The Scottish property market remains competitive and despite a marked decrease in the availability of finance and indeed housing stock, many buyers and sellers find themselves in long and complex property chains. Residential property solicitor Jazmin MacPherson outlines the characteristics of this increasingly prevalent scenario and offers advice for those who find themselves in a chain when buying or selling their home.
Are property chains common?
Yes, the reality is that it is becoming increasingly common to find yourself in a chain when buying or selling your property. Many people are reliant on the sale of an existing property before purchasing another. Some sellers may find the prospect of entering into a chain in order to sell their property off-putting and may even hold out for an offer which is not contingent on the sale of another property. We would recommend discussing any offers which are subject to sale with your property advisor before making any final decisions.
What is a property chain?
Put simply, property chains are a series of connected and often contingent property transactions. For example:
- Bob is purchasing a property but this is dependent on the sale of his existing home to finance this purchase.
- His buyer Anne, is relying on the sale of her home to finance the purchase of Bob’s property and she is selling to Ingrid.
- Ingrid is a first-time buyer who is dependent on mortgage financing.
This illustrates the complexities of being involved in a chain: Bob has no direct relationship with Ingrid, his transaction is contingent on Ingrid securing her mortgage to allow the missives to move through the chain, eventually reaching him and enabling him to proceed with his purchase. A common question for the conveyancer in this scenario is to confirm the timescales involved in chain transactions, this is of course dependent on how long the chain is i.e., how many buyers and sellers are connected by contingent sales and the funding position of all the parties involved. If Anne also requires a small mortgage in order to finance her purchase, then she will not provide Bob with a missive until her own mortgage offer has been received. Of course the conveyancing is also required to be carried out at each stage in the chain, and the purchasing solicitors will be required to note the title and provide their respective clients with a report to ensure that they are satisfied in respect of the title deeds, prior to concluding the missives.
Questions to ask your Solicitor if you are in a property chain
In respect of your sale, it is sensible to ask your solicitor the following:
- What the funding position is in relation to your buyer?
- Where they are selling their property to finance their purchase of yours?
- What is the position of the buyer for their property?
It is important to be mindful that their own buyer’s position may affect you, as they will need to secure all funds (i.e., conclude missives on their own sale and or/obtain their mortgage offer) before they conclude with your buyer. It is often only once your buyer’s sale has concluded that they will be able to progress the missives in respect of their purchase.
You should seek clarification at an early stage as to the funding position of all parties involved so you understand the steps that need to be completed ahead of concluding your own missives. This is a significant and often life-changing purchase, so don’t be shy when it comes to asking questions or seeking reassurance from your Solicitor. They should have a good understanding of the market, but it is important to remember that with clear communication from the outset, chains are a frequent and entirely manageable part of residential property transactions.