – Before we prepare the offer for you it is important that we know of any particular points which need to be taken into account. This includes details of any moveable items you expect to be included in the sale such as carpets, curtains, appliances and the like. If you will be using the property for any specific purpose other than just as a home you should let us know. Similarly if you plan to alter or extend the property let us know so that we can ensure that nothing in the title restricts your planned use. If the property is served by private roads or paths, or private services it is better for us to deal with that in the offer as we need to ensure that the title contains the appropriate rights for these private services.
The offer and contract “missives” – If the sellers agent is not fixing a closing date the parties are free to negotiate on the offer. A verbal offer is not binding but in some cases the negotiations will be carried out verbally with the written offer only being submitted once agreement on price is reached.
In most cases where a written offer is to be accepted the acceptance will contain some further conditions ( this is referred to as a qualified acceptance). If these qualifications are acceptable a letter accepting them is issued and the bargain will be concluded at that stage and is then binding on both parties. Only once the point has been reached where neither party has any further qualifications and the last set of qualifications has been accepted is there a binding contract – up to that point either party can withdraw without penalty.
The letters forming the contract are also referred to as the missives. Until recently a valid offer for property had to be in writing and signed in accordance with various legal requirements. Now, any signed letter can form the basis of the contract . You should therefore take care not to commit any discussions in writing to either the seller or selling agents as that could end up being accepted and forming part of the contract.
What happens next – between contract and settlement
Much of the subsequent work involved in the transaction will be carried out between the two firms of solicitors and if the transaction is reasonably trouble free there may be little of substance to report until nearer settlement.
Whilst you should be certain by this stage that your loan will be granted by the Lender, you should ensure at this stage that your loan application has been completed and that the lender does not need any further information from you to enable the loan to be processed. The lender will then issue a formal offer of loan to you. Loan instructions will also be issued to us.
We complete a certificate of title to the lender and request the loan funds which are sent direct to us.
Prior to completion it is also our job to ensure that there are no problems with the property.
Settlement – the date of entry
Settlement will occur on the date of entry specified in the contract unless all the conveyancing matters have not been concluded. You will be made aware in advance if anything is likely to delay you moving into your new home. There is no specific time by which this must happen. If you are likely to need the keys by a specific time on the date of entry let us know as soon as possible so that we can liaise with the seller’s solicitor to endeavour to ensure the keys will be available when you need them.
Prior to settlement we will need funds from you for the part of the price being paid from your own funds (unless of course this is coming from a sale we are also dealing with). As the Land and Buildings Transaction Tax and registration dues of the Disposition and Standard Security have to be paid immediately after settlement, we will need funds in advance to cover these items too. We will also need funds from you before settlement to meet our fees and any other outlays unless we are also dealing with your sale and these will be met from your sale proceeds.
After settlement a lengthy Land and Buildings Transaction Tax return must be submitted on your behalf to Revenue Scotland, even if no tax is payable for the transaction. After the transaction has been approved by Revenue Scotland, and any appropriate duty is paid, the application for registration of title is submitted to the Land Register. When registration is completed the deeds will be sent to the lender, or placed in our strongroom if there is no loan.
As stated, the purpose of this article is to provide some background information on the main points which often crop up during a normal transaction. Each individual transaction is different however and we will guide our clients through each stage, ensuring attention to their own individual requirements as we go.