Simultaneous Exchanges And Completions – The Debate Continues
A couple of week’s ago we posted an article about simultaneous exchange and completions and completions and asked the question whether you thought this was a good thing?
Paul Sams, Partner and Head of Residential Property at Dutton Gregory, shared his views with the sector.
“One thing that has particular irritated me during this time is the reliance on so many firms wishing to carry out a simultaneous exchange and completion. The whole idea about exchanging contracts is to provide certainty. The role of the lawyer in the conveyancing process is to provide certainty. There have been many firms for years who have adopted a chaotic approach to the whole business that they seem to think that simultaneous exchange and completion is the “only way to go”. I expect that is because they have no system in place or belief in their ability to deal with it any other way.
“Now I am not saying that someone should never exchange and complete on the same day. There are circumstances where that has to happen. However, they should be the exception to the rule not the norm. There have been many firms I have dealt with over the years (yes I am old) that have always seemed to prefer a simultaneous exchange and completion. Oddly those firms always seem to be the ones that end up in trouble with the regulators at some point.
“The argument that many put forward to not exchange in advance of completion is somewhat counter intuitive. They say they can’t be certain they will be able to complete. As I have stated above the point of exchanging is to provide certainty to parties in the first place. The reasons stem from “my client may fall ill” and “the mortgage offer could be withdrawn”. Well yes, their client could fall ill but is that a reason not to exchange when they clearly have funds lined up?
“The other reason put forward I have heard as mentioned above is “the mortgage lender could withdraw their offer”. Well, news flash to those who did not know this, but a lender has always had the right to do this. A huge amount, of conveyancers seem to think that if a mortgage offer is issued then it can’t be withdrawn. Covid-19 has not changed this reality so why exchange before the pandemic but not now? As you can tell I get quite worked up about this issue so best I move on. And breathe.”
Since the publication of the article, we have received a number of comments from other people in the sector.
David Lewis, who agreed with Paul, wrote:
“I agree with the comments within the article. There are also many practical reasons why simultaneous exchange and completion is not a good idea, including having properly calculated apportionments, having meters read, removals and the actual practicality of having no legally binding date to work towards for such things as drawing down mortgage funds.”
However, Giu Ardenza, wasn’t wholly convinced that simultaneous exchange and completions were bad idea, as you can see:
“There are some good reasons as explained in the article for exchanging earlier with completion at a future fixed date. But never does one size fits all. And there are sound good reasons for doing a simultaneous.
“As long as all of the parties warned etc it’s never been an issue. With lenders being more and more fickle, it is all the more reason to be careful and have funds ready on the day of completion. all these last-minute underwriting checks, or last-minute requests for information have left far too many people high and dry.
“Yes, lenders can always withdraw the funds. But it’s too late for them once the funds have been released to you and you have released it to the other side. Give me a guaranteed mortgage offer, and there will be no one desperate to do simultaneous transactions. You need to join the current times”
Isobel Brookfield, also shared her thoughts in which she thought that the idea was great due to the protection it gives clients during these unprecedented times. She wrote:
“I do not agree. The singular inability of most conveyancers to draft appropriate clauses to deal with the Covid issue means that simultaneous exchange and completion afford the greatest protection to the client in these unusual times. The disappointment in the drafting skills of conveyancers is inexpressibly disappointing but it is a fact. The size of the investment being made by people involved in a property transaction render it all the more likely that litigation will follow an argument as to whether the right of rescission validly arose under one of these clauses. That is far from in the interests of the average client – far better to take the risk of exchanging on the day, provided, of course, suitable warnings have been given. In fact, clients opt to do this all the time even in “peace time” not because they prefer the anxiety attendant on the lack of certainty but because they agree dates between themselves irrespective of advice given, and then prefer to stick with it to the bitter end. The key really is the clarity and appropriateness of the advice given, followed by taking proper instructions.”
Victoria Codling, aired on the side of caution as she believes that simultaneous exchange and completions are beneficial in certain circumstances. She wrote:
“I personally only advocate a simultaneous exchange and completion , where a client is moving in to an empty property and there is no chain. Otherwise , you run the risk of cancelled removals and other expenses that you can’t claim back for a failed completion, because there has been no contractual obligation entered into.”
Matt Faizey, agreed with Paul’s comments, he wrote:
“Planning to, and advising the client to exchange and complete same day is inconsiderate, foolhardy and lazy poor practice.
“How any ‘professional’ can think it reasonable for a person or family to wake up one morning and even then not know if they actually are moving home that day is sociopathic in terms of lack of empathy.
“Knowingly exposing people to the stress surrounding the uncertainty is gross neglect.
“Will they get gazundered/chipped?
“How are they supposed to book time off?
“Are they supposed to pack?
“How are they supposed to commit to a moving company?
“How are they supposed to organise broadband or sky etc?
“How are they supposed to plan finances ahead? Many families will scrimp for a month or two prior to moving.
“The stress involved is absurd and is the primary reason moving home, as a process is so feared.
“It isn’t packing, it isn’t moving. It isn’t selling or negotiations. It’s the terrible stress and uncertainty behind the final stage of the legals.
“Any conveyancer thinking this practice is desirable, frankly shouldn’t be practicing.“It’s time for:
“1) a total change of emphasis. Stopping estate agents targeting completion dates. The public should be encouraged to focus on a date to exchange by. All estate agent staff talk should should now target the exchange. We need the public talking of ‘exchanging by’ and not ‘completion by’.
“2) we need a mandated minimum 2 wk period in-between exchange and completion. It would harm nobody. And provide an emotional and planning gain for tens of thousands every month.
“Any counter with ‘clients want to move as fast as possible’ is ignorant in the extreme. The sole reason they get angsty is due to completion date focus for the preceding 3 months. With hopes and dreams being hyped. If the sole focus was on exchange from the outset with a known 2 week (minimum) period following then all ongoing date stress would vanish.
“Completion dates wouldn’t even be discussed until all parties were actually ready to exchange.
“Cue total removal of huge stress for the people that actually matter.