Until the banking crisis of 2008, the Scottish system for concluding missives, ie putting in place a binding contract between a willing purchaser and a willing seller, was perceived to have one major advantage over the corresponding English system. That advantage was certainty. The certainty that within a short period of time of agreeing a price, more often than not a few days, the purchaser and seller have concluded missives and a binding contract is in place. Once missives had been concluded, neither party was at liberty to withdraw from the contract unilaterally. Concluding missives removed the risk of the purchaser having a change of mind, and of the seller accepting a higher offer from a third party. With a contract in place, both purchaser and seller could plan ahead with a degree of certainty in the knowledge that they were working towards a fixed Date of Entry.

Prior to 2008, the Date of Entry was usually 4-6 weeks after the date of the purchaser’s offer. Now, in 2014, it is rare for the Date of Entry to be any fewer than 6 weeks ahead, and 8-10 weeks, sometimes longer, has become quite common. The principal reason for the increased time frame is that that Banks and Building Societies are taking much longer to process mortgage applications. Mortgage applications are now subject to far greater scrutiny, particularly post the Mortgage Market Review (MMR) of April this year.

An Agreement in Principle from a lender is no guarantee that a mortgage in “the agreed terms”, or indeed any mortgage, will be forthcoming. The, perhaps unpalatable, reality is that until a mortgage application has successfully passed through underwriting, there is no guarantee that the required mortgage will be available. A direct consequence of this is that the purchaser’s solicitor may be reluctant, or indeed may decline, to conclude missives until such time as the purchaser’s mortgage offer has been issued by the lender in question. That approach brings uncertainty for both purchaser and seller, as until such time as missives are concluded, either party can simply walk away, and that without incurring any penalties.

The seller’s solicitor may well endeavour to pressurise the purchaser into concluding missives in advance, and perhaps significantly in advance, of the purchaser’s mortgage offer being issued. The seller’s solicitor does so by imposing a time limit within which the purchaser must conclude missives, failing which the purchaser runs the risk of the seller withdrawing and dealing with a third party. The seller’s time limit is often not enforced resulting in missives, ultimately being concluded, and the transaction completed, possibly both around the same time.

However, regard should be had to the risk and consequence for both purchaser and seller should a purchaser be of a mind, or be pressurised, to conclude missives without the certainty of having his mortgage in place. Should the anticipated mortgage offer arrive in sufficient time, prior to the Date of Entry, then the transaction should complete as was originally intended. However, if completion is delayed, the purchaser would be liable to pay penalty interest to the seller on the full purchase price. In the event of the purchaser being declined a mortgage and being unable to complete the purchase, that breach of contract could have significant, and perhaps even disastrous financial consequences for the purchaser. The purchaser would be liable for the seller’s losses as calculated by reference to the breach of contract provisions in the concluded missives.

Based on the foregoing, it is easy to understand why a purchaser may be reluctant, or may decline, to conclude missives prior to the issuing of his mortgage offer. The premature conclusion of missives may turn out to be less than ideal from a seller’s perspective. Come the Date of Entry, all that a seller is looking for is the sale price. A binding contract with a purchaser who has been unable to secure a mortgage will likely be of cold comfort to the seller who has been left high and dry and unable to complete his sale. Arguably, a seller would also prefer the certainty that his purchaser had secured the desired mortgage prior to concluding missives. The alternative is the uncertainty of concluding with a purchaser who may not be able to secure a mortgage, and the seller perhaps not discovering that fact until shortly before, or even on, the Date of Entry.

Should you have any queries in regard to the effect and importance of concluding missives, please get in touch with your usual contact at the Firm or any of our residential solicitors by calling 01224 581581 or email This email address is being protected from spambots. You need JavaScript enabled to view it.