Issues around residential conveyancing during the Covid-19 lockdown period
The consequences of the lockdown have had ramifications far and wide to all aspects of our lives, businesses and the way we socially interact now. Residential Conveyancing has not been immune from these ramifications.
The government has issued advice (see link 1 at the end of this note) to both those in the profession and also the public about how to approach residential conveyancing transactions whether you are thinking about marketing the property or are well into the process.
The good news is that conveyancing has not been banned or suspended completely. Transactions can continue providing they observe and comply with the self-isolation measures currently in place. This will unfortunately almost certainly cause delays in the process until lockdown can be lifted due to some of the practical aspects of a usual transaction not being able to be done and the time limits imposed on various matters that are common in such transactions.
At Z group we continue to offer our conveyancing services remotely with clients receiving the same service expected of us, even though we are unable to physically meet in person. Although this note refers specifically to residential purchases and sales, there are many types of transactions in conveyancing that do not involve people moving such as acquiring investment properties, buy-to-lets with tenancies in place, simple lease extensions and gifting property, to name but a few. The issues outlined could come into play during these types of transactions to a greater or lesser extent.
We expect government guidance to change as and when lockdown restrictions begin to be lifted and therefore please keep checking back to our website for any updates regarding this possibility.
We will now outline some of the issues that clients need to consider or be aware of depending on how far or at what stage your transaction has progressed, and whether you are a buyer or seller.
You have not yet put your home on the market
- Estate Agents cannot open branches or attend properties for marketing reasons. ·
- Unnecessary visitors should not be invited to your property.
Although marketing opportunities will be limited, it can be a good time to prepare for the sale and future marketing though. It is useful in any transaction to start collating the information needed so that when restrictions are lifted you are that bit more prepared to progress your matter more quickly. Examples of this include:
- Get together any planning permissions, building control certificates, FENSA certificates, NHBC (or similar warranty) if your property is less than ten years old, guarantees, boiler service paperwork and compliance certificate, test certificates and any other documents that relate specifically to the property.
- If your property is a flat (i.e. leasehold) the last three years of ground rent demands, service charge statements, landlord and/or managing agents contact details, share certificate (if a member of a management company) and the last three years of accounts if applicable.
- Keep hold of your original documents until requested.
You have placed your home on the market for sale As a seller the following items need to be considered:
- The government’s advice is to delay entering into any formal legal agreements (such as exchange of contracts) if the property is currently occupied during the lockdown period. Transactions can continue with unoccupied properties providing self-isolation rules are complied with during the move as well as the transaction.
- Virtual viewings could be considered but buyers are unlikely to make on offer, and subsequently enter into a contract, without having physically visited the property. You also need to consider if you want videos of your property online.
- There are provisions that can be added to contracts to try and mitigate against the risks of the consequences of the virus in regard to delayed completion or not being able to complete on the contractual completion date. However, none are fool proof and given the uniquely new situation it is not certain that all provisions have been accommodated as there are could well be new and evolving scenarios that by definition cannot be accounted for prior to an exchange of contracts. All parties in any chain would likely need to agree. Other possibilities include simultaneous exchange and completion.
- Offers can be accepted but until contracts are exchanged nothing is legally binding and either party can withdraw before this. Buyers may expect the market to soften considerably so may not want to enter into a contract now expecting a lower price in the future.
As a buyer the following items need to be considered:
- The usual searches may be harder to obtain and they are usually only valid for six months form the date of issue. It may be the case fresh searches need to be obtained again if the isolation period is protracted. This adds further expense to your transaction. There may well be delays in obtaining searches, both personal and official, or they may not be possible.
- Your mortgage offer (if needed) may expire. Some lenders are providing extensions to offers to assist but you also need to factor in your own circumstances. For example, should you be made redundant, this is something you would need to advise your lender of, as your change of circumstances in terms of being able to pay any future mortgage payments could be affected.
- Many lenders have withdrawn products or revised the conditions of new mortgage lending in anticipation of property values falling. Similarly, they are not party to any contract between you and the seller, so could withdraw their mortgage offer. If you have exchanged of contracts it would leave you in a precarious financial position if further funding cannot be found or there are no contractual provisions (that the seller will agree to) to be able to end the contract with no penalties. Talk to your conveyancer as soon as possible if you are in this position.
- You are unlikely to be able to get your own independent survey done, mortgage valuation or other physical inspections.
These issues are not an exhaustive list of items that need to be considered but the general theme is that without the ability to physically attend the sale property by various parties, surveyors and others needed to provide the necessary information to confirm finance or condition of the property, then sales and purchases will inevitably be delayed.
As a seller there are opportunities to make the necessary preparations to get your property and affairs ready for any future sale, and by making preparatory steps now your sale could potentially progress more quickly as a rule when conditions are more favourable.
Buyer and Seller have exchanged contracts already
If the property is unoccupied you can proceed to completion providing self-isolation rules are followed. Sellers must be able to give vacant possession (all people and all items not agreed to be left must have been removed). Buyers should note they may have difficulty getting removal companies booked.
If the moving date (completion date) cannot be changed by agreement (and this will be likely in chains), and someone does self-isolate, the move may not happen on the contracted date and this would cause considerable issues and problems contractually. You should contact your conveyancer as soon as possible if this situation might arise.