Practical tips for selling and buying a property during the Coronavirus crisis
The current government advice (as of 26th March 2020) for buying and selling homes during the stay at home period is that “there is no need to pull out of transactions”. The priority of course has to be that the health of everyone involved in the process is protected.
However, the government has said that “where the property is vacant, then you can continue with this transaction” but it is important their guidance is followed concerning home removals for the safety of all.
The government has further advised “where the property is currently occupied, we encourage all parties to do all they can to amicably agree alternative dates to move”.
On that basis, the conclusion that can be drawn is that parties can continue with all the work relating to the sale and purchase of a property but consideration will have to be given to the health of all when deciding when is an appropriate time for the move itself to take place.
I summarise below a number of points that have arisen since this crisis began that all parties involved in house moving should consider. This is by no means a conclusive summary but it should be a helpful aid to estate agents, property solicitors and buyers and sellers in particular. The points to consider are:-
- Putting a property on the market for sale - our understanding is that currently there should be no visitors to your home. This means that estate agents should not be coming to your property if it is occupied to take pictures or videos. This does not however preclude you from taking pictures or videos of your property and sending it to estate agents for them to use in sales particulars or marketing your property for sale.
- Viewings of a property by buyers - you should not allow people into your home for viewings if it is occupied at this time in line with current government guidance (as of 26th March 2020). This does not however prevent a buyer from having a virtual viewing of the property conducted by the estate agent or even directly yourself.
- Surveys of a property by buyers - if the property is currently occupied, again in line with current government guidance, you should delay the survey until the current guidance is relaxed. If the property has been vacant for at least 1 month then there is no reason why the survey should not proceed provided all parties to the process are comfortable in this occurring.
- Mortgage Offers may be delayed but see if the particular lender will proceed with a desktop valuation rather than a physical survey of the property - most mortgage lenders require their surveyor to carry out a physical inspection of the property before they will issue their mortgage offer. Buyers should ask their mortgage lenders whether they would be prepared to proceed on the basis of a desktop valuation of the property rather than a physical inspection of an occupied property to reduce the risk of the mortgage offer being delayed because a physical inspection of the property cannot occur at this time.
Buyers should ask their lenders or mortgage brokers what their current service level is for issuing mortgage offers before deciding which lender to use. Some mortgage lenders carry out their services outside of this country and if the country they operate from is subject to more draconian lock down measures than this country then this may delay their offer compared to a lender who operates their service from this country. The reverse could of course apply too if the country in question is subject to less draconian measures at this time.
- Removals firms may not be able to supply services even if they have contracted to do so – buyers and sellers should keep in regular touch with their removal companies whether or not they have already booked their services for a particular date to move. If someone from a removals company displays symptoms of Coronavirus then in line with government guidance that company may not be able to fulfil the service you have booked with them even if there is a contract in place for you. You should therefore ensure you are in contact with more than one removal company so that if your removal company is unable to perform the service then you have another company that may be able to assist you.
- You may not be able to change your completion date if you have already committed to a binding contract by exchange of contracts – the current guidance to property solicitors when dealing with properties that are occupied is that there is a recommendation that the contract is varied so that the completion date is delayed until after the period where stay at home measures to fight Coronavirus are relaxed. However, there may be reasons why parties are not willing to agree a variation in the completion date. If a buyer or seller does not then complete the purchase or sale when agreed then the party who does not complete will be in breach of contract and liable to the other party for all losses suffered as a result of the failure to complete the purchase or sale. If a buyer does not complete within 10 working days of a valid notice to complete being served on or after the completion date then a buyer would also lose the deposit paid on exchange of contracts. This is not the full extent of remedies available to either party but it reinforces the message that it is crucial that sellers and buyers must complete their sale or purchase on the contractual completion date if at all possible if an agreement for delay cannot be reached.
