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Those in the process of moving home or who are planning to do so in the near future, will doubtless already be aware that sales and purchases of residential property have been severely disrupted as a result of the ongoing Coronavirus pandemic.

What are the main problems?

  • Registers of Scotland is closed to new applications

The importance and implications for purchasers and lenders is that they will, subject to a few very limited exceptions, be unable to register their interest in a property meantime. A purchaser will therefore not be able to obtain legal ownership of the property.  In the case of a lender, it requires to register its security over the property in order to be able to recover its money or the property if the owner fails to pay the mortgage.  If a lender is unable to register its security, ordinarily it will not lend the money which may be required to purchase a property. 

Registers of Scotland, UK Finance and the Law Society of Scotland have been working together in an attempt to find an interim solution to this problem.  The result is that a few “emergency” transactions may be able to proceed provided they fulfil all of the criteria which apply. However, many will not.

Advance Notices which provide a period of protection (for instance against sellers being sequestrated) are already in use, with Register House set to extend the protected period beyond the current timeframe to a date following the re-opening of the Land Register.  This may also enable certain purchases to proceed if all parties are in agreement.

Where a purchaser requires a mortgage to buy their property, the agreement of the lender is required and, whilst a number of lenders are willing to release funds based on the agreement reached between the relevant bodies, some are not. The result is that, even if one purchaser’s lender agrees to lend, a problem can arise further back the chain if someone else’s lender does not agree, causing the whole chain to collapse.

  • Government restrictions are in place which require everyone to stay in their homes - on 31 March the government released guidance relating to house moves in Scotland - details can be found here.   

As a result, even if a transaction could perhaps proceed by means of meeting the criteria, some purchasers and sellers will be unwilling to breach Government Guidance which requires that we should all stay in our homes, postponing any house sale or purchase unless it is absolutely necessary that completion take place. Again, this may cause a chain to collapse.

  • Removal firms have closed which makes it difficult or impossible for most people to manage the practicalities of a move.

What to do now?

All in all, the very clear advice from the relevant Government and regulatory bodies is that, wherever possible, settlement/completion of a property purchase or sale should be delayed until such time as the current restrictions are lifted and issues with Registers of Scotland resolved.

In normal circumstances, once a contract is concluded and is legally binding, both parties are contractually obliged to give or take entry to a property on the agreed date but these are unprecedented circumstances with the impossibility of completing a deal for the reasons discussed, being nobody’s fault.

In a situation where the contract (missives) hasn’t yet been concluded, the advice is to wait until restrictions have been lifted and the Land Register is open.  However it is important that you seek advice in relation to your position from your own solicitor who will have knowledge of the particular circumstances in your case.

The ongoing problems in dealing with property sales and purchases will undoubtedly cause stress, anxiety and practical difficulties for those affected, at a time when life is already challenging, but the priority for everyone has to be safety both in terms of their own health and the health of others and in terms of being able to adequately protect their legal position in relation to a house purchase.

We believe that at least a temporary solution to the Land Register problem may be in place shortly and will update this page as and when we receive relevant information.

Further Information

Our teams are working remotely, with full access to the systems and technology required to deliver our normal service in relation to property contracts and conveyancing.  However, until the barriers described above are overcome, property solicitors are having to respond to a variety of difficult circumstances beyond their control which may impact on planned transactions. 

If you require further information, please do not hesitate to contact carol.crowther@stronachs.com or your usual contact at Stronachs.

Additional information is available from the following:

Law Society of Scotland    

https://lawscot.org.uk

Registers of Scotland

https://www.ros.gov.uk

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