Buying and selling a home during coronavirus
The property market has moved very quickly since COVID-19 lock down measures were eased last summer, along with the announcement of the stamp duty holiday.
However, many clients are wary of exchanging contracts for fