Property Contract Formation in Scotland – “Missives”

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Property Contract Formation in Scotland – “Missives”

Property Contract Formation in Scotland – “Missives”

Are you based in England and considering buying, selling or leasing a property in Scotland? Did you know that Scotland has its very own unique laws relating to Scottish property?

If you are acquiring, disposing or leasing property in Scotland, you need to instruct a Scottish solicitor based in England or a solicitor north of the border.

There are fundamental differences in the laws and processes involved in Scottish and English property transactions. One of the main differences is the way in which a property contract is formed. In England, the contract becomes binding when contracts are exchanged. In Scotland, the contract is not binding until missives are concluded.

“Missives”, a word which is foreign to most people in England is, generally speaking, the equivalent to exchanging contracts in England and this is usually the first stage of the conveyancing process in Scottish property transactions.

Missives can be described as a series of formal letters exchanged between the seller’s solicitor and the purchaser’s solicitor on behalf of their respective clients until an agreement has been reached.

The first letter in the series of missive letters is known as either the “offer” or “offer to purchase”. In residential property transactions, the offer is usually issued by the purchaser’s solicitor and in most commercial property transactions the offer is prepared and issued as an “offer to sell” by the seller’s solicitor.

In the majority of cases, the solicitor who receives the offer letter will then respond to the opposing solicitor with a counter offer letter known as a “qualified acceptance”. Thereafter, a series of letters are exchanged between the respective solicitors until no further negotiations are required and an agreement is concluded – this is done by a final missive letter being issued by either the seller’s solicitor or the purchaser’s solicitor (as the case may be) which is known as a “concluding letter”. The date that the concluding letter is issued is the “date of conclusion of missives”, being the date that a contractual relationship is formed between the parties (similar to contracts being exchanged in England). Once the concluding letter has been issued and a contractual relationship has been formed neither party can withdraw from the missives (or in other words, the contract) without incurring penalty.

In some rare cases where there are no negotiations required, rather than a “qualified acceptance” being issued in response to an “offer”, a de plano acceptance (de plano meaning “without argument”) may be issued by the other solicitor which immediately concludes the missives.

An advantage with the Scottish missive is that the formal missive letters don’t need to be signed by the client themselves but rather they are signed by the solicitor acting on the client’s behalf. This, in some cases, allows for swift progression of transactions in Scotland, without relying on the return of signed documents from the client.

Historically the Scottish system of missives was seen as more favourable than the system in England as there was very little time between an offer being issued to the purchaser and the purchaser (or rather their solicitor) accepting the offer – this significantly minimised the risk of gazumping and gazundering. Today the position is very different as more likely than not the offer issued to the purchaser’s solicitor will contain various conditions which need to be satisfied before missives can be concluded.

For more information contact Shabnam Hanif.

This article is for general guidance only. We are not, under any circumstances, providing advice or accepting any liability for any party who may seek to rely on the terms of this article.