Standard missives: an unachievable dream?
In the second part of her article on the utility of standard missives, the author offers her own list of practical suggestions to improve the house transaction process for solicitors and clients alike
I have slight reservations, to say the least, about the Scottish Standard Clauses. Some of these stem from the fact that the clauses are the sum of many parts, which often do not sit properly together.
For instance, Stewart Brymer and Robert Rennie suggest in their recent article “Missives: can we conclude more quickly?” (Journal, May 2017, 34) that caveat emptor is a bad thing. They say: “The current situation is not new and is, in reality, a product of accepting for many years what is, in essence, an unequal bargaining position between seller and purchaser. Why should the purchaser accept all the risk and be deemed to have satisfied themselves prior to conclusion of missives? If accepted, purchasers ought to ensure that they have carried out all appropriate checks prior to concluding the bargain. This leads to delay and the possibility of either party deciding not to proceed with the deal which, in turn, leads to an undermining of confidence in the very system of which we, as Scots lawyers, have been rightly proud for centuries.”
But are these authors not proponents of the standard missives, and more significantly, if so, why did they approve clauses for instance about the purchaser having 10 days on coal reports etc when this is the opposite of what they are saying now?
They also state: “Missives have become longer and longer, the objective apparently being to seek to cover everything which might conceivably arise with regards to the subjects of sale. If one reviews all 30 of the standard clauses, it is actually quite difficult to condense them into something shorter, given the developments necessitated by recent legislation and case law – and we have tried.”
Really! Consider clause 25: parties “irrevocably authorise their respective solicitors to release their current address on demand”. I would argue that this clause is meaningless. Agents are not a party to the contract, nor can they unilaterally be bound to implement such a mandate. If this is a concern, a clause should be added binding the client to deliver such a mandate to their solicitor at settlement.
Then there is the development clause (clause 5). What is the point of it? There is no out for the purchaser. It is described as an “awareness clause”, i.e. it draws to the purchaser’s attention that they should be making due enquiry, and perhaps jolts the seller into making a confession. Is there not a better way of doing things, and does it not all boil down to solicitors providing their clients with proper advice? What about the clause concerning fixtures and fittings (clause 1): is all of that really necessary!
Clause 5 perhaps gives the purchaser a degree of comfort which given its limitations they have no right to expect, and the clause regarding central heating and appliances (clause 4) gives clients a sense that they are buying a perfect house in all respects, when they are not, especially given clause 26 (limitation of claims).
I have to say that the client guide should not be viewed as a substitute for providing the client with full and clear advice. As far as I can see, some solicitors simply send out the client guide with the offer and that is considered sufficient. It is not. In any event, many of my clients find it difficult to get to grips with the guide. The duty must be on us to explain things properly, and if that means telling them to go and check whether there is likely to be a development across the road from their ideal home, so be it. Hardly onerous.
A return to basics
Brymer and Rennie make various suggestions in their article. I have already discussed making home reports more useful, and abolishing caveat emptor. They also suggest ensuring that a property is market ready by offering an “insurance wrapper” at “modest cost”, and even setting up an Association of Property Lawyers, marketed under a recognisable brand, independent of the Law Society of Scotland, and which could “set its stall out on behalf of its members who can then advise the benefits of using an affiliated solicitor subscribing to certain core standards”. I am at a loss to understand the thinking behind such a concept. In my view what is required in this modern world is a return to the basics.
I respectfully make the following suggestions. Rennie and Brymer also have a list, and state: “The following... do not take account of the involvement of the lender and the attendant issues that arise these days with regard to a loan being finalised”.
If that is the case then, with the greatest of respect, what use are these suggestions? What I need as a practitioner is not a counsel of theoretical perfection but practical steps which can be taken to improve matters for agents and clients alike.
1. Fees should be increased to take account of the actual work and risk involved in a conveyancing transaction. Compared with fees say in the south of England, legal fees in Scotland are significantly lower. Why do we sell ourselves so cheaply? Surely it is a matter of re-educating the public?
