News / General

Closing dates and noting interests

By SLAS Spokesperson

The Committee was concerned about the guidelines issued in February 1999 by The Law Society of Scotland in relation to closing dates and notes of interest. The article recommends that once a closing date has been fixed and instructions to accept an offer have been given by the selling client, a solicitor would not be able to accept any subsequent instructions to enter into negotiations with, or accept an offer from, another party unless and until negotiations with the original offerer have fallen through.

By contrast, the article ends by stating that where a closing date has not been fixed, the selling solicitor should advise his clients of any offer received, whether before or after negotiations with another prospective purchaser have commenced, and should intimate that the clients are entitled, but not obliged to, accept the second offer. This is the case even if an acceptance may have been given to another prospective purchaser, either verbally or in qualified form in writing.

The Committee could not understand why these two situations should be treated differently. The view was that in the latter situation, if a selling solicitor had indicated verbally to a purchasing solicitor that he had instructions to accept his offer, the selling solicitor was not in a position to depart from those instructions again until negotiations had fallen through with the original offerer. If the client insisted on instructing the selling solicitor to accept a subsequent offer, then the proper course of action for the selling solicitor was to resign agency.

As a general observation, the Committee felt that the Law Society of Scotland was issuing too many guidelines and practice rules which was resulting in confusion to the profession. Whilst it is vital to have the profession properly regulated the proliferation of so many directions, some of which seem to be altered very quickly after they are produced, seemed to be unnecessary.

The Law Society of Scotland has responded to that letter and does not accept that there is no distinction between the two situations. The Director of the Professional Practice Department states that closing dates have no legal status in Scotland and have simply developed as a matter of practice to facilitate the marketing of properties.

The guidelines were designed to protect this convention from abuse, and in particular, to minimise the risk of unsuccessful offerer coming back for a second bite of the cherry. The Professional Practice Committee had adhered to this view and decided there should be no change.

The Convener would like to hear the views of our members on this issue.

Convener:
Andrew D. Anderson, James Guthrie & Co., 3 Portland Road, Kilmarnock, KA1 2AN - DX KK6 KILMARNOCK.

Vice-Convener:
Kenneth W. Swinton, University of Abertay, School of Accountancy and Law, Bell Street, Dundee, DD1 1HG.

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