Q&A on buying and selling a home during the coronavirus pandemic
Can I put my house on the market at the moment?
The short answer is yes. However, it will not be possible for anyone to view your property in person due to Government guidelines on social distancing, unless the property is empty. Now is a good time to get a feel for the local estate agents who will be best placed to talk you through the marketing process.
My house sale was underway before lockdown. Can I still exchange and complete?
Yes, if the circumstances allow it and you are comfortable with the risk. In each instance the factual circumstances should be considered. These can include:
- Is everyone involved in the transaction willing and able to do this?
- Can the house in question sit vacant for at least a week with nobody in it?
- Is my lender happy to proceed?
- Can I get removals during this time?
- Do I prefer the risks of a simultaneous exchange and completion, or do I prefer the risks of a gap between exchange and completion?
You should discuss with your solicitor the particular circumstances and risks in relation to your transaction to assist you in making the decision as to whether you are happy to exchange and complete during this period.
What are the likely timescales at this stage considering the lockdown?
An average transaction outside of the lockdown takes approximately eight weeks from the point that the buyer’s solicitor receives contract paperwork. This may be extended where the property is leasehold, where there is a mortgage or where there is a chain. With any transaction, the timescales hinge on all elements of the transaction proceeding in a timely manner and the transaction can only move as quickly as the slowest link in the chain.
At present, lockdown is preventing surveyors from physically examining the property either for the mortgage valuation or for a homebuyer’s survey. Some lenders are relying on ‘drive by’ or desk-based valuations. This means that some buyers, even with the best intentions, may not be able to proceed until after the lockdown ends.
For other matters, perhaps where there is an empty property and cash buyer, in theory the timescales are not affected and we have arranged the completion of quite a few similar cases during the lockdown.
Many law firms have furloughed high numbers of conveyancers and support staff, with some companies saying that they will not progress any matters at all during this time. This means that chains may find themselves unable to proceed to exchange and completion. The conveyancing team at Berry & Lamberts are operating business as usual via telephone, email and video link.
It is therefore very difficult to anticipate how long an existing transaction will take at this stage given the amount of factors that are beyond our control. Please rest assured though, that our conveyancing team are doing their best to ensure that each matter continues to be dealt with as quickly as possible, given the individual circumstances surrounding that matter.
I am not comfortable proceeding with my sale/purchase at this time, can I put it on pause?
Yes, if all parties are happy to do so. We are finding that a lot of our clients have requested this.
You should be aware that the other party to the transaction may be unhappy with this decision, however from a pragmatic standpoint, if they walk away from the transaction they are unlikely to be able to find another buyer/property during the lockdown.
What are the additional risks for exchange and completion at this time?
Normally exchange takes place with a week or more before completion, however at this time we are advising our clients to undertake simultaneous exchanges and completions where possible.
This is because of the risk of things going wrong for one of the parties between exchange and completion – for example someone having to quarantine themselves due to Covid-19 symptoms or if someone is taken to hospital or passes away because of the virus. Other potential issues might be linked to trouble finding a removals company in order to vacate the property or someone losing their mortgage offer as a result of being made redundant.
People can find themselves locked into a contract they cannot comply with, which has very serious practical and financial implications.
The alternative we are arranging for some clients, is a carefully drafted clause allowing for an exchange of contracts but with the ability to delay the initial completion date if one party cannot complete due to a Covid-19 event.
I have already exchanged. What happens if we are unable to complete due to Covid-19 related issues such as illness?
Under the terms of the contract, the completion date is fixed and parties are contractually bound to complete on this date.
The parties to a contract can mutually agree to vary the terms of the contract, including the completion date. This would be a first port of call if it appears that one of the parties is unable to complete on the contractual completion date. However, there is no guarantee that the parties would be able to agree an alternative date.
Other points to note:
- If an alternative completion date is needed because of the repercussions of coronavirus, but this cannot be agreed, then the party who cannot complete (for whatever reason) is deemed to be in breach of the contract.
- The party in breach of the contract is then liable for damages to the other party – the damages cover any losses incurred by the other party as a result of the failed completion (although the losses should be mitigated).
- If the buyer fails to complete then the seller is able to keep their deposit; if the seller fails to complete they must return the deposit plus interest.
What if I or the other party delay completion or fail to complete due to Covid-19 reasons?
Under the terms of a standard contract, one of the parties will be deemed to be the reason that completion fails to take place on the contractual date. This can either be the buyer or the seller depending on the circumstances.
The ‘innocent’ party is entitled to damages for the losses they incur as a result of the other party being unable to complete. These losses may include removal costs, solicitors’ costs, and alternative storage/accommodation costs and, where it is a buyer failing to complete, the loss of interest earned on the purchase monies based on the contractual interest rate.
Particularly where there is a chain, this can lead to very large bills being presented to the party that caused the remainder of the chain to fail to complete.
The contract also allows the innocent party to serve a ‘Notice to Complete’ on the party that failed to complete – once this is served there is a countdown set into action. If a delayed completion does not happen within 10 working days of the Notice being served, then the contract may be terminated and, where the innocent party is the seller, he/she may be able to keep the deposit. If the buyer is the innocent party, the deposit can be returned to them with interest at the contractual rate.
The termination of the contract is obviously the worst case scenario. A ‘Notice to Complete’ is not issued automatically so is at the discretion of the innocent party – given the exceptional circumstances we find ourselves in one would hope that the parties in the chain would take a more sympathetic stance and seek to either allow delays if at all possible or renegotiate an alternative completion date.
What if the removal company pulls out?
At this stage in the lockdown, most removal companies have decided their stance on whether or not to agree to assist in removals during the lockdown.
If, however, your chosen removal company decided not to undertake the work and you have a contract with them then (depending on the terms of their contract, which should be checked carefully before booking the company) there is a possibility that they would be deemed to be in breach of contract. You may be able to highlight this to the removals company in order to persuade them to change their stance, however we would strongly advise you to also look into making alternative arrangements such as hiring vans or finding another company etc.
If this is not possible we would ask the chain to try agree another completion date – there is no guarantee this would be possible or agreed though.
If you reach the contractual completion date and you cannot vacate the property (but the buyer remained ready, willing and able to complete) then you would be deemed the reason that completion failed to take place on the contractual date. You would be liable for damages to both your buyer and your seller.
Need to talk to us?
If you have any queries about buying or selling a property at this time or wish to speak to a member of our team then please telephone 01892 526344 or email email@example.com.
For further information on all our Property services, please click here.
Whilst our offices are closed to the public during the coronavirus pandemic, we are offering a telephone appointment service which gives you one hour of time with a solicitor for £100 + VAT. Please get in touch if you feel this type of appointment would be beneficial.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.