Coronavirus and your conveyancing transaction - FAQs
Will Coronavirus delay my conveyancing transaction?
In line with Government guidance we are continuing to operate on a remote working model which has been tested for the past three weeks. Michelmores' Conveyancing team are working from home and we do not anticipate that this will impact adversely upon your transaction.
We continue to be available via email, telephone and the usual postal system.
We are noticing some slightly increased turnaround times where documents are required to be posted but, as far as possible, we will try to deal with matters via email.
What will happen now that the UK has been put into 'lockdown' and I cannot move?
Under the current lockdown provisions it is likely moving into your new property will not be considered 'essential movement'.
Under the terms of the Law Society's Standard Form of Residential Conveyancing Contract a Seller is required to give vacant possession upon completion and therefore the Seller would effectively be in breach of Contract.
However, the Heads of Conveyancing in the local area have agreed to adopt a reasonableness approach in these unusual circumstances in order to achieve the best possible outcome for all parties.
The Law Society's Conveyancing Protocol requires that all Solicitors:
- Act with courtesy and co-operate with third parties and;
- Maintain high standards of courtesy and deal with others in a fair and honest manner.
The legal position is that if completion does not take place when contracts have been exchanged due to the effects of Coronavirus, then the parties who were unable to complete would be in default, however, whilst the contract provisions would still apply, it is possible for the non-defaulting party (most likely to be the buyer) to take a 'good faith view'.
It will be at the discretion of the non-defaulting party as to whether they decide to enforce the terms of the Contract and serve a notice to complete. Whilst in the local area we are adopting a reasonable 'good faith' approach in light of the unprecedented times, we also deal with solicitors from further afield with whom the same approach has not necessarily been agreed.
The Law Society recommends that we do not make any substantial amendments to their Standard Form of Contract and therefore, in such uncertain circumstances, we do not propose drafting a Contract clause which would capture every situation. The Law Society has commented that:
"We do not consider that bespoke clauses are necessary or desirable as standard […] we do not think that we can assess the position sufficiently to attempt to provide any suitable clauses for such a wide range of potential situations."
What aspects of my conveyancing transaction might be delayed as a result of Coronavirus?
- Searches: It is possible that your search results may be delayed. It has been reported that various Local Authority offices have been required to transfer to remote working, which we are expecting to create some delays.
- Disruption to banking systems: Exchange and completion both require the transfer of funds, and there may be some disruption to the banking system. At present, we have not experienced any difficulties.
- Requests for properties to be deep-cleaned/decontaminated could cause delays to exchange of contracts, as such services will not be considered to be essential travel under lockdown.
- Obtaining a witness to documents: A signed Contract will be required on exchange of contracts and, with your express, written authority, this can be signed on your behalf. However, we will require the signed Transfer and Mortgage Deed (if applicable) on completion. Both of these require a witness to your signature who has to be independent to you and not related by blood or marriage. We send documents to you as early as possible in the transaction and, in many cases, these will have already been returned. Please advise us immediately if you do not anticipate being able to return duly signed and witnessed documents before completion.
- Delays with the issuing of Mortgage Offers: A valuation of the property will need to be carried out before an Offer is issued. This requires a third party to enter the property you are purchasing, which may not be permitted by the Seller. Please liaise directly with the Estate Agent/Seller in this regard to establish the position before allowing a valuation to be scheduled. Some lenders are able to carry out a desktop valuation, which may mean they do not need to attend the property. You should discuss this option with your broker or lender.Due to the announcement about 'Mortgage Holidays' Mortgage Lenders are experiencing a high volume of calls and enquiries at present. This may delay the administrative aspects of issuing your Mortgage Offer.
- Removal Companies: It is likely removal companies will stop taking new instructions. Before exchange of contracts takes place ensure you have secured a removal company on a provisional basis to be confirmed once contracts have been exchanged, subject to the lockdown conditions in force. The British Association of Removers has instructed all members 'only to complete any moves that are underway' and 'immediately cancel or postpone any move that has not yet started'. It is unlikely general house removal services will be deemed essential.
- The Seller being unable to move out of the property: Either due to self-isolation or lockdown the Seller may not be able to provide vacant possession of the property on completion. The Seller would effectively be in default as per the comments above and the Buyer would be able to claim for any loss incurred as a result of the Seller's breach.
- 'Signing off' of New Build Properties: It is likely that the construction of new build properties will be disrupted due to tradesmen and building inspectors being unable to access the property and the potential closure of site offices.
What are the potential solutions?
- Simultaneous Exchange and Completion: This does not offer a great deal of certainty as there are no guarantees completion will take place on a set day until exchange has taken place. However, arranging for exchange and completion to take place simultaneously would ensure that you are not tied into a legally binding contract to complete until we can be certain there are not restrictions on your ability to move house.
- Leaving as little time as possible between Exchange and Completion: If exchange has not yet taken place it would be our advice not to exchange until the situation is more certain. If you still want to proceed with exchange and complete then we would suggest as little time as possible between exchange and completion, so that when you enter into a binding contract you can be reasonably certain of the situation at completion.
- Exchanging with a Completion Date later in the year or earlier by arrangement: There are no guarantees as to when the Coronavirus-related disruption will be resolved or when restrictions will be lifted. However, you could exchange contracts with a completion date in the more distant future or 'earlier by mutual arrangement' so this date could be brought forward if the circumstances allow. Please note: this would be subject to the expiry of your mortgage offer (if applicable).
- Putting Exchange on hold: As above, we are continuing to operate a remote working model and can progress your transaction over the coming weeks to the point of exchange and then agree an exchange of contracts and fix a completion date when the relaxing of the current lockdown has been confirmed.
- Exchanging to allow Legal Completion to take place: You could allow exchange of contracts and legal completion to take place at present. We are not noticing any difficulties with the banking system (but the situation is, of course, changing every day). We may be able to help you to agree a form of Licence to Occupy between buyer and seller to allow the seller to remain in occupation of the property after legal completion until the practical steps of moving out can be arranged. This may bring some welcome flexibility in these challenging times.
If you would like to discuss any of the issues raised in this article, or have other concerns about the impact of Coronavirus, please contact Louise Peters, Partner or Ellie Wonnacott, Solicitor in Michelmores' Residential Conveyancing team.
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This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact our specialist lawyers to discuss any issues you are facing.