Buying a house is a huge decision for most people and the whole process can be stressful. Most people will do their homework, decide where they want to stay and then start to search for their ideal home. Alongside that, they arrange their mortgage and contact their solicitor. Then, when they find a house they want to buy, they instruct their solicitor to put in an offer for them. They will usually find out very quickly if their offer has been successful and, if it is, the conveyancing process then gets underway.
There’s nothing unusual about this. It happens every day throughout Scotland and, if you are a homeowner, you’ve already been through this process. However, sometimes something happens that prevents you from going ahead with your purchase. When that happens, you need to know if you can withdraw from your purchase even though you’ve been told your offer has been accepted.
One of the key factors that determines if you can withdraw is whether missives have been concluded. You will hear solicitors talk about this all the time when they are dealing with house sale and purchase. Missives are made up of an exchange of formal letters. In the case of a house purchase, the Offer is the first stage in the process. In addition to the price, the date of entry and extras, an Offer contains a number of conditions the seller is asked to accept. The seller’s solicitor will discuss the Offer with the seller and decide whether there are any conditions that are not acceptable. Then the seller’s solicitor will issue a Qualified Acceptance. This is not a final acceptance because it removes or changes some of the conditions on the Offer and, perhaps, introduces additional conditions. Your solicitor will then discuss the Qualified Acceptance with you and if you are happy with the changes proposed, your solicitor will then send an Acceptance of the Qualified Acceptance to the seller’s solicitor. At this point Missives are concluded.
However, it doesn’t always go as smoothly as that, and the Missives can be made up of an Offer and several Qualified Acceptances passing back and forth between solicitors until a final Acceptance is issued by one to the other leading to conclusion of Missives.
Whilst this process is ongoing, the buyer or the seller can withdraw from the transaction without any penalty. However, once missives are concluded, a contract to buy and sell exists and, generally speaking, the buyer is required to proceed with the purchase.
As indicated earlier, the Missives are made up of a series of documents containing conditions. That means each party has to honour these conditions. In some circumstances, there may be conditions that are favourable to the buyer.
For instance, it is not unusual for a buyer to include conditions in the Offer about receiving satisfactory mortgage finance or a satisfactory survey report or even that the purchase is conditional on the buyer’s sale of their own property. Usually, the seller will not accept those conditions, especially in a busy market, but on some occasions conditions like this are accepted. This may give the buyer an opportunity to withdraw from the purchase, even though Missives have been concluded.
We should also point out that the Missives also impose conditions on the seller, and should the seller be unable or unwilling to comply with those conditions, this may give the buyer the option to withdraw.
In theory, you could conclude Missives in a day. Your solicitor submits an offer and the seller’s solicitor sends an Acceptance of all the conditions in your offer. That creates the binding contract. However, these days, it tends to take many weeks to conclude missives and one of the main reasons for that is that buyers’ solicitors are very reluctant to conclude missives unless they have an Offer of Loan from the buyers Lender when there is a mortgage involved. If the buyer is committed to buy but the mortgage finance collapses, then, if missives are concluded, the buyer is committed to buy but will not have the funds available to do so. That means the buyer can be sued by the seller which can prove to be extremely expensive for all involved.
Sometimes, it is the seller who does not wish to conclude. Perhaps they have not yet found a suitable house they wish to move to. Alternatively, there may be other issues in the background (separation or divorce being one example) which can cause delay in concluding missives.
As a rule of thumb, until Missives are concluded, either party can withdraw from the sale or purchase without penalty. After Missives are concluded, the answer to whether or not you can withdraw is very much dependent of the particular circumstances of the transaction.
If you are thinking of buying or selling or wish to discuss any concerns about the process, please get in touch.