- Property Searches may be delayed - currently, some local authorities are not producing search results at all and some water and drainage companies are severely delayed in producing search results. If a buyer is proceeding with a mortgage then their solicitor may not be able to proceed until the search result is received. An option to consider is checking whether a buyer’s mortgage lender will accept insurance against the risk of searches not being carried out but only if it is crucial to a buyer to move quickly ahead with the purchase for a particular reason and only on the basis that a buyer is fully informed of the risks of relying on search insurance rather than the search result itself.
- Mortgage funds for completion may be delayed - if a purchase of a property can proceed at this time in line with current government guidance and all parties do not want to delay the completion of a purchase then parties need to consider that lender services may be affected. Some lenders seem to be more adversely affected than others currently and this is causing a delay in mortgage funds arriving on the day of completion. Options for parties to consider therefore at this time are:- (a) exchanging contracts but with a long period before completion- in normal circumstances, lenders need at least 5 working days notice to guarantee they will send funds in time. In the current circumstances, it may be prudent for there to be at least a 10 working day gap between exchange and completion to try and ensure funds arrive on time (b) requesting the mortgage funds one working day earlier than the completion date. Whilst this would mean you would be liable to the lender as a buyer for one additional day’s interest, this is far more preferable than being liable to your seller for any losses they suffer as a result of your delay in completion because this could include additional removal and storage costs among other things (c) consider exchanging contracts and completing your purchase on the same day- while this would mean you would not have a claim against your seller if they did not proceed with exchange of contracts and completion on the agreed day, it would mean you would not be liable to your seller for any losses suffered as a result of any delay in completion
- Get your purchase funds to your solicitor well prior to your agreed completion date - if current restrictions become more draconian, it may not be possible for you to order the transfer of funds to your solicitor before any agreed completion date. Alternatively, the bank due to staff shortages caused by illness or lockdown, may not be able to process the funds transfer request in time to your solicitor. It is therefore crucial you send your funds to your solicitor as soon as possible when they request them.
- Ensure that you send your signed contract, signed stamp duty land tax return, signed and witnessed transfer deed and mortgage deed and any other signed documents back to your solicitor as soon as possible and well before any exchange or completion date - your solicitor needs to be holding your original signed and witnessed transfer deed in the case of a sale and an original signed and witnessed mortgage deed in the case of a purchase before they can proceed to completion of your sale or purchase. If these documents were not with your solicitor, your solicitor would not be able to complete your sale or purchase.
- Ensure that your estate agent holds a set of keys for your property and that the keys can be passed safely to a buyer on completion - a seller is legally required to hand over keys to a buyer on the completion date. This can be through an estate agent or by yourself but it is crucial that the government’s guidance on social distancing is applied.
- CONSIDER WHETHER PROCEEDING ON THE BASIS OF A SIMULTANEOUS EXCHANGE AND COMPLETION (IE EXCHANGING CONTRACTS AND COMPLETING ON THE SAME DAY) IS APPROPRIATE - this does have limitations for both sellers and buyers because it means either party can withdraw right up to the day of exchanging contracts and completing without liability to the other party. I do think though that this option should be strongly considered. It may be appropriate for the following reasons:- (a) if someone displays symptoms of Corona virus, it may not be safe for the move to occur (b) a removal firm may not be able to move a seller out of a property (c) a buyer may lose their job before completion meaning they lose the mortgage they need to buy the property (d) there may be a delay in mortgage funds arriving for the proposed completion date (e) a seller or buyer may not be able to get their signed documents to their solicitor in time for the agreed date (f) a buyer may not be able to get funds to their solicitor in time for the move to occur (g) very sadly if someone was to die before the agreed completion date (h) current government restrictions on movement may become more pronounced meaning that sellers and buyers are not legally permitted to move on the agreed completion date
The above points are just a summary of some points to consider when moving during this time and is by no means exhaustive. There is nothing to prevent a house move process continuing during this time provided government guidance and the law is followed.
Carter Bells LLP has a team of experienced property solicitors who can assist you with your move during this time and would be delighted to supply our expert guidance. If you would like assistance, please call 0208 9394000 or make an enquiry through our website (http://www.carterbells.co.uk/)
Richard Bland, Residential Property Partner
Carter Bells LLP