What are Missives?
Missives are the Scottish name for a contract for the purchase or sale of property. As well as the important issues such as price, date of entry and extras, the documents which make up the Missives - the Offer, Qualified Acceptances and Final Acceptance, include a lot of legal conditions. While many of these are technical, several are very important particularly as to responsibility for repairs, alterations and the condition of systems such as central heating.
A Broken System?
It was always proudly stated that the Scottish system was best to buy or sell a house; a speedy contract was promised but the Missives system has been creaking for years. Despite some efforts from the profession to standardise contract terms, the changes that resulted from the financial crisis removed the last of the benefits of the system.
What we have today is something that would be unrecognisable to someone who bought or sold a house even 10 years ago. In many ways the worst aspects of the English system, "chains and uncertainty", have been imported into a system that pretends to create an early contract with a formal offer but in reality only achieves that once in a blue moon.
In addition the Scottish legal profession is much smaller than that South of the Border and approaches to create greater efficiencies and certainty are sadly not supported by many practitioners. McVey and Murricane will continue to push for change to the conveyancing system which will benefit the consumer, the profession and the lending industry.
- Seller places property on market - needs a home report.
- Purchaser views property - wants to buy.
- Having ascertained that finances are in principle available, purchaser asks solicitors to make offer which is submitted in writing, but, in almost all circumstances, has so many conditions as to be effectively only a statement of intent.
- Negotiation may then take place through the selling agent until the purchaser and seller have come to an in principle agreement.
- The solicitor for the seller now comes into the picture (Unless already involved as the selling agent) and receives the formal offer together with any adjustments that have taken place verbally following.
- Generally speaking, the contract will not be completed by the solicitor for the purchaser until mortgage finance for the purchaser is available. Unless the purchaser does not require mortgage finance, confirmation that the finances available is when an "offer of loan" is available from the purchaser's lender. It is imperative that at this point the purchaser ascertains that the lender or whoever is arranging the purchaser's mortgage have all the information they require.
- The purchaser's lender will require a copy of the Home Report and, if this is more than three months old, will need to be refreshed by the seller. This means that the person who carried out the Home Report has to confirm whether any of the findings of the Home Report have changed. On occasion the lender for the purchaser may ask for a fresh valuation to be carried out. Normally these requirements do not cause problems, but it is a variable that requires to be resolved as quickly as possible.
- At this point the solicitors acting for the purchaser and seller should deal with the adjustment of the contract which is known as "Missives". The way that the contract is adjusted is by a series of letters known as "Qualified Acceptance" and then a final letter which creates the completion of the contract known as "Concluding Missives". However, as stated above, the solicitors for the Purchaser will not generally concluded contract until the offer of loan is available and, indeed, some solicitors acting for Purchaser will not progress adjusting the contract until the "offer of loan” is available.
- Other circumstances individual to either the Purchaser or Seller may also be pertinent particularly whether either of them has another ongoing transaction. An example would be that a purchaser is buying a property from a seller but that purchaser's ability to purchase the property is dependent upon the purchaser selling their existing house. The solicitor acting for the purchaser would generally not allow the contract to be completed until the contract for the purchaser's sale had been completed. Accordingly a delay in an entirely separate transaction could also cause a delay in this transaction. Although "chains" are meant to be something which blights the English system they also exist in Scotland but without the consistent infrastructure that exists in England.
- The original offer made for the property and the adjustment of the contract through qualified acceptance is covers a wide variety of matters that are relevant to the property. This includes the title, various different types of searches, alterations, potential repair notices and generally issues on which the purchaser's solicitor requires assurance. There are two different approaches to these matters. The first is to agree a contract which allows these matters to be resolved at a later date in terms of standards contained within the contract while the second is that the solicitor acting for the seller endeavours to demonstrate that these matters are satisfactory meaning that the contract could not later fail because the seller was unable to satisfy the purchaser.
- Many solicitors acting for purchasers are unwilling to accept a potential contractual position without first seeing the offer of loan from the lender to the purchaser. The reason for this is that many lenders are much more demanding these days on issues that may impact upon their security; solicitors who act for a purchaser do not want to be in a position where they have already accepted something contractually and then find it is not satisfactory to the lender.
- Finally all of these hurdles are overcome and a contract is concluded. It can be seen that this is far from straightforward and not helped by the lack of standardisation of processes in Scotland. What should be a broadly collaborative process too often can feel as though it has been reduced to point-scoring. At all times we will try to guide you through the Missives Mountain as there are so many different involvements that exerting pressure from one end only is often wasted energy because it takes two willing parties to make a contract.