Can Reservation Agreements Help in this Unprecedented Conveyancing Market?
Conveyancers are currently working in the eye of the storm. They are facing unprecedented volumes of work due to the SDLT ‘holiday’ combined with the pressures and uncertainty of working in a market which is restricted by a lockdown. A huge challenge which conveyancers and their clients are now facing is the significant delays to transactions from receipt of instructions by the conveyancer to exchange of contracts.
Given the almost overnight pivot to homeworking in March 2020 and the knock-on disruption to property professionals, it is not surprising that transactions are taking longer to conclude. There have been many logjams in the system including: delays with surveys and mortgage valuation reports, the issue of mortgage offers and turnaround time for local searches to name but a few. Despite the fact that these well reported delays are being experienced across virtually all property professionals involved in the conveyancing transaction, it is fair to say that conveyancers are often at the sharp end and are left having to give unpalatable advice to stressed buyers and sellers.
We must not ignore the fact that unprecedented workloads have invariably had an impact on conveyancer’s ability to progress transactions; but it is fair to say that the delays go well beyond conveyancing firms. Unsurprisingly, many firms have been advising their clients for some months that it is unlikely that they will be able to meet the (current) expiry of the SDLT ‘holiday’ on 31 March 2021.
Conveyancers may therefore be asking what they can do to assist the progress of their conveyancing transactions. Vague suggestions of more ‘upfront information’ are sounding like a broken record. However, part of the solution is very straightforward. If a seller can produce to a serious buyer an up-front pack containing the Property Information Form, Fittings and Contents Form and title documents, this will invariably speed the process. This enables the buyer to be satisfied that there are no hidden problems with the title to the property at the point of offer.
Gazeal is a prop tech company which has recognised many of the problems with the conveyancing process and is providing straightforward, cost-effective solutions. The first is that Gazeal produces a seller’s pack when a property goes on the market which contains the documents listed above. Sellers can use the Gazeal service and complete the Protocol forms when they instruct an agent. Gazeal, now a Law Society licensed provider, will do the rest.
The second solution is Gazeal’s simple, straightforward reservation agreement and it is this which can assist some sellers and buyers in this very challenging current market. If the seller and buyer enter into a reservation agreement upon agreeing a sale, they are demonstrating a serious commitment to the transaction which can enable both parties to move forward with confidence. The parties can also take advice from their estate agent and conveyancer as to a realistic timeframe for their transaction which can then inform how long the seller and the buyer wish to be tied into the agreement. If there are further delays, both parties can simply agree to extend the term of the reservation agreement.
Conveyancers may wish to be more open-minded to the benefits of a succinct and well drafted reservation agreement. The Gazeal reservation agreement allows the buyer to withdraw without default only in very specific, defined circumstances, one of which is the inability to secure mortgage financing. Thus, a buyer can enjoy the certainty of a reservation agreement without the fear of default in the event that today’s difficult market results in no mortgage offer.
A reservation agreement and an upfront pack cannot remove all of the delays and difficulties currently faced by all parties involved in the conveyancing process. However, an upfront pack will enable a buyer’s conveyancer to start work on the transaction at a much earlier stage and entering into a succinct, realistically timed reservation agreement can help remove some of the uncertainty for sellers and buyers at this unprecedented time.
Written by Lorraine Richardson (M.A.) Cantab
MD of Adapt Law Ltd