Amy Paterson, conveyancing solicitor at Gard & Co, answers some of the questions we are frequently being asked concerning moving house during the coronavirus outbreak and the impact it has had on conveyancing transactions.
Government advice is that homebuyers should, where possible, delay moving home whilst the stay-at-home measures to fight coronavirus apply. Where the property being moved into is vacant, this transaction can still continue however I am advising clients that they should only move if they are confident that they can comply with the social distancing measures. In practice, as many removal companies are not operating at present, this usually means that buyers are hiring a van and moving themselves although they are not able to call upon friends and family members to assist them with the move. We can facilitate the financial transaction and legal completion; however it is the logistics of physically moving which is causing buyers and sellers difficulty.
All of our conveyancing lawyers and assistants are continuing to work remotely from home. Our office phones are diverted to our mobiles and so we can still be contacted in the usual way. We pride ourselves on offering a personable service and can still provide “face to face” appointments via Zoom, WhatsApp or Skype. Whilst we are encouraging clients to communicate with us electronically, we also appreciate that some clients may not have access to email or a printer and we can still post letters and documents to clients where this is required. We also have staff in the office scanning in any incoming letters and documents so that we can access these at home.
Whilst we are working hard in our new offices at home to progress and complete transactions, there are a number of factors outside of our control that have inevitably had an impact on the conveyancing process. There are delays in Local Authority Searches being received as Councils are operating with reduced services, there are delays with mortgage offers being issued as valuers have not been able to carry out mortgage valuations and some mortgage lenders have put funding on hold or withdrawn it altogether. Due to reduced staffing levels and the high volume of calls and enquiries lenders are receiving because of mortgage payment holidays, there are administrative delays with lenders processing mortgage applications and responding to correspondence. Other issues include surveyors not being able to access occupied properties to carry out surveys, delays in Land Registry applications being processed and in leasehold transactions, delays in Management Companies providing Replies to Leasehold Property Enquiries
If a transaction cannot complete whilst the stay-at-home measures apply, we are still actively progressing these matters so that parties are ready to exchange contracts once the restrictions are lifted. It is not advisable to exchange contracts now for a completion date in the future.
On exchange of contracts, a 10% deposit is normally paid by the buyer and at this point you are contracting to buy the property on the completion date stated in the contract. If you decide that you do not want to proceed once exchange of contacts has taken place or you are not able to complete due to factors outside of your control, for example if your funding has been withdrawn, you may lose your deposit and have to pay further penalties. As the seller, unless you are selling the property subject to an existing tenancy agreement, you are contracting to provide vacant possession on completion. If you are not able to move out of the property on completion, for example because your removals have cancelled or you are displaying symptoms of coronavirus and having to self-isolate, you will be in breach of contract.
For transactions that can still proceed whilst the restrictions are in place, I am advising clients not to exchange contracts until the day of completion. This is to minimise the risk of exchanging contracts and not being able to complete because a mortgage offer has been withdrawn, removals have cancelled or any other coronavirus related issue has arisen. We can agree to work towards a completion date however you would not be legally bound to complete until we exchanged contracts on the day of completion. I appreciate that this can create stress and uncertainty for parties however we will prepare the transaction for completion as if contracts had been exchanged and it is generally considered the better alternative than exchanging contracts before the completion date and being in breach of contract because you are unable to move or provide the balance of the purchase price.
As set out above, I am advising clients to exchange contracts on the day of completion which is the point at which you are contractually bound to complete. We are progressing matters up to the point of exchange of contracts and, unless the property is vacant, these matters are then put on hold until the restrictions are lifted. However there may be matters that exchanged contracts before the coronavirus outbreak.
For matters that have already exchanged, unless the property is vacant and the buyer can move safely in accordance with the distancing guidelines, it is advised that a new completion date is agreed between the parties. In these circumstances, we are working with other solicitors to agree Variation Agreements to amend the original completion date in contracts and incorporate new terms for the risks presented by coronavirus.
When agreeing new completion dates, we have to be mindful of the expiry date of mortgage offers. In order to support customers who have already exchanged contracts and need to defer completion, UK finance have confirmed that all mortgage lenders are working to find ways to enable customers who have exchanged contracts to extend their mortgage offer for up to three months. It is advisable to obtain confirmation from the lender that the mortgage offer can be extended before agreeing new dates for completion and I would recommend speaking to a mortgage adviser and/or the mortgage lender direct in this regard.
Another consideration if completion dates are deferred is the validity of search results which should be no more than six months old at the time of completion. If searches need to be reordered, this will increase costs and may cause a delay especially as searches are taking longer than normal to be returned. Clients could consider search indemnity insurance however this may not be acceptable to the lender.
If the parties are unable to reach an agreement to delay completion once contracts have been exchanged, there is an exemption for critical home moves in the emergency enforcement powers that police have been given to respond to coronavirus.
All parties must follow the distancing guidelines including maintaining a two metre distance from others at all times throughout the move. If you are moving into a recently occupied property it is important to carry out a deep clean of the property and follow the Government advice for decontamination of a property if you have reason to believe that the previous occupant, or someone who they had been in contact with, has coronavirus or symptoms of coronavirus. I have asked clients to advise me if they fall ill or begin to show symptoms of coronavirus so that I could notify other parties to ensure that that they would then take the necessary precautions before occupying the property.
Government advice is that you do not have to pull out of transactions because of coronavirus, however if you do decide to withdraw from a sale or purchase prior to exchange of contracts, you can do so without any financial penalty. Unfortunately, if you wish to pull out of a transaction once contracts have exchanged, as the buyer you risk losing the deposit paid and as the seller you would need to return any deposit paid to the buyer with interest. The defaulting party may also have to pay further penalties as the remedies available to the buyer and seller are not restricted to the losses under the standard terms of the contract. The buyer or seller can take legal action against the defaulting party for breach of contact if they sustain other losses.
We provide our conveyancing service on a “no move no fee” basis and so, if for any reason you decided that you did not want to proceed, we would not charge you for the legal work carried out up to the point of withdrawal. You would not be able to recover costs already incurred on your behalf for example if you have authorised us to order searches and these have been received or cannot be cancelled. You would also need to consider other costs incurred for example the survey or mortgage application fee.
We are still providing quotations to prospective clients in the usual way and can send the instruction paperwork to you either electronically or in the post. You can formally instruct us by returning the paperwork in the post or by email.
If a property was already on the market prior to the restrictions being in place, this can still continue to be advertised for sale although physical viewings cannot take place. You can still instruct us to act for you even if a sale has not been agreed and we can get the paperwork in order to enable the transaction to progress smoothly and swiftly once a buyer is found. As previously explained, we act on a “no move no fee” basis and so you will not be charged for the legal work carried out on your behalf if the transaction does not proceed.
If you are thinking about selling a property, it is advisable to use this time to gather all information and documentation you will need to provide to prospective buyers and to carry out any home improvements and repairs.
If you are thinking about buying a property, it is also advisable to use this time to gather information and consider all of the costs involved in buying a property. We can provide you with an instant online quotation or please do not hesitate to telephone us if you would like us to explain the fees and process to you.