Buying a home and obtaining a mortgage can be a fairly stressful experience for many of us but if you are selling in Scotland and buying in England or Wales – or vice versa – an additional level of complexity is added. This is because the law and procedure is quite different north and south of the border.

Scottish law and English law have evolved quite separately. The Scots will say that their system including a binding contract at the outset is better and provides greater certainty although it can involve more up-front costs. The English will say that their system involving an agreement “subject to contract” which is not binding until contracts are exchanged later generally works well.

In England and Wales flats are invariably sold on a leasehold basis because English law requires a leasehold contract to enable the enforcement of positive covenants. In Scotland no such requirement arises so flats are generally sold with the Scottish equivalent of freehold title.

Scottish Home Report

In Scotland purchasers must have their mortgage arranged, survey completed and legal enquiries completed before making an offer because if the offer is accepted it is binding. In order to reduce the amount of wasted fees and costs when several purchasers are interested in a property in Scotland it is a requirement that the vendor supplies prospective buyers with a Home Report. This comprises a professionally prepared survey, energy performance certificate and completed property questionnaire.

A vendor commissioned Home Report must comply with the Housing (Scotland) Act 2006 and the Housing (Scotland) Act (Prescribed Documents) Regulations 2008 and became a legal requirement from 1 December 2008. The concept of a survey report prepared by the seller was mooted for properties in England and Wales also some years ago but the scheme was not properly thought through and failed to gain general support in the market.

Binding offer

So if you are buying a house in Scotland and selling in England or Wales the vendor in Scotland will supply you with a Home Report, you lawyer will complete the enquiries and you will make an offer. If the offer is accepted you then have a binding contract. There is no backing out. However, if you have agreed a sale “subject to contract” in England your purchaser could back out, perhaps at the last minute.

Conversely, if you are selling in Scotland and buying in England or Wales your agreement in Scotland will be binding but the people you are buying from could change their minds.

In order to deal with these potential problems applicants may need additional mortgage finance in the form of a bridging loan agreed in principle available as a back-up to ensure that they are not forced to break their contracts with potential liability for damages and costs.

Surveys

South of the border it is for the purchaser to decide what level of survey report (if any) they require and the survey is generally commissioned after an offer has been accepted subject to contract. The surveyor reports to the purchaser and is paid by the purchaser. The vendor is not entitled to see the report and the surveyor’s report will usually expressly stipulate that the report cannot be relied upon by any third parties.

In contrast, the Scottish Home Report is commissioned and paid for by the seller. It is then available for any prospective buyer to see and rely upon. The surveyor preparing the Home Report will also be able to provide a mortgage valuation report in most cases when the purchaser requires a mortgage.

Mortgage applicants crossing the border need to obtain good early expert professional advice to ensure that their transaction proceeds smoothly.

Peter Glover is a chartered surveyor working in London and author of “Building Survey” and “Buying a house or a flat”