New guidance for buying and selling residential properties during COVID-19 has recently been released by the Government. The Government urge all parties involved in moving home to adapt and be flexible.
Government guidance on conveyancing is to delay moving while ‘lockdown’ is in place, to fight coronavirus. This is in line with the guidance to ‘self-isolate’, ‘stay at home’ and ‘social distance’ following public health warnings. If you have not exchanged contracts it is advisable to negotiate a delay and take a pragmatic view of when the completion date can be agreed. All risks for both buyers and sellers need to be assessed, considered, and understood.
What happens if we can’t agree a delay?
In some transactions, for various reasons, a delay may not be agreed and moving may be unavoidable. All parties that this affects should follow the Government guidance on hygiene and social distancing.
What happens if we have already exchanged contracts?
If a completion date is fixed in the contract and both sides are agreeable to proceed, but it is impossible to agree a delay, the move may be able to go ahead if:
- it strictly adheres to the guidance,
- is critical, or
- you are moving to an empty property.
Removal firms are in a difficult situation and may not be willing to assist you. Any move must be in line with the Public Health guidelines: where the property is occupied a deep clean is recommended together with adherence to the Public Health England’s guide to de-contaminating your new home prior to occupation by the new owner. All parties must respect the social distancing guideline and any occupants must not be in isolation or have symptoms of the virus. You should note the Police emergency powers are only disapplied where the move is critical.
What are the risks if I proceed to exchange of contracts?
If you meet the criteria to move, we would advise that during this period of uncertainty and due to complications and issues that can arise that all matters proceed by way of simultaneous exchange and completion.
It is important to understand all the risks that may arise if you decide to go ahead with exchange of contracts. All risks must be discussed with your solicitors in detail as you could find yourself in breach of contract and forfeit your deposit. It may be possible to insert clauses in the contract to protect both sides and, on agreement, delay the completion date. You should consider all risks very carefully including whether or not your circumstances may change, your searches expire, or your mortgage instructions exceed their offer date. In general, lenders have agreed to extend mortgage offers for 3 months although formal consent may need to be obtained.
What happens if completion does not take place after exchange of contracts due to COVID-19?
If completion does not go ahead then the side not completing are in default unless it can be agreed otherwise, and agreement can be reached to vary the contract. The other party may apply a ‘good faith’ view, however a number of issues may arise such as loss of deposit and penalty interest. The case will need to be looked at further depending on the chain.
What can we do whilst we wait for the ‘lockdown’ to be lifted if we are looking to purchase a home?
This is a perfect time to review locations of where you are looking to purchase. Consider proximity to shops, access to open spaces in easy distance, connectivity and storage in your new home. Keep an eye on mortgage offers as the market is variable. If you are selling use any free time to finish any D-I-Y projects so that your house is ‘super saleable’ when the restrictions are lifted.
If I’m placed on Furlough, do I need to tell the lender?
Yes, if you are placed on Furlough, you must tell your solicitor that you’ve been placed on Furlough and you should therefore not exchange contracts.
- Public Health England guidance for households with possible coronavirus (COVID-19) infection
- Advice on moving during the Covid outbreak
In such uncertain times first advice is to sit tight and wait until every party is ready. If this is not possible and you need further advice on conveyancing please contact Sue Elias at DTM Legal on Sue.Elias@dtmlegal.com, or call on 01244 354820.