This announcement was first published on the Winckworth Sherwood website.
These are challenging times and we are all adapting to the current crisis seeking to ensure the best interests of our clients are protected and that their transactions are conducted during this troubling and restricted period. Challenges include getting documents executed and ensuring arrangements can be put in place to ensure planned completions and other stages of the conveyancing procedure can go ahead with certainty, restricted access to the usual banking and administrative systems, the inability to meet clients and difficulties with the signature and witnessing of documents.
We have received messages and calls from worried clients concerned about whether their transaction can go ahead and what needs to be done to ensure they do or adaptions made.
The situation is developing rapidly and massive uncertainty still remains. Banks have indicated that issued mortgage offers are still valid and may be extended but that no new offers will be issued partly due to the massive administrative task of dealing with offers that have already been issued and the inability to carry out valuations and general uncertainty with the market and economy in general.
The Law Society has produced guidance, in collaboration with other industry groups, to help conveyancers assist clients and comply with the latest government regulations and guidance on house moves. Please see our detailed note about this here.
The health of individuals and the public must be the priority. The government has made clear that home moves into occupied properties should only take place where contracts have already been exchanged and it has proved impossible for the parties involved to agree a deferral date for completion. House moves into unoccupied (so new build properties with no current occupier) can proceed, although of course the problems will remain with the handover of keys and purchasers are currently having difficulty with the purchase and delivery of furniture. So if an exchange has already occurred completion should only occur if impossible to find an alternative.
If a matter has already exchanged and once all parties have agreed to defer the completion date, in order to comply with the requirements for a binding property agreement (s.2 of the Law of Property (Miscellaneous Provisions) Act 1989), the parties conveyancers should exchange a written agreement to vary the contract. The parties will need to either e-sign the agreement to vary the existing contract or authorise their conveyancer to sign as agent on their behalf. This will require a formal exchange process.
For transactions that have already exchanged, or if once all the advice is given the parties still decide to proceed with an exchange, as well as the considerations about the expiry of existing mortgage offers (some lenders have indicted a willingness to extend by 3 months but this must be checked) consideration should also be given to the ability of the lender to continue to lend where for example 60% or more is being borrowed; consideration should be given to what would happen if the buyer’s circumstances change during this period, for example, would they still be able to afford the mortgage if they lost their job and had to find new employment. They may need to extend the completion timeframe even further or seek to end the contract if possible if they have exchanged. Consideration may need to be given to whether the contract has been frustrated. While it is possible to exchange incorporating clauses in the contract aimed at dealing with risks related to the virus it is unlikely to be possible to cover every eventuality and it will be particularly difficult in a chain situation.
Mark Vinall, Partner, Lease Extension and Enfranchisement at Winckworth Sherwood
Syeda Malik, Senior Associate, Lease Extension and Enfranchisement at Winckworth Sherwood
Gavin Walmsley, Associate, Lease Extension and Enfranchisement at Winckworth Sherwood