Buying Property?

People move for many reasons, to a bigger, or smaller, property, to be closer to work or family, or simply because you fancy a change.  You may be a first-time buyer or have a house to sell, or you may be buying your council house.  You may have bought or sold a property before, or you may not be familiar with the Scottish legal system at all.  Whatever your situation, as your property is likely to be your biggest financial asset for which you may be paying a mortgage for 25 years, legal advice and assistance is vital at any early stage.

Local Advice & Assistance

The legal process of buying a property in Shetland is the same as in the rest of Scotland, however it is different from the process in England & Wales.  Dowle, Smith & Rutherford has been actively involved in the Shetland property market for over 25 years and using this extensive experience our two partner solicitors, Chris Dowle & Paul Rutherford, will be happy to guide you through the process.  The information below is intended to be a general guide only.  We will be happy to meet with you in person and explain the process in more detail.

Noting Interest

Once you have found a property you are interested we will “note your interest” with the seller’s solicitor.  This does not commit you to offering for the property, nor does it guarantee that you will have a chance to submit an offer, but the seller’s solicitor should advise you of any developments in connection with the sale, in particular if a closing date is fixed, and you should be given the opportunity to offer if possible.  If the seller’s solicitor is not aware of your interest the property may be sold to someone else.

At this stage we will provide you with a competitive written estimate of our fees and outlays.  A buyer’s outlays include the recording fee the title deed in your favour (calculated on a sliding scale according to the purchase price of the property) and the standard security in favour of your lender if a mortgage is involved.  For residential properties Stamp Duty Land Tax is payable at 1% of the full purchase price where the purchase price exceeds £125,000.  A higher rate of duty applies for purchases over £250,000.

If we have not acted for you before we will need to obtain proof of identity from you to comply with Law Society Regulations.  There may be some instances where we are unable to act on your behalf.  If so we will explain why and will provide details of other solicitors if necessary.

Surveys & Finance

We will explain what you should do next, particularly with regard to getting the property surveyed and how you will be financing the purchase (although we are not authorised to provide financial advice).  We always recommend that you have a survey carried out by a professional surveyor as this will provide independent information on the condition of the property and its value.  We can organise the survey for you if you wish.  There are two local surveyors in Shetland:-

There are different levels of survey from a basic mortgage valuation to a full structural report.  Your surveyor will discuss with you which type of survey is appropriate.

Property to Sell?

If you have a house to sell we also offer a full property sales service including free advertising on the internet.  Contact our Property Manager Robert Bell (email property@d-s-r.co.uk) or see our Selling Property in Shetland page.

Closing Date

If no closing date has been set offers can be submitted at any time, and if you are able to submit a quick offer you may avoid the uncertainty of a closing date if your offer is successful.  However if a closing date has already been fixed all interested parties are required to submit offers in the form of sealed bids at the appropriate time and usually, though not always, the highest offer is accepted.

The Offer

Once you are ready to offer we will discuss the terms of the offer with you and using our extensive experience give you helpful advice on the likely price that may be offered, taking into account the current state of the local market.  Properties are usually advertised at an “Offers over” price.  A purchaser can however offer whatever price they wish, however an offer below the asking price is less likely to be accepted in the current climate unless there are unusual circumstances.  Occasionally an “Offers in the region of” price may be stated indicating there may be some room for negotiation or it may be a “Fixed Price” where the first offer (usually without any survey or finance conditions) received at the asking price would be accepted.  Properties are generally advertised at or around valuation however this is not always the case and sellers are free to market their property at whatever price they wish.  This is another reason for obtaining a valuation.

It used to be the case that the survey and finance arrangements were put in place before a formal offer was submitted however increasingly offers are now made subject to survey.  However where there is other interest, for example if a closing date has been fixed, a prospective purchaser who is able to make an 'unconditional' offer may well be in a better position.  Offers can also be made subject to the sale of the buyer’s own property, however this may not be acceptable to a seller.

A formal solicitor’s offer is an important legal document designed to ensure you obtain a proper marketable title to your new house so that you will have no problem selling it at a later date if the need arises.  It is the start of the negotiating process between buyer & seller and sets out the terms & conditions of the offer.  We will discuss your own individual circumstances and the property itself with you to enable us to frame the offer accordingly.

The offer will start by detailing the basic terms of the offer, noting the property address and any additional buildings to be included (e.g. a garage), the price (sometimes attributed to heritage (buildings) and fixtures & fittings), entry date, any moveable items to be included in the sale (e.g. curtains, kitchen appliances), and any survey / finance conditions.  The date of entry (the date the seller moves out, the purchase price is paid and you gain possession of the property) is often around 5 - 6 weeks from the date the offer is made, however this is a matter for negotiation and it can be sooner or later, depending on circumstances.

These are the points of perhaps the greatest interest to you at this stage but the offer will contain further clauses relating to the title to the property and other aspects such as access, if the road is adopted, water supply, sewerage & drainage, alterations to the property, planning matters that might affect the property, insurance, the crofting position, and so on.  Often the offer will specify a time limit for acceptance.

The offer will then be submitted to the purchaser’s solicitor who will take the seller’s instructions.  If the basic details, i.e. the price & entry date, are acceptable, an acceptance in principle will be given, usually verbally.   It is a common misconception that the receipt of an offer and a verbal acceptance in principle means that the house is ‘sold’ however this is not the case.  At this stage the property is ‘under offer’.  The basic details have been agreed, but the ‘small print’ requires to be finalised.  There is no contract at this stage.

Concluding a Binding Contract (The “Missives”)

With most sales, the seller’s solicitor will then send us a formal written response to the offer (referred to as a “qualified acceptance”), amending or deleting certain conditions, together with the title deeds for examination.  Once the title deeds have been thoroughly examined and we are happy that any amendments to the offer can be accepted, a further formal letter is sent concluding a legally binding contract at which point the property is effectively ‘sold’ and neither party can back out without penalty.  This exchange of letters, known as the “missives”, forms the final terms of the contract for the sale and can take three or four weeks, but this can vary from property to property.  During this period no other offers will be considered for the property unless negotiations between the seller and the successful offeror break down.  On occasions it may be necessary for a series of formal letters to be exchanged between solicitors before a contract is agreed.  Throughout the process we will carefully advise you of any implications arising from the terms of the offer and take your instructions where necessary.  You will be kept fully advised of all developments in connection with your purchase. 

Examining the Title Deeds

In the course of dealing with the contract we will carefully examine the title deeds and other supporting documentation, including a search charting the ‘history’ of the property and a Property Enquiry Certificate, so that we can check the seller has a marketable title.  We will advise you if there are any conditions affecting the property you should be aware of, such as restrictions on use or other access rights, and the crofting position will also be checked as necessary.  As we will not have had the opportunity to inspect the property in person, we will need to ask you to satisfy yourself that the description and plan referred to in the title deeds ties in with the subjects on the ground.  The Land Registration system of recording property ownership details was introduced to Shetland in 2003.  Under this system, which was already in use throughout the rest of Scotland, the title a purchaser receives is in the form of an Ordnance Survey map based Land Certificate.  Where a property is being sold for the first time under Land Registration the seller’s solicitor will provide a P16 report comparing the extent of the property as described in the title deeds with the OS map.  If this highlights any discrepancies these may need to be remedied.

You must let us know if any alterations have been made to the property so that we can check the appropriate warrants and / or consents are in place.  Unauthorised alterations will need further investigation. 

Once we are satisfied that everything is in order we will draft the title deed (the “Disposition”) transferring the title from the seller to you, which will be sent to the seller’s solicitor for signature by the seller.  If you are financing the purchase with a mortgage we will receive loan instructions from your lender and thereafter attend to all the necessary formalities to ensure that the loan funds arrive in time for settlement of the transaction.  If you are financing the purchase price or any part of it in excess of any mortgage involved, you will need to ensure that we have cleared funds preferably the day before settlement.

Settling the Transaction

On the date of entry (the settlement or completion date), we will hand over the purchase price in exchange for the title deeds and keys.  You can now move into your new home!  The Disposition and any Standard Security will then be registered in the Land Register in Edinburgh and a copy of the Land Certificate for the property sent to you in due course.  We will advise Shetland Islands Council of the change of ownership for council tax purposes and you will be provided with a full breakdown of all fees and outlays involved in the transaction.

We aim to ensure that you are happy with every aspect of our service.  A Client Relations Partner is available if required.

Making a Will

As your property is likely to be your biggest financial asset, now is a good time to prepare a will if you have not already done so.  We will be happy to provide further advice if required.

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