Purchasing a Property - The Legal Process
At the outset please do not be put off by the thought of a long and difficult transaction – your solicitor here at James & George Collie will be happy to answer any queries you have and will assist you throughout the purchase process.
The First Steps
Once you have seen a property you are interested in purchasing it is important to get in touch with your solicitor as soon as possible. Your solicitor will then contact the selling agents to “note interest” in the property on your behalf. This confirms to the selling agent that you are seriously interested and once your interest has been noted it is unlikely the property will be sold to anyone else without you being given a chance to submit an offer.
If yours is the only note of interest in a property then your solicitor can negotiate on your behalf with the selling agents in order to secure the property at the best possible price for you. Most properties on the market for sale will have a Home Report which provides details of the condition of the property as well as it’s open market valuation. This will assist you in deciding exactly how much to offer. Your solicitor will also be able to advise you on recent comparable sales data and current market conditions.
Closing Dates and Offers
If the selling agent has two or more notes of interest for a property they are selling it is likely that they will fix a closing date for offers. This is the deadline by which all offers have to be submitted.
After discussion with your solicitor you will be in a position to decide exactly how much to offer. The official offer which is submitted on your behalf also includes the date of entry (the date on which the purchase price is paid in exchange for you receiving the keys) as well as details of any extras such as white goods, furniture etc.
At a closing date the owner will usually accept the highest offer. You will be advised of the outcome of the closing shortly after it has taken place.
If a property is advertised at a fixed price then the property is usually sold to the first person who offers the asking price. It is possible to offer a figure below the fixed price although the owner is not obliged to accept this.
New Build Purchases
If you are purchasing a new property from a developer then after paying your reservation fee you will generally have between seven and fourteen days within which to make all the usual property purchase enquiries and return the signed contract relating to the purchase. The main advantage of purchasing a new property is that the price is fixed and, depending on market conditions, discounts or incentives can be provided.
Home Reports are not provided for new build properties and therefore your solicitor will commission a survey valuation on your behalf which will confirm the open market value of the property being purchased.
Prior to submitting an offer for any property it is advisable to obtain an agreement in principle from a mortgage lender. If you require assistance in connection with obtaining suitable mortgage finance please let us know as we can introduce you to an in-house mortgage adviser who can search the market for the best possible deal for you. Once you have agreed a price for the purchase of a property you will complete a mortgage application form which will then be submitted to the bank or building society who will then progress the mortgage application. The loan funds are paid directly to your solicitor just before the agreed completion date.
The Contract - Missives
If your offer is successful there will be an exchange of letters between your solicitor and the selling agents. These are called the missives. An offer generally contains approximately 30 clauses including the price, date of entry, additional items to be included and more technical conditions relating to the title deeds, alterations and the legal conveyancing process.
Due to the number of conditions included in an offer it is very unlikely that it will be met by a completely unqualified or straight acceptance. In most cases your solicitor will receive what is known as a qualified acceptance which amends or deletes some of the conditions in the original offer. Some amendments including those relating to the title deeds and any structural alterations to the property may take some time to resolve and a number of letters passing back and forth between purchasing and selling solicitors.
Once all the relevant conditions and amendments have been agreed the missives, or contract, will be concluded and legally binding on both you and the seller. At this point neither party can back out. Your obligation is pay the full purchase price on the agreed date of entry. The seller’s obligation is to sign over ownership of the property to you and hand over keys in exchange for receiving the agreed price.
The Titles Deeds and Conveyancing Process
Once the legal contract is in place your solicitor will receive the title deeds of the property and will examine these in detail. You will receive a copy of the main title document which will usually contain a plan showing the boundaries of the property and the exclusive and mutual areas which you are to be acquiring. The title documents will contain details of the burdens or conditions of ownership which apply. These may include restrictions on the use to which the property can be put, such as a prohibition on commercial use as well as setting out your responsibility to contribute towards the maintenance and upkeep of any common or mutual areas such as the roof of a block of flats. Your solicitor will also check to ensure that there are no outstanding charges or securities over the property and they will also check other documents to ensure there are no repairs, notices or planning proposals which might adversely affect the property and to ensure that all building warrants, completion certificates and timber treatment guarantees are in order.
Once your solicitor has examined the title documents he or she will prepare the document which transfers ownership from the seller to you. This is known as a Disposition and it sets out details of the parties, the price, the date of entry and will also refer to the older title deeds or the registration number of the property in the Land Register of Scotland. The final version of this document will be signed by the sellers before the date of entry.
During this period of time your solicitor will also be in contact with your bank or building society and will complete all the loan documentation required. This includes the Standard Security which is the lender’s charge over the property and which ensures that their loan will eventually be repaid. Your solicitor will explain the meaning of these documents before you sign them.
Just before the date of entry you will be asked to provide funds to your solicitor. This will be your deposit and the legal costs. Your mortgage provider will, at the same time, release the mortgage advance to your solicitor and the agreed price will then be passed on to the selling agent. In exchange you will receive the keys and your solicitor will obtain the title deeds and signed Disposition. This is the settlement process.
After settlement your solicitor will submit the Disposition and the bank’s security for registration in the Land Register of Scotland. It can take some months for the completed, registered deeds to be returned but once these are received, depending on your lender’s requirements, the deeds will either be sent to you or to your mortgage lender for safe keeping. This then brings the transaction to an end.
Your first steps to purchasing a property using our experienced solicitors
Your solicitor here at James & George Collie will be happy to answer any queries you have and will assist you throughout the purchase process