The below article appeared in The Scotsman on Monday 25th January 2016.
Conveyancing on either side of the Border may differ but both have advantages, writes Antonia Scott
When it comes to residential conveyancing under Scottish and English law, which is the better system? Each side of the Border considers its system superior and there are advantages and disadvantages to both.
To market a property in Scotland, it must have a Home Report – a single survey, energy performance report and seller’s questionnaire. This is advantageous to both parties: sellers can address any problems revealed by the survey prior to the property being marketed and the result of the survey is available to buyers prior to making an offer so the risk of withdrawal because of a poor survey result is removed.
Another advantage of the Scottish system for the seller is the rather formal way offers are made as the potential buyer has incurred legal fees and is therefore less likely to withdraw. However, this is a disadvantage for potential buyers as they incur legal fees prior to knowing an offer will be successful.
In England, sellers only need an energy performance certificate to market a property, keeping initial costs down. Potential buyers can make offers themselves so they do not incur legal fees if unsuccessful. This may seem advantageous to both parties but when the seller accepts an offer, it is not legally binding and a transaction could collapse at any point until contracts are exchanged. Further, the buyer will usually obtain a survey once their offer has been accepted, transferring costs to the buyer. If this reveals problems, this may delay the transaction or cause it to abort.
Another difference between the two systems is the Scottish missives and the English contract. Historically, missives were considered superior to the English contract; they concluded quickly as much preparatory work was done prior to the buyer submitting an offer. This was beneficial to both parties: the quick route to a legally-binding agreement gave them both comfort that the transaction was proceeding and they could make removal arrangements for the settlement date. However, offers are now often made subject to conditions which need to be satisfied, increasing the time between the offer and conclusion of missives.
Caveat Emptor in the English Contract
In England the principle of caveat emptor applies so it is the buyer’s responsibility to check the title to the property and obtain search reports before purchasing it. On average, this means 4-6 weeks from acceptance of an offer to exchange of contracts but it can take longer and the risk of the sale aborting is high. This delay between acceptance of an offer and exchange of contracts can create specific problems, such as:
- gazanging - the seller pulls out of the transaction and decides to stay put;
- gazumping - another buyer makes a higher offer and if the original buyer cannot match or better it, the buyer with the higher offer gets the property;
- gazundering - in a slow or falling market, buyers reduce an offer just before exchange of contracts;
- contract races - another buyer makes an offer which the seller accepts and he will sell to the party who can exchange contracts first.
These are a considerable disadvantage to the English system as they usually occur once both parties have engaged solicitors and thus incurred fees and expenses.
Both systems have advantages and disadvantages but the grass does not seem particularly greener on one side or the other, just a different shade.