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Laura McCarthy, qualified in both Scottish and English Law examines the differences between the Scottish and English property conveyancing systems.
As a dual qualified Solicitor practising in the Highlands I am often approached by clients wishing to buy a property in England and sell their home in Scotland and vice versa. Whilst there are fundamental differences in the English and Scottish conveyancing processes it is possible for the two to align in order for transactions to complete effectively and efficiently.
OFFER TO BUY
In England a potential buyer ordinarily views a property and then makes a verbal or written offer to the selling Agent. If the offer is agreed by the vendor the property is usually removed from the open market and the conveyancing process begins. In Scotland, by comparison, a formal, written offer is made by a solicitor usually after a buyer has sight of a Home Report detailing the condition of the property. Whilst an offer letter can state that the offer is “subject to” something happening (such as mortgage finance being obtained) it is generally accepted that the terms of that offer represent an agreement between the buyer and seller. Whilst not legally binding at that stage this process is generally accepted as being an almost ‘informal’ contract between the parties.
The biggest flaw of the English system is that at any time up to contracts being exchanged another potential buyer could make a higher offer to the vendor. The vendor in law would be free to accept the increased offer which would result in the original buyer being “gazumped.”
Sometimes a ‘contract race’ takes place. This happens when a vendor accepts offers from two buyers and states that the first party to be in a position to exchange contracts will be sold the property. This is far removed from being an ideal position!
Bear in mind that with the conveyancing process having started, and sometimes being close to concluding, a buyer will have incurred legal expenses and outlays – which they are not able to recover from the vendor in the event of a transaction falling through prior to contracts being exchanged. This can often amount to losses of hundreds of pounds.
CONCLUSION OF MISSIVES OR CAVEAT EMPTOR?
The Scots have always considered their ‘conclusion of missives’ to be far superior to that of the English ‘exchange of contracts’. Primarily this is because of the ability in Scots Law for a transaction to become legally binding quickly as opposed to the requirement in English Law for legal title checks to be undertaken, searches requested and a mortgage offer to be received prior to contracts being exchanged. Whilst historically this has caused difficulties in allowing Scottish and English transactions to dovetail, recently the Scottish system has evolved so as to allow for conveyancers to receive a formal offer of loan or to satisfy conditions of an offer made, prior to the conclusion of missives.
The English principle of ‘Caveat Emptor’ is a Latin phrase meaning “let the buyer beware.” This means that the onus of checking the legal title to a property before committing to purchase it rests with the buyer. For that reason English conveyancers have to ensure that they are satisfied that the legal title to the property is good, marketable and free from defect whilst also establishing that their clients have sufficient funds with which to purchase the property. Once a draft contract package has been received from the seller’s solicitor it is usual for searches to be commissioned by the buyer’s solicitor which often include, but are not limited to, the following : a Local Authority search , a Water and Drainage search and an Environmental search. With such a high proportion of negligence claims against solicitors falling within the conveyancing sector is it imperative from a risk and liability management perspective that all enquiries about the legal and marketable title to an English property are undertaken and satisfactorily addressed, prior to an exchange of contracts taking place.
When dealing with a cross-border sale and purchase, to safeguard compatibility between Scots and English law the conveyancer must ensure Scottish missives are only concluded when parties are ready to exchange contracts in respect of the sale/purchase in England.
During the course of my employment with Munro and Noble I have been involved in numerous transactions concerning the sale and purchase of property in England and Scotland. My colleagues Kay Bevans-Brown, Catriona Dalziel and Alida Brice have acted in respect of the Scottish sale/purchase and I have been instructed to undertake the English conveyancing. On each occasion we have been able to conclude the English and Scottish transactions together with ease.
Whilst both the English and Scottish conveyancing processes are different, each have their own advantages and disadvantages. It is however possible for both to co-exist!