The response to the Coronavirus epidemic, and the impact on residential property transactions, continues to evolve. Further guidance to the legal profession has been issued, following talks between various departments of Government, the Law Society, the Land Registry and others. Simon Cooper of Hewitsons explaiins.
COVID-19: An update on residential property transactions
Following receipt of that guidance, we now need to make clear:
- Buyers should, where at all possible, delay moving to a new house until further notice.
- If the property is currently occupied and contracts have already been exchanged then all parties should work together to agree a delay or another way to resolve this matter. Even if there was a desire to move, it will prove very difficult to source removals companies etc.
- If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on staying away from others to minimise the spread of the virus. This is a high bar and the police emergency powers are disapplied only for critical home moves.
Varying an existing contract to defer completion to a later date when the current stay-at-home restrictions are lifted will involve a formal process whereby the buyer and seller exchange supplemental agreements to provide, as far as is possible, an agreed timescale for this to take place. This agreement will need to fit the parties’ requirements and if there is a linked chain of transactions then there will need to be uniformity across the chain. To avoid physical contamination from exchanging hard copy documents, it is suggested this document be signed electronically by lawyers on their client’s behalf and with their authority.
The clear message is that whilst the legal work in preparation for exchanging a contract can still be going ahead, buyers and sellers should think very carefully before instructing their lawyer to actually exchange contracts in the coming weeks. There are many variables for the parties to consider, including the possible length of the coronavirus crisis and fluctuations in property values etc. The contract will be binding once it is exchanged and the parties would be bound to complete even if their financial position had changed. If contracts are to be exchanged then it should incorporate a suitable clause to address anticipated ongoing risks caused by the virus.
Subject to strict compliance with the social distancing rules, unoccupied properties can still be conveyed, but a buyer should only move in if it is critical and safe to do so and having first arranged any deep clean or decontamination in line with the latest guidance.
If you wish to discuss any of the contents of this article with a member of the Hewitsons Residential Property team then please contact Simon Cooper on 01223 447410 or click here to email Simon.
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