Missives: can we conclude more quickly?
Ten suggestions that the authors believe might help restore confidence in the Scottish conveyancing system, benefiting both purchasers and sellers – with a call for solicitors to take the initiative
How we got here
In the early 1980s, it was not uncommon for missives to be concluded de plano. This was on the back of a short offer which, in many respects, would be quite unrecognisable from the standard terms and conditions currently in use. What are the reasons for such a drastic change, and is this really in the best interests of the seller and purchaser?
In those days, it can be fairly said, there was less of a tendency to spell out what was already implied by law – be it common law or statute. An example would be the common law obligation on the seller to deliver or exhibit a valid marketable title (see McDonald’s Conveyancing Manual (7th ed), para 28.32 and Reid, “Good and Marketable Title” (1988) 33 JLSS 162). Then, it was common to find a short title clause in an offer. Not all the provisions of the common law operate to the seller’s advantage (passing of risk, for example), and it was, and is, accepted practice for the common law to be expressly varied. The equivalent provision in the Combined Standard Clauses, however, is considerably longer.
Viewed retrospectively, the change in attitude started following Winston v Patrick 1980 SC 246. Missives have become longer and longer, the objective apparently being to seek to cover everything which might conceivably arise with regard 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.
The problem is that while the standard clauses admirably seek to protect the purchaser, sellers’ agents look to shift responsibility from their client, citing the Roman law principle of caveat emptor. This may be appropriate on occasion, but is it really in the best interests of us all, purchasers and sellers? While there is an increasing tendency these days for purchasers to view themselves as consumers with consumer-type rights, it is suggested that the current state of affairs is not in the best interests of purchasers or sellers and that any system which, for example, tolerates solicitors for a seller making 22 qualifications to what are supposed to be standard contractual provisions is failing in its duty to the very clients who pay for the solicitors’ service. Thankfully, most qualified acceptances contain six to eight clauses, usually property-specific.
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.
Unfortunately, the current adversarial system also breeds what, at times, appears to be a lack of mutual respect and trust between conveyancing solicitors. Is that in our or our clients’ best interests? We think not. Conveyancing is a serious business and clients can be justifiably apprehensive about the process and its cost. Can we not do better? Do the parties to the sale and purchase transaction not deserve better?
What could be done
The following suggestions do not take account of the involvement of a lender and the attendant issues that arise these days with regard to a loan being finalised, and must be viewed in this context. In no particular order, it is suggested that consideration be given to the following:
- Offers that are subject to survey and/or loan should be expressly stated to be so. Full disclosure of these material facts must be made. The proposed new edition of the standard clauses will make this a requirement. Obviously, a seller would rather receive a “clean” offer, but the reality is that it takes time to process loan applications. One solution is for a purchaser to 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. During the option period, the property would be marked as “under offer”, and the purchaser would have time to purify the suspensive conditions. Some may see this suggestion as an alien concept in Scots property law, but it has been mooted before and perhaps its time has come.
- The property questionnaire, which forms part of the home report and was designed to be signed by the seller (though often now submitted digitally via SPC portals), should be referred to in the missives and the position warranted by the seller, with perhaps some qualifications with regard to executors and trustees, for example. There is no logical reason why this does not happen; the problem lies with the then Scottish Government deciding that it was not within the remit of the relevant working party so to recommend – the assumption being that practice would evolve. Unfortunately, in the absence of express provision, the practice that evolved was one which was contrary to the best interests of the purchaser – the very person the PQ was designed to protect.
- The Scottish Government carried out a review of the workings of the home report, but no real changes have been obvious so far. Now is the time for the home report to be made more useful to prospective purchasers and include more, not less, useful information. Many offers these days are conditional on checks being undertaken by specialist third parties, e.g. heating engineers, roof surveys and the like. It is difficult to argue with that principle, especially when buying a flat in a tenement and the home report, due to its inherent limitations, excludes any detailed view as to the condition of the roof: it is, of course, not the equivalent of a homebuyer’s or “scheme 2” survey report.
- Have we not arrived at a point in time when we should agree a cut-off period for alterations? Twenty years is a definitive cut-off period in law, but perhaps a case can be made for 10 years? Obviously, this would have to be approved by the CML.
- There has been dialogue with Scottish Government with regard to the possibility of a Law of Property Bill to tidy up some of the inconsistencies in the legislation introduced since 2000. This could be expanded to give the standard clauses legislative effect albeit, perhaps, with an “opt-out” option. This would, at a stroke, shift the emphasis and reintroduce a fairer balance between the interests of seller and purchaser. A positive side-effect would be a speeding up of the process of concluding missives. Any such primary legislation would also allow future changes to be done by secondary legislation.
- Another possibility would be legislation abolishing caveat emptor. In some respects, that would appear the easier option, but it would fail to deliver the benefits of the broader-based reform which the route in the preceding paragraph could achieve. It would also not allow us to benefit from the changes taking place in registration of title, conveyancing case management, reconciliation of information databases, and the use of geospatial data generally.
- Selling agents could consider reverting to carrying out a check of the title and ancillary consents etc, so as to ensure that the property to be sold is “market ready”. This might include a suitable title insurance “wrapper”, likely available at modest cost. Such solicitors could form an association which, in turn, could set its stall out on behalf of its members who can then advertise the benefits of using an affiliated solicitor subscribing to certain core standards. It is suggested that there are considerable benefits to be gained by specialist residential property solicitors coming together in an Association of Property Lawyers, trading under a recognisable brand which could be marketed accordingly. This should be independent of the Law Society of Scotland.
- Such a development might likely still suffer from the age-old issue of those buying and selling not wishing to commit to a purchase before a sale is concluded. That, in turn, comes round to better education and marketing of the sale/purchase process among clients and prospective clients generally. See below.
- The Society should review its practice rules and guidelines, and publish same in conjunction with a PII discount scheme for solicitors who can prove that their practice meets the standard expected. Why should the Society not have some form of accredited kite mark scheme, for example? Would it be so difficult to introduce and police? Unfortunately, there appears to have been a lot of talk but little positive action to introduce lasting and beneficial change – perhaps because more input is required from solicitors generally.
- Could we not do more to market the service which solicitors provide in the purchase and sale process, and conveyancing generally? More education is required for first time buyers in particular. Material exists and individual firms often have good information available online and in paper form. To date, the Society has preferred to let individual firms do their own thing. It is suggested that there has never been a better time for an Association of Property Lawyers to be formed and to take the initiative on behalf of its members.
Call to action
There have been numerous changes in conveyancing practice since the early 1980s, and more are coming – many being introduced by non-solicitor competitors. If solicitors want to continue to play a central role, positive action has to be taken now. By 2025, most of Scotland’s titles will be on the Land Register, ScotLIS will have developed further, geospatial data will be used to a significant degree, and artificial intelligence (in some form) will be deployed. Should we still be exchanging paper missives, with or without using a secure digital signature?
If solicitors are to have a role, what is it to be and how will we achieve that? Waiting for others to introduce change is a recipe for disaster. We should be building a modern system which will be ready before 2020 (when Registers of Scotland plans to be entirely digital), and which we, and our clients, can be proud of for many years to come. Why should the legal profession expect to be immune from changes which are in the public good? In this connection we should remember that the monopoly we currently enjoy in conveyancing could easily be removed. Digital delivery is fine and well and is to be commended, but who advises on the content? If that is to be solicitors, now is the time not only to plan for the future but actively to make the changes necessary.
Professor Stewart Brymer, University of Dundee, and Professor Emeritus robert Rennie, University of Glasgow.