Scotland business

Coronavirus: Efforts under way to tackle house sales disruption

Glasgow terrace homes Image copyright Getty Images

The buying and selling of homes has been severely disrupted since Registers of Scotland (RoS) halted the processing of documents because of the health crisis, it has emerged.

This week the government agency stopped scanning documents sent by solicitors through the post, citing the health risk posed to its staff.

The Law Society of Scotland, RoS and lenders are now holding talks to find a way of guaranteeing transactions so that mortgage funds can be released.

RoS has proposed replacing registrations on the Land Register temporarily with "advance notices".

The aim would be to provide sufficient legal cover to secure transactions.

Many solicitors have stalled or abandoned home sales, leaving many buyers and sellers facing the cost of cancelled removals and securing continued accommodation.

These are mostly home sales agreed weeks before the virus outbreak escalated.

Why is the Registers of Scotland important?

When a house changes ownership, the title deed is sent by post to Registers of Scotland. Normally, this government agency scans the document, and returns it, while entering the transaction on the official register.

Only once it is on the register, usually the day after one homeowner moves out and the new one moves in, has the transaction legally taken place.

This is important to new owners and mortgage lenders, because it establishes a claim on that property. Others cannot register the same property.

Nor can another lender claim to have a right to the property if the owner defaults on mortgage payments. This is important to avoid buyers taking out two or more mortgages on a property without the lenders knowing.

On Tuesday, the law society advised solicitors not to settle transactions, following the RoS move.

It has since revised that advice while it considers the new RoS proposals.

Lenders, represented by UK Finance, are also involved in the effort to find a solution.

Banks normally demand to see registrations are in place before releasing funds, and they will have to be satisfied the temporary arrangements cover their risk.

Offices closed

The Law Society of Scotland said the "sudden cessation of settlements" was understandably causing "huge additional stress" to members of the public, solicitors and their staff.

It added: "Most solicitors' offices are now closed in accordance with the new restrictions and although many are now working at home, they do not have consistent access to all office resources and they will have no face-to-face contact with their clients."

RoS claimed the risk to transactions and to lenders was "minimal", and it was taking steps to mitigate that risk.

It added: "Any citizens with concerns about the ability of their property sale going through during this period are being advised to speak to their solicitor and RoS will have our senior customer advisers on hand to work with solicitors to identify the correct solution for individual cases."