2. Property should be advertised as market ready. We need proper research into how the home report can be improved, working with surveyors to this end. We also need to ensure that the seller gives a warranty in relation to the property questionnaire. The seller’s solicitor should check the contents of the home report – especially the section on matters for the conveyancer – for any issues which require attention such as guarantees or alterations. Either the estate agent or the solicitor should liaise with the surveyor to ensure that historic alterations are labelled as such, and the surveyor should be asked to take a view at the outset. It is quite outrageous that purchasers are now being charged by surveyors for examining plans for, say, alterations when this is something they should have done in preparing the report.
3. The seller’s solicitor should check that the title is ready for market. This usually – though not always – happens when the property is still in sasine. It should happen as a matter of course. Are we not getting paid to avoid problems, not wait till the purchaser examines the title and then be asked to sort it out? Ashley Swanson (Journal, July 2017, 34) stated: “In October of this year I will have been in the legal profession for 41 years. What has saddened me most in all of that time is the apparently inadequate service given by some firms, not only in checking the title of subjects purchased for clients but also in the way in which they deal with title issues arising out of sales.” I wholeheartedly echo that sentiment.
4. Ensure you know your client. Undertake proper checks when instructed to put in an offer; speak to brokers. Why is that deemed to be rocket science? To the firm adding a clause in their offer advising that they are still to carry out checks on their client – stop it!
5. I issue my clients with a property and sale questionnaire. I ask them to give me full details about themselves, and the property they are buying/selling.
6. Order reports early and send them with the qualified acceptance. I accept that this means the agent incurring costs early in the transaction. Explain to me why my firm has to subsidise these costs? There was a time – albeit brief – that clients were asked for the money upfront. They mostly pay for the home report upfront, so why not the searches? This would avoid last minute problems re notices, sequestrations, trust deeds etc.
7. We need an adult discussion with the lenders regarding loans and the speed with which they are issued, and about what they will and will not accept. Most of all we need uniformity. It is no use simply plucking things out of the air such as the 20 or 10 year “rule” regarding alterations. To those that say such discussions are not possible, I point to the turnabout by HSBC over their refusal to use solicitors not on their limited panel. As far as I can see, that came through client pressure to reduce what were truly unnecessary and inflated costs.
8. We need to take action re the clause “subject to selling [the purchasers’] own house”. It seems that we have taken on board the worst aspects of the English system and amplified them. I agree with Brymer and Rennie when they say: “Full disclosure of these material facts must be made.” They add: “The proposed new edition of the standard clauses will make this a requirement.” I take exception. My small research project shows that agents are doing this now. We do not need further nannying. I do agree though with their suggestion that the purchaser be granted an exclusive option for a specified period in exchange for a payment – most likely equal to the cost of the home report produced by the seller (and I suggest the other reports also). During the option period the property would be marked as “under offer” and the purchaser would have time to purify the suspensive conditions. We also need to make clear whether the purchaser’s house has just gone on the market, is to go on the market or indeed whether an offer has been received.
9. Provide clients with full and clear advice. I know that seems obvious but there is no substitute…
10. Understand the Scottish Standard Clauses – and keep up to date with the law. Why include unnecessary clauses?
11. Do not blindly accept the standard missives – take into account local conditions. Don’t use them in situations where they are not necessary or not appropriate, e.g. buying a vacant piece of land or even commercial premises!
12. Try to get avoid being sucked into matters which are nothing to do with the actual work of the conveyancer – clothes dryers!
13. Make the purchaser responsible for certain actions. Get them to check things like developments, or whether water nearby affects insurance premiums. Why do we take on the responsibility? Is caveat emptor such a bad concept? I do not think so.
What I am suggesting then is really – with a few exceptions – back to basics. It is not rocket science, but it requires a multidisciplinary approach – lawyers, lenders, estate agents and clients working together. It involves education, of both the public and agents, and most of all it requires common sense. I do not think that we should scrap standard missives altogether, but I do think that they should be used with care, and adapted where necessary. If you are making more than say eight qualifications to them, one has to question their usefulness.
So back to my wheelbarrow story. Don’t focus on the minutiae; concentrate on the bigger picture. Some of the stuff which we deal with is – to put it politely – the sawdust of the transaction. It’s the wheelbarrows we have to worry about!
Debra Clapham, partner, Claphams, Glasgow