Coronavirus Advice For Conveyancers

The coronavirus – Covid-19 – pandemic has seemingly sent the world into a spin. With people fighting over groceries and toilet roll, and organisations deciding to lock down, it can be difficult to comprehend what advice to follow.

With some countries in complete lockdown, others are taking a more progressive approach. The UK is currently in the ‘delay’ phase of the governmental plan to tackle the virus.

Here at Today’s Conveyancer we’d like to give you some practical advice, to help you maintain a ‘business-as-usual’ approach.

We recommend that:

  • Conduct face to face meetings only when completely necessary. If it’s possible, limit the contact you have with clients. If you do need to meet with them, it may be worthwhile conducting a risk assessment to see if they’ve been in contact with anyone who has had the virus
  • Follow the World Health Organisation’s advice regarding hand hygiene and advice around self-isolation if you feel under the weather, or you’ve been in contact with anyone diagnosed with Covid-19
  • Check your insurance policy. In the Chancellor’s budget last week, the Government announced it will cover sick pay costs for small to medium businesses. Now is the time to check your insurance policies, as knowing exactly what you’re covered for will help prepare you for any worst-case scenario situations

What impact is this outbreak going to have on the property market?

Following on from the December general election, the property market saw the ‘Boris bounce’ which resulted in property prices increasing. This has been the case for a number of months, despite Brexit fears, as people have been buying and selling homes. Albeit not to the scale as previous months due to the political uncertainty.

The Land Registry’s UK House Price Index demonstrated this ‘Boris bounce’ as in December it noted that overall house prices rose 0.3% month on month, and 2.2% year on year.

However, as more people begin to self-isolate it could mean that fewer properties come onto the market, and buyers may hold off from viewing and offering on properties. Although no-one has a crystal ball, it seems the housing market will mirror that of the economy and see a slight downturn.

The time when it hits conveyancers is if the buyer or seller falls ill part way through the conveyancing process.

Unfortunately, the law allows little space to manoeuvre, especially where ill health is concerned. Advice from the Law Society, reveals that if both parties haven’t exchanged contracts, it may be worth advising clients about including a clause in their contracts covering the issue of a potential delay due to the coronavirus. However, this would need to be thought about and agreed by everyone in the chain.

However, if contracts have already been exchanged, the lack of leeway in the law, can cause issues for either party. If one of the parties finds it difficult or unable to complete because they’re in self isolation, removal companies are unavailable due to the outbreak or no witnesses are available to sign the necessary paperwork due to people working from home, the party will suffer the consequences.

As many of you may know, the standard contractual position is that the person who can complete, can serve notice on the other party. This means the party would have 10 days to complete the transaction. Also, this may surpass the self-isolation period, the tricky part is that interest will be accrued on the purchase price, approximately at 3% or 4% above the base rate. This cost falls to the party who has delayed the completion. The party will also be liable for costs of the other person’s costs (for example, storage costs, living costs if they have to leave their ‘sold’ property). This could ultimately result in the person terminating the contract if the exchange doesn’t take place. This can result in sellers keeping the deposit and buyers having their deposit returned.

So ideally, it would be worth considering your client’s position ensuring that their best interests are covered. However, each contract may need to be looked at individually, as a one size fits all approach may not work.

As ever, the situation surrounding coronavirus is an ever-changing beast, and information coming out of the Law Society, Friday 13th March 2020, is saying that parties who default because of coronavirus, should “in good faith” revert back to pre-exchange mode.

Rob Hailstone, founder of The Bold Legal Group, said that conveyancers are already drafting extra clauses to help their clients.

He said:

“To date, the most popular possible solution is to agree to exchange and complete on the same day. But, in my opinion, the uncertainty that leaves until the very last minute is unfair on all (including removal companies) and someone in the chain may say on the morning of the day) £5k off or I don’t proceed.

“The second favourite solution is to simply agree a long completion date. Problem there is that some mortgage offers may expire during that period.

“If at all possible, we need to agree a standard way forward.

“My own idea is that if any party in a chain is unable to complete because of a COVID-19 related event, all parties will treat contacts as not being exchanged and all parties and their advisors will proceed to act and negotiate as they would have done prior to exchange taking place.”

3 Comments

  • test

    The possibility of future pandemics requires urgent consideration of replacing the chain system with brokerage where large financial institutions (preferably insurers) buy homes and sell them on taking a purchaser’s existing home in return. The insurers could offer (say) insurance against infection during transactions and deep clean between purchase and resale (etc) as part of the package.

    Improvements beyond Coronavirus could be added progressively to a national, standard, home brokerage package once pandemic issues have been covered EG :-

    A upfront comprehensive and consistently guaranteed information

    B standardised documentation with user-friendly guidance

    C housebuilders being confined to building homes and not profiteering from dodgy documentation

    C etc etc for the many improvements to the house moving process some of which we all have

    Could coronavirus be the devil’s answer to conveyancing?

  • test

    The major hurdle seems to be the need to satisfy the due diligence requirements and money laundering regulations which require verification of ID at an early stage of then process. Usually this would mean face to face verification. Once that becomes impossible for any reason the whole conveyancing process appears to be impossible to get off the ground, even though the remainder of the work can be managed online or by phone contact.
    I have seen no guidance on this point from any of the legal professional regulators to date and with possible lock down in days we cannot be sure that conveyancing is possible.
    Can anyone assist with this please?

  • test

    What happens as from today as we were due to exchange this week? Presume with the lock down it will go on hold?

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