Law Society Advice
Since it is now impossible for the time being to get a title or standard security onto the Scottish Land Register, the Law Society's advice is that solicitors should not settle conveyancing transactions until there has been a further update from the Registers. This would extend to any financing or security transactions in respect of which land or property is being secured by way of a standard security.
What about new property searches?
The Searchers are telling us that for the time being, they can fulfil any orders for new conveyancing searches, should anyone need to obtain them.
Registers have issued a statement this morning advising that they have held a number of discussions with the Law Society and UK Finance colleagues over the last 24 hours. Registers state they are concluding their discussions with the Law Society and UK Finance this morning and will be providing further guidance later today (i.e. Wednesday, 25 March 2020) on the options available to customers. Our hope is that this guidance will include a mechanism which will allow the Registers to accept fresh applications by email, with perhaps certified copies of the relevant documents being scanned to them. But we must stress that at present, nobody has any clear idea of whether there will be a practical solution to this problem during the current lockdown.
What does this mean for me?
There will be some clients who are buying or selling and are sitting with an unconditional contract with a completion date in the next few days. Sadly, it appears that it will not be possible to complete those deals on the contractually agreed date. This would also extend to clients who are trying to complete financing transactions with a lender where the finance would be secured by a standard security over the client's land or property.
Most sale/purchase contracts will include a 10 working day period after the contractual completion date during which time the contract will not terminate, but the parties are instead given that period within which to remedy any issues. For now, we hope that the Registers come up with a workable solution within the next few days which will allow those deals which are already in contract to complete before the expiry of that 10 working day grace period. If that happens, however, we think it unlikely that the courts would allow vendors to enforce any interest provisions for late payment of the price which the contract might provide for, but we are in uncharted waters and interest on late payments seems to us to be a side show when set against the wider issues facing the property industry.
For now, we will just need to wait and see whether the Registers can quickly provide a suitable work around.
Our key message to Sellers
If you are already in contract, we recommend that you continue to do all that you can to discharge all of your contractual completion obligations. These are strange times, but you can at least put yourself in the strongest position possible if/when further clarity is received from the Registers.
Our key message to Buyers
Speak to your seller. It's no secret that the logistics for completing transactions are difficult at the moment. Maintaining a good and co-operative relationship with the other side is more important than ever.
Our key message to Borrowers
Speak to your lender. If you already own the property and are trying to complete a financing transaction, any solution the lender may consider will depend on the nature of the financing transaction and the terms offered. The lender may have differing views depending on whether you are a new or existing customer and the financing is of a single property or a small portfolio of properties as opposed to a property being added to your already existing property portfolio secured to the lender. Where available, the lender may look at other security options in the short term, but any changes to the lender's terms will require approval which may still delay matters. We have not yet seen any guidance from lenders on the issue. Otherwise put yourself in the strongest position possible if/when further clarity is received from the Registers.
Our key message to Lenders
If the borrower already owns the property and is trying to complete a financing transaction then they may look to you for a solution. As in our key message to Borrowers above, any solution you may consider will need to take into account the nature of the financing transaction, the terms on which this has been offered and, additionally, any internal policy requirements. The requirement for a standard security over land or property to secure the finance means such transactions cannot be completed at present and it may only be possible to complete if/when further clarity is received from the Registers.