"The Scottish System"

[scarlets]

Everyone refers to it as a good model whenever they hear of a chain collapsing ("ahhhh shame. We should do what they do in Scotland"). Is that the case? Is it genuinely less glitchy than the system in England and Wales?

What's the process like in N. Ireland and other places?

I've heard of many difficult and disappointing scenarios over the years relating to fickle buyers/sellers. The worst was that of an old lady who lost her place in a retirement home because her house sale fell through; she had a fatal heart attack later that week which her sons were convinced was stress-related. I can't help thinking that Something Should Be Done but I don't know what.

[chocolateyy]

In Scotland, once you make an offer on a property, and it's accepted, then that's it! There's no pulling out, for any reason at all.

So, it matters, not a jot, if there's a chain or not here, because once you've sold you've sold.

I always thought it sounded very, very stressful in England.

[ginmakesitallok]

In Scotland once your bid is accepted then it's binding, unless it's a bid subject to survey out similar. Basically the buyer and seller have to complete by the given date and if they don't there are likely to be financial penalties.

Think n Ireland is the same as the English system?

[ginmakesitallok]

You can still pull out after offer accepted, but only in certain circumstances. E.g. we pulled out when survey came back and valued house much lower than expected, seller refused to renegotiate on price so we pulled out. House ended up on market for another year and they finally sold for less than we'd offered.

[PrimalLass]

I'm pretty sure you can still pull out until the missives are concluded. But that gets done much quicker than exchange in England.

[SoldierBear]

That isn't quite true about the Scottish system.

When your bid is accepted, the solicitors on both sides enter into a series of negotiations called "Missives". It is only when everything is ironed out and all the details agreed that Missives are concluded, and this constitutes a contract that is binding on both parties. The missives take as long as they take for the agreement to be reached. Either party can drop out before missives are concluded with no penalty.

It is possible to break the Missives, however there will normally be a financial penalty for doing so.

A recent addition to the Register of Sasines and the Land Register in terms of the 2014 Act is the facility to record an Advance Notice - a legal document notifying anyone searching the registers of a forthcoming transaction and gives the party named therein a "first right" in layman's terms. Basically, this was introduced specifically to prevent the English practice of "gazumping" despite the fact it has never been an issue of any note in Scotland.

[scarlets]

Thanks for the replies.

Is there any difference between "missives" and the normal solicitors' negotiations in Eng, Wal and NI? Do they tend to be quicker? See, that's the problem for me - exchange happens approx 8-12 weeks after offer, by which time people have spent money and excitedly made plans, so a chain fail is traumatic.

[Rangirl]

Traditionally the conclusion of missives was a lot quicker than the English system but not so much now Huge variation in timescales depending mainly on whether purchaser is getting a mortgage / has a house to sell
Advance notice system is not primarily to prevent gazumping

[lotsofcheese]

IME, missives are generally concluded within 4-6 weeks, so it's much faster. It's also very unusual to pull out after an offer is made, and chains don't seem to exist up here.

A much simpler process all round.

[SoldierBear]

Well, there was also the issue of masterplan insurance for solicitors and the projected shortfalls whcih was one of the reasons for advance notices given prior to the remit of the consultation paper being given.

[SoldierBear]

In Scotland concluded missives form a contract. This is in writing. So until that point they are basically a series of negotiations.

[Roseybee10]

We had to pull out before we concluded missives back in April as we discovered power lines going over the bottom of the garden after the offer was made and the power company did a survey which showed high levels of radiation in the garden and back of the house.

We had to pay some solicitors fees for the work already done but it was only around £200.

[LoveVintage]

SoldierBear's answers are absolutely right. As a rule, unless there are issues with the title or getting mortgage offer through, missives tend to, or can be, concluded reasonably quickly. It is possible for missves to not be concluded until very close to the date if entry, but as a rule, and assuming there is good reason for this, the conveyancing is progressed, giving the parties confidential both are committed to the transaction.

Usually, a date of entry (i.e. moving date) is agreed fairly early on so again from an early stage both parties are moving toward settlement in that date.

Sales do fall through for all sorts of reasons, but the system does seem to be more straightforward, with less uncertainty.

[LoveVintage]

Like in Roseys case the missives even if concluded early, give parties the right to pull out without penalty in certain circumstances, such as material issues with the title coming to light. A real shame when you think our have found your house.

[museumum]

You can't put in an offer without engaging a solicitor in Scotland so no time wasters.
Also, I believe that solicitors moderate their clients behaviour. If I'd asked my solicitor half way through missives to just drop my offer without a very good reason he'd have strongly dissuaded me.
We have estate agents here but I'd guess that over 90% of sales go through EAs that are also the solicitors so we don't seem to encounter the same sort of "wide boy" EA bullshitting I hear about down south.
Also, with home reports everybody knows the valuation by an independent surveyor so the EA doesn't value the house and the buyers don't need to either. Often but not always the mortgage supplier takes the home report valuation.
I've lived here all my life and don't personally know anybody whose sale or purchase fell through unexpectedly.
Gazumping is unheard of as once an offer is accepted the house is instantly marked as "under offer" on all the websites. I don't think my solicitor would have agreed to put forward an offer on a house already under offer (not sure if he legally could but I'm sure he morally wouldn't have).

[blueteapot]

Sounds a lot more straight forward! Can confirm here in NI it's just the normal English system. There were a few odd things eg our lender offered to cover legal fees if we used their solicitor / cash back but NI we weren't allowed to use their solicitor so had to take the cash back (we'd have rather used our own anyway but I thought that was odd)

[OllyBJolly]

There's a plus and a negative in the Scottish system

The "sold subject to concluded missives" system means you know where you are. You would only pull out because of a bad survey or similar. When I was buying and selling in England you just didn't know if the house was really on the market or not, or whether your buyer would turn up on exchange day. Incredibly stressful.

The "offers over" system stinks. I haven't bought since the crash but 12 years ago I surveyed and bid on 5 houses to lose out on all of them. Houses advertised at "offers over £190k" were fetching bids of £250k+ . Hugely expensive, time consuming and frustrating process.

When I sell this house I'm doing it at fixed price. Much fairer and less greedy.

[SoldierBear]

The introduction of home owner surveys and the ability to look up recent sale prices online have had a big impact on the offers over system. As has the fact that Registers of Scotlad has finally reduced its backlog, which used to be over a year in some instances, so that info is up to date (give or take a few weeks)
But the key to dealing with the offers over system was a solicitor who understood the local market and could advise what the property was likely to go for and when not yo even bother putting in an offer.
It used to be that you always instructed a survey before putting in an offer, so that has changed to the financial benefit if buyers.

[specialsubject]

with binding offers in the Scottish system, presumably you need to do searches and surveys before offer. So you spend a lot more up front.

from the last post, sounds like the survey is now done by the seller. Makes sense - but would you trust it?

no perfect way of doing it.

[lotsofcheese]

Seller's surveys are done by a surveyor commissioned by them - it's a lengthy document, usually around 50 pages & is usually pretty through.

Mortgage lenders accept this without problems (on the whole). Occasionally a further specialist survey might need done eg damp, based on that 1st survey. And of course there are a few disclaimers eg central heating not tested.

But it gives a pretty comprehensive review of the property - the condition of various elements eg windows, roof, all graded on a range of 1 = good condition, 2 = needs investigation/work in future, 3= urgent work needed.

Have a look in the ESPC website & you can download/request them online, if you want to see them.

Having bought & sold under both systems, over the years, I think the current HR system is much improved. Although you will always have to make a competitive offer at a closing date.

[SoldierBear]

Searches will be done before property is put up for sale. Buyer only then has to order an updated search from the date of the previous one, which is a lot cheaper.

Homeowners surveys are required, so they can be trusted as much as any other survey.

[hairhelpplease]

Searches are not done before a house goes up for sale. They are done during the missives process.

[SoldierBear]

Not true that sellers don't get searches done.
You wouldn't believe the number of people who have no idea about their titles.
Or even whose name the title is in.
Or the number of solicitors who don't know where the deeds are and get a search and then order copy deeds
Not to mention those who are occupying additional ground to which they have no title and have to trace the title before putting the property up for sale. Especially since the new plans reports were introduced in December.

[hairhelpplease]

I never said they don't get done. I just said they don't get done before the house is put up for sale. They are done as part of the missives which is when the house is under offer.

[Rangirl]

Traditionally best practice was to get the searches done at the earliest opportunity If it is a Land registered title that is not as necessary now ,and in my experience is not often done Usually just download a copy of the Title sheet for £3.60 and who cares where the titles are
Different if it is not a registered title

[hairhelpplease]

Another big difference - although I am not 100% sure how it is done in England is Scottish Solicitors pay for purchases by Solicitors cheque. So in terms of a chain as an example:

Solicitor A would write a cheque for £100K to Solicitor B
Solicitor B would write a cheque for £200K to Solicitor C
Solicitor C would write a cheque for £300K to Solicitor D

All would receive their cheques and accompanying documents via the Legal Post system (internal postal system between Solicitors) by 9 am on settlement day. If all goes to plan (it should do and assuming all Solicitors who need to be in funds from banks etc are early) then the whole chain can settle very quickly. We had a chain of 6 last Friday and the whole lot was done and everyone moving by 11.30 am.

It does mean if the client is due any funds back they have to wait 7 days for the banks to process the cheques.