Jargon Buster
Closing date
Concluding the contract
Deposit
Fixed price
Moveables
Note of Interest
Offer
Offers over
Qualified acceptance
Sales particulars
Settlement date
Specialist report
Stamp duty/Land and Building Transaction Tax
State for settlement
Survey
Once a number of parties have noted an interest in a property the sellers may decide to set a closing date for offers. This is set for a fixed time and date and offers are invited to be submitted before that fixed time on that particular day. The intention is that all interested parties get the chance to offer for the property but do so on a fair basis, in that no one knows what the other parties will offer. You will normally be advised how many other parties have noted an interest and it is at this stage that you must decide how much you are willing to offer depending on the valuation and level of interest. If your offer is unsuccessful your solicitor is not permitted to re-submit a higher offer on your behalf, unless invited to do so by the selling agents.
This occurs once the terms of the last contractual letter between the purchaser’s Solicitor and the seller’s Solicitor have been agreed. It is at this point that the contract becomes binding on both parties and normally neither party can withdraw without incurring penalties. Please note this is often referred to as "conclusion of missives" which simply means that the purchaser and seller are now in a binding contract.
Normally in a Scottish transaction, no deposit is payable. When you purchase a brand new home, often a reservation fee will be payable at point of reservation. Thereafter a deposit will be payable once the contract is concluded. This deposit will be deducted from the price payable at settlement. This deposit may or may not be refundable in the event of the purchase not proceeding and if you are unsure you should ask your solicitor at the time.
A price may be stated as being a fixed price of, for example, £200,000. In this case, it is normal for the first written Offer for this amount to be accepted. If a seller receives more than one offer at the same time, which is rare, then they could set a closing date. If you are thinking of offering for a fixed price property, just be aware that time is of the essence.
These are items such as furniture, carpets, appliances, curtains etc and other items which are not of a fixed nature. They should be specifically referred to in the Offer if they are to be included in the price although it is not uncommon for such items to be sold separately. Moveable items do not attract Stamp Duty. The position is however that the price cannot be apportioned to moveable items simply to reduce or avoid Stamp Duty Land Tax. To try to do so amounts to fraud. It is therefore vital, if some of the price is for moveable items, that the items are tangible and of a genuine value that can be apportioned.
Your Solicitor will note an interest for you formally by contacting the selling agents and intimating your interest in the property. It is then professional courtesy on the part of the selling agents to advise all parties who have noted an interest formally through their Solicitors once a closing date has been set. The sellers is not however obliged to set a closing date and they may accept an offer from any party at any time prior to the setting of a closing date. Simply having your interest noted does not guarantee that you will be given an opportunity to offer for a property.
This is the formal written Offer prepared by your Solicitor which contains the name of the purchaser, the property, the price, date of entry, details of any furniture etc. to be included and the other standard legal terms required in order to complete the conveyancing and to take legal title to the property. A time limit for acceptance is normally included in the offer. Please note that, in normal circumstances, an offer is signed on your behalf by your Solicitor.
The purchase price may be stated as being offers over a specified sum. This normally means that the seller is expecting an offer in excess of the specified sum and will not normally accept anything less.
This is the selling Solicitor’s formal written acceptance of the Offer in which a number of the Offer conditions are usually amended and the title deeds and other papers exhibited for examination. Again, this is normally signed by the selling Solicitor on behalf of the seller.
This is the brochure containing photos and a description of the property, prepared and circulated by the selling agents. They usually also contain details of any furniture, etc., is to be included in the price and the purchase price. In certain cases the purchase price is not disclosed and is available on request from the selling agents.
This is the "date of entry" provided for in the contract and is the date on which the transaction will complete. At this time the purchase price is paid over to the seller’s Solicitor in exchange for the title deeds, other documentation and the keys to the property. It is very important that the purchaser is in a position to settle at this time as if not then interest will normally be payable to the sellers on the purchase price until the purchaser is in a position to do so. In the event the purchaser cannot complete the purchase on time, has the option to either claim penalty interest or to claim damages.
This would be provided by a Specialist as recommended by the Surveyor in the Survey or Home Report and may cover such matters as timber treatment, electrical wiring and the structural condition of the property. Specialist Reports Again should be obtained prior to offering as it is not normally open to the Purchaser to carry out any further surveys/inspections after the Offer has been submitted (unless the obtaining of such a report is a condition of the Offer).
If you buy a property in the UK over a certain price, you have to pay Stamp Duty Land Tax (SDLT). This is charged on all purchases of houses, flats and other land and buildings. We have a dedicated page that explains SDLT.
Land and Buildings Transaction Tax
Land and Buildings Transactions Tax (LBTT) will be introduced on 1 April 2015 in Scotland, and will replace UK Stamp Duty Land Tax (SDLT). More information can be found on the Scottish Government's website - here.
The Scottish Government has also released a useful LBTT calculator that helps everyone budget appropriately from 1st April 2015 onwards. Simply enter estimated or known completion date (purchase) and the estimated (or known) purchase price and you will be provided with the tax payable after 1st April 2015. Click here display the LBTT calculator.
This will be prepared by your Solicitor prior to settlement and will provide details of the purchase price, fees and outlays required prior to settlement.
Now that the Home Report has been introduced, it is often not essential for purchasers to obtain a separate survey as the intention of the Home Report is to provide a purchaser with sufficient information to allow them to decide whether to offer for a property or not. It is however for you as purchaser to establish the condition of the property and normally there is no recourse in this regard against the sellers after tjhe purchase has completed. Some purchasers do therefore still commission their own survey. It is also the case that the purchaser's lender, in some circumstances, will not accept the valuation contained within the Home report. In that case the purchaser's lender may commission a mortgage valuation for their own lending purposes. In any case where you are not sure, simply ask your Solicitor for guidance.
