You have made an Offer on a property and it has been accepted – congratulations! However, there is still quite a long way to go until you can pick up the keys to your new home or investment! Here is some guidance about what happens before, on and after your Date of Entry (often known as the ‘Settlement Date’).
In Scotland, the contract for your purchase is concluded by the buyer and seller’s solicitors exchanging letters, known as ‘missives’. Missives are signed on your behalf by your solicitor, the only exception being new build purchases when you may be required to sign the missives. The ‘conclusion of missives’ means that there is a binding contract in place. Until missives are concluded, either party is at liberty to pull out even though the parties have verbally agreed the details of the sale and purchase.
Conclusion of missives may take some time as there are a few things that can hold up the process. There may be issues the buyer and seller are disagreeing about, there may be a delay in the buyer’s lender sending through paperwork about their mortgage (mortgage offers often take 6-8 weeks to be issued) and issues can come out of the woodwork such as alterations to the property or boundary disputes.
Missives can settle right up to the Date of Entry although this is not ideal. Paperwork can be painfully slow but is a necessary part of the process, so ensure that you maintain clear lines of communication with your solicitor. In the current seller’s market, properties can sell quickly and you may find yourself with less time than you would have otherwise hoped to get the paperwork together.
Even though missives are concluded, you can’t pick up keys until the Date of Entry (DOE). This is the day on which you agreed to pay the purchase price and for the seller to hand over ownership of their house to you.
Here are some key aspects of settlement that you need to consider. Knowing what to expect can help make things less stressful!
- Make sure that you are able to transfer the funds for the purchase to your solicitor’s bank account prior to the Date of Entry. If you’ve got money (for example a deposit) tied-up in a bank account that has a 30 day notice period, you’ll need to take action to release the funds in good time. Aim to have funds in your solicitor’s account two working days prior to settlement, at the latest. Your solicitor will need to check the source of funds for money laundering purposes and, if there is a ‘gifted deposit’, the lender may need to be informed. These processes can be time-consuming and remember that keys are only exchanged for money, so no money means no keys!
- If you are in a ‘chain’, the sale of your property will need to be settled first if you are then using the sale proceeds to purchase your new property.
- A bank transfer is not immediate and will take time to show in your solicitor’s account. There is also likely to be a charge for the bank transfer. Cheques are still widely used for settling conveyancing transactions. Although this might seem antiquated, it is particularly useful in ‘chain’ situations (for reasons too long to go into here!). However, please note that your own cheque will need to clear (allow four working days) before your solicitor can issue a settlement cheque.
- Banking cut-off times can delay some actions until the next working day and impact on your settlement date.
- Let your solicitor know if you intend ‘porting’ your mortgage (i.e. moving your existing mortgage over to your new home) as they will need to check details of this prior to the Date of Entry.
- If your mortgage payment is due to be taken near the Date of Entry, you should allow payment to be taken – this will be apportioned and refunded. If the mortgage payment isn’t due for a week or more, you may be able to cancel your direct debit – check with your solicitor/lender.
Once the missives are concluded and the Date of Entry is agreed, your solicitor will ask you to send the required purchase funds to their client-specific bank account and will also request any mortgage funds from the mortgage lender where appropriate.
On the Date of Entry, your solicitor will pay the purchase price to the seller’s solicitor. The seller in turn provides your solicitor with essential paperwork that facilitates the transfer of ownership of the property to you. All being well, the transaction is treated as ‘settled’ and the keys can be handed over. A transaction can settle anywhere between 9am and 5pm on the day of settlement. The aim is for the property to be clear by midday, but the time of settlement cannot be guaranteed in advance.
Whilst not an exhaustive list, here’s a few tips regarding the move.
- Arrange a removal van if necessary and aim to be packed up by midday on the Date of Entry.
- As the property transaction can take place anytime between 9am and 5pm, it’s best to check with the removal company in advance regarding any additional charges, for example if the handover of keys is delayed. You may want to consider taking out removal insurance.
- Get in touch with any tradesmen that you think will be necessary in advance of you moving in to your new home, although note that Date of Entry is not confirmed until missives have concluded.
- Arrange for your mail to be redirected and notify family, friends, service providers and other relevant organisations that you are moving.
- Advise your local authority of your change of address in connection with your council tax.
- Arrange for the connection of services such as telephone or broadband if required.
- Take final electricity and gas meter readings (and initial ones in your new home) and notify the providers.
- Arrange insurance for your new property. Buildings insurance is likely to be a requirement of your mortgage, but you need to make sure that your contents are also insured.
These are just some of the practicalities of settlement and moving home. If you have any questions, please don’t hesitate to get in touch with our Conveyancing Team by calling 0131 297 7999 or by emailing [email protected] and we’ll happily talk you through the process of buying and selling.
For more information about MOV8 Real Estate’s conveyancing services and how we can help you with your home purchase or sale, go to https://www.mov8realestate.com/conveyancing/.