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The Client • Issue 12 • December 2011 Buyers and sellers opt for caution The system of buying and selling residential properties in Scotland has undergone a number of changes in recent years. Many of these changes have come at a time of economic uncertainty and a widespread downturn in the property market. 10 Land & Property “The hoops through which borrowers and solicitors must jump to satisfy lenders have always existed, but those hoops are proving increasingly challenging.” B uying and selling a home can be one of life’s most stressful experiences, even in the ‘boom years’ when the prices are high and sales seem easy. The current economic climate has undoubtedly seen a change in attitude from both purchasers and sellers, with caution the underlying theme. Conflicting media reports regarding the state of the property market and the difficulties in securing funding from lenders have compounded the issue, and so overall it is not surprising that there is a lack of confidence from sellers and purchasers alike. Home Reports Since 1st December 2008, subject to some exceptions, a seller must provide a Home Report when selling their property in Scotland. The Home Report (which is undertaken by a qualified surveyor) contains a survey and valuation of a property, an Energy Performance Certificate and a questionnaire containing general information about the property. While many purchasers do find the information in the Home Report useful when considering an offer for a property, generally a purchaser (or the purchaser’s lender) will require either that the Home Report be updated or that an independent survey and valuation be carried out. Often, the independent survey and valuation will highlight matters not shown in the Home Report or a different valuation may be reached. These differences can cause problems for both parties, particularly where a lender is involved. Standard Clauses When submitting an offer for a residential property it is now standard practice to submit it containing what are known as ‘Standard Clauses’. These form the basis of a fair and standard contract and are generally in a format that is acceptable to both purchaser and seller. Standard Clauses help speed up and simplify the missive process. As such, a contract for a sale and purchase tends to conclude, and therefore be legally binding, at an early stage in the transaction. It is important to be aware that when submitting an offer containing Standard Clauses (particularly if the offer is not subject to survey) the seller may accept that offer quickly and the missives could be binding on both parties almost immediately. It is sometimes possible to conclude missives in one day and purchasers must be mindful of this when making an offer for a property. Automated Registration of Title to Land Automated Registration of Title to Land (ARTL) is a new system introduced by the Registers of Scotland. In some cases, where the title to a property is already registered in the Land Register of Scotland, it may be possible for the conveyancing to be dealt with without any paper deeds being prepared or signed. It will be some time before there will be widespread use of the ARTL system but it is becoming more common with residential property transactions. The intention is that ARTL will simplify the process of title registration. It is early days and currently only simple title transfers can be registered in this way. Common Repairs Queries often arise regarding owners’ liability for common works and repairs affecting tenements. Provided the title deeds correctly set out the liability for all the properties in the tenement, the terms of the title deeds will prevail. However, there can be a variety of situations where the provisions of the title deeds will not apply and in those cases the liability will be calculated in accordance with the Tenements (Scotland) Act 2004. advising a seller on the offer. A well advised seller is more likely to accept an offer from a cash buyer, even if the price offered is slightly lower. Solicitors need to disclose if a client’s offer is subject to finance, so if your mortgage has been approved, and you can confirm that you have funding in place, you will be at an advantage. Raising finance through lenders is proving particularly difficult and you should allow yourself plenty of time to secure a mortgage. The hoops through which borrowers and solicitors must jump to satisfy lenders have always existed, but those hoops are proving increasingly challenging. Sellers Early preparation of all relevant papers and a review of them is always time well spent. One of the issues which can most delay transactions is the lack of building control documentation for alterations carried out to the property. It is extremely important that this paperwork is in place. For listed buildings make sure that listed building consent has not been overlooked for any alterations. If you know the paperwork has been misplaced or that consent for alterations was never sought, you should obtain copies or apply for retrospective planning consent as soon as possible. For both purchasers and sellers the key to a successful sale or purchase is to be realistic on price at the outset. This is where the advice of good estate agents, surveyors and solicitors can be so important. If a purchaser or seller’s aspirations are out of line with the market, it can prove a difficult obstacle to overcome. With the property market in its current state, it is becoming increasingly difficult for buyers and sellers alike to get transactions across the line, however, there are steps you can take to help give your transaction a head start. Purchasers If you are looking to purchase a property the most important matter to consider is your financial arrangements. Estate agents are doing all they can to investigate a potential purchaser’s financial position before Thea Roth, Land & Property Senior Solicitor e. [email protected] Land & Property 11