Buying a Home – First Time Buyers

Author: scott
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In Scotland – things are not done in quite the same way in England – the buyer’s solicitor makes a written offer to buy and the seller accepts in writing. The solicitors then exchange letters – known as “the missives” – setting out the details and conditions of the offer and acceptance. Once everything is agreed the missives are “concluded”. At that point the parties have a binding contract.

If the buyer cannot then fulfil the obligations in the missives they may be liable to pay the seller “damages” i.e. money to compensate the seller for any losses he or she suffers as a result. Such damages could be many thousands of pounds. So, before making an offer, the buyer should get legal advice and ensure that finance will be available to pay for the property in full.

Until the missives are “concluded” either the buyer or the seller can withdraw from the prospective bargain without penalty. But, once the missives are concluded, there will be a binding contract and an agreed “date of entry” when the price is payable and the keys handed over. You cannot be “gazumped” or “gazundered” as in England: in other words the seller cannot accept a higher offer from someone else, and the buyer can’t withdraw from the agreement and then make a lower offer instead.

The Home Report

Generally (with only a few exceptions – for example, new housing being sold for the first time) a seller or their solicitor must give potential buyers a copy of a “Home Report”. This has three parts:

  • a single survey and valuation which includes information about:
    • the property’s condition;
    • any repairs required;
    • gives a valuation of the property which can be reformulated as a standard mortgage valuation report – the buyer must check this is acceptable to his or her lender;
    • and, for insurance purposes, gives an estimate of what it would cost to rebuild the property if it were destroyed;
  • a property questionnaire which includes information about:
    • the property’s council tax band;
    • alterations to the house; and
    • details of any notices affecting the property;
  • an energy report which includes information about:
    • the property’s energy-efficiency rating;
    • and how to save fuel costs

Buying a Home

Most houses are sold through a system of “blind-bidding”. The seller asks for “offers over” or “offers around” the valuation in the Home Report. This indicates the minimum price the seller expects to get. How much you will actually have to pay depends very much on how competitive the market is at the particular time.

Using the Home Report

If you are interested in a property the seller (or his estate agent/solicitor) must give you a copy of the Home Report (within nine days).

If the Report identifies any urgent repairs you should consider whether you can afford these and may wish to get estimates for the cost of such works.

Making on offer

If there are several people interested in a property the seller will normally fix a “closing date” being a specific date and time when all offers must be submitted. If you are interested, and want to be sure of being told if a “closing date” is fixed, you should formally “note your interest” with the seller’s agent/solicitor. This should be done before you fix up any loan for your buying the property or the seller’s agent/solicitor might not let you know about a “closing date” and you could miss out.

Normally a “closing date” should be set far enough ahead for you still to have time to fix up your loan to buy the property.

If a “closing date” is not set that may be because of there being not much interest in the property in which  case you may be able to negotiate a price.

New homes

The procedure for buying a newly built property differs a bit from buying an existing one. It may be part of an incomplete housing estate – or it may not even be built yet. It will usually be offered at a fixed price and the builder will usually make on offer to sell to the buyer – rather than the other way round.

The builder may well do so on a “take it or leave it” basis: in other words there may be little or no scope for negotiation about any of the conditions attached to the builder’s offer to sell. You should make sure your loan is arranged and take legal advice before accepting any such offer: once you have accepted it will be legally binding.

Once missives concluded

Once you have an agreed contract (i.e. once “missives are concluded”) your solicitor will carry out the conveyancing to transfer ownership (“title”) from the seller to you. In particular your solicitor will:

  • check the title deeds to make sure the seller actually owns what he is selling and that there are no unreasonable conditions that would affect your use of the property;
  • tell you about any relevant title conditions that affect the property;
  • make sure that property management fees or maintenance charges for e.g. a common garden are properly divided between you and the seller; and
  • ensure that any existing mortgage (“standard security”) over the property is paid off at “settlement” when the property is transferred to you.

Settlement

This is when you get the keys and “possession” of the property and usually happens on the agreed “date of entry” in the missives. Before settlement actually takes place your solicitor will:

  • certify to your lender that the “title” is good;
  • get the loan cheque from your lender; and
  • get your contribution to the price from you.

In exchange for the cheque for the price your solicitor will get:

  • the “disposition” i.e. the document that transfers title of the property to you;
  • the other title documents; and
  • the keys.

Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Ian Ferguson: icf@mitchells-roberton.co.uk

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