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For a good clause

14 September 09

How the differences between the respective standard missives previously in use in Edinburgh and Glasgow were resolved to produce the Combined Standard Clauses

by Paul Carnan

There have been Standard Missives Clauses for Glasgow and separate Standard Missive Clauses for Edinburgh since 2005. They are markedly similar in many respects. For all that, as a matter of practice rather than law, there are certain significant differences between the two styles.

The respective drafters believed that it ought to be possible to agree a common wording. They approached the Professors of Conveyancing and invited them to give their persuasive collective opinion on the areas of clear distinction, so that a common missive could be developed for use in both cities.

The working parties of the Royal Faculty of Procurators in Glasgow and the Edinburgh Conveyancers Forum would like to acknowledge the support and assistance which they have received from Professors Brymer, Paisley, Reid and Rennie (“the panel”), without whom the Combined Standard Clauses could not have been delivered.

The panel was asked to opine on the following specific areas of distinction:

1. Definition of “the Property”.

The Edinburgh missive states that “the Property means [insert postal address]”, and then goes on to state: “together with any garden, garage, parking space and/or outbuildings”. The Glasgow missive adds that it includes “all necessary rights of access and all rights exclusive, mutual and others pertaining thereto and the parts, privileges and pertinents thereof”.

 

The panel’s view was:

(1) The panel doubted whether “parts, privileges and pertinents” added anything, but did not feel strongly that the phrase needs to be excluded (although they would favour shortening it to “all other parts and pertinents”).

(2) Subject to its aftermentioned comments regarding “necessary access”,

the panel generally favours the Glasgow wording. The standard offer is not a standard missive. Revisals can be made in a qualified acceptance.

(3) The panel is not in favour of using general words like “necessary rights of access”. Many existing rights of access are not “necessary” at all. They are purely desirable or beneficial or even useful. They may add material value to the property but they are not “necessary”.

 

2. Awareness of defects

The Edinburgh missive has an “awareness of defects” provision. The Glasgow missive does not. The panel was asked if it was appropriate to incorporate a “state of awareness” clause.

The panel’s view was:

(1) Such “awareness”clauses are fairly widely used in practice. However, it is questionable how enforceable they are. A qualification will invariably be made along the lines of “So far as the seller is aware (but no warranty is given in this respect) there are no such facts” etc. This therefore makes the argument about such matters somewhat pointless.

(2) It is usually the case that clauses of this type are deleted and a statement added in the qualification to the effect that the purchaser shall be deemed to have relied on his or her own survey – caveat emptor. The panel is also concerned as to how one actually one would pin down “awareness”.

(3) The panel believe that this is something which the home report should identify. The risk of having an awareness of defects clause is that although it is almost bound to be qualified as aforesaid, a purchaser may erroneously think that he is absolutely protected should a defect arise. The panel is therefore of the view that it is better to have a clear cut situation where the purchaser knows that he has no guarantee as to the state of repair of the property.

Provision of guarantees/specialist reports

In relation to the provision of guarantees/specialist reports, the Glasgow missive provides for delivery of “any guarantees in force” in respect of specialist treatment. The Edinburgh missive goes further by stating that in the event that such documentation

is deemed to be “materially prejudicial”, the purchaser then has a right to resile.

The panel’s view was:

(1) There are two situations which can arise. In the first place, a surveyor may discover some defect which would require specialist treatment. In such a case, it is obviously very important that any existing guarantee and the specification indicating what is guaranteed is made available. On the other hand, there may be situations where the surveyor picks up no defect but there is still a guarantee for work which has been properly done, say 15 years ago with five years of the guarantee left to run. The panel does not favour a clause which would allow a purchaser simply to pick technical holes in the guarantee and then rescind, even although there was no suggestion that the work had not been done properly. The Glasgow clause covers such a situation. In the panel’s opinion, it is sufficient to state that if there is a guarantee, for say double glazing or dry rot, then it must be handed over.

(2) If it is the former case where the surveyor has picked up a problem and the seller says that there is a guarantee, then the panel believe that the missives require to be tailored to suit that situation with an extra clause to the effect that it will be shown that the guarantee is enforceable and covers the defect as disclosed by the surveyor.

(3) The panel believe that if a right to resile is to be retained, it would need to be much more carefully targeted against whatever mischief, precisely, the provision is intended to solve.

 

4. Awareness of developments

The Edinburgh missive requests a statement from a seller that they are not aware of “proposals, applications or redevelopment plans”. The Glasgow view is similar to their position concerning awareness of defects.

The panel’s view was:

(1) While accepting that there can often be benefits of such “awareness” provisions, the panel is of the view that they can also be potentially dangerous.

(2) The panel is generally not in favour of clauses which result in uncertainty and argument. The Edinburgh general clause is a “catch all” clause. How would one be aware of an application for planning for an adjoining property unless there had been neighbour notification or a notice in the local newspaper?

(3) There is more difficulty with the words “proposals” and “redevelopment plans”. In practice, such clauses tend to be qualified either by deleting them with reference to a property enquiry certificate which is to be delivered, or by stating that the seller has not received written notification of any such proposal. The latter is a more clear cut situation.

 

5. Liability for statutory notices

In Edinburgh, the watershed date for the transfer of liability for local authority repair notices from seller to purchaser is the date of conclusion of missives. In Glasgow, the date is the date of entry. These provisions reflect longstanding practice in each city. It is believed that the distinction may reflect the situation that in Glasgow many tenemental properties are factored, whereas in Edinburgh few traditional tenements are (with the co-proprietors relying on the local authority to perform such a role).

The Edinburgh position however is also based on the argument that a purchaser is expected to acquire a property “as seen”.

The panel’s view was:

That the arguments in favour of Edinburgh’s position with regard to this matter were persuasive, and that the watershed date for the transfer of liability for local authority repair notices from seller to purchaser should be the date of conclusion of missives.

 

6. Listed building consents

Although both the Edinburgh and Glasgow missives adopt the view that local authority documentation for previous alterations is only looked for in respect of work carried out within the period 20 years preceding the date of entry, in Edinburgh there is concern that there is no time limit under the relevant planning legislation for possible listed building consent.

The panel’s view was:

That a 20 year cut-off for listed building consents is preferable.

 

7. Declarations of trusts in dispositions

The panel was not in favour of trust clauses. Put bluntly, trust clauses in dispositions have never really worked. Any deed of conveyance containing such a clause is arguably internally inconsistent. There is no clear trust purpose. In any event, it is the view of the panel that the clause is now also not necessary because of the bankruptcy legislation changes. There may also be possible limiting effects on the Keeper’s indemnity.

The panel’s view was:

That the trust clause device in dispositions should be eradicated.

 

The combination of the Glasgow and Edinburgh Standard Clauses into a single set of clauses – the Combined Standard Clauses (2009 edition) – common to both regions will greatly enhance the house buying and selling process, creating more certainty in the process, and will reduce the time taken and costs incurred in concluding missives. Practitioners will know that, as long as they adopt the Combined Standard Clauses, they will be compliant with current best practice.

 

Paul Carnan is a Glasgow member of the joint working party which agreed the terms of the Combined Standard Clauses.

 

A fuller version of this commentary can be found at www.journalonline.co.uk/extras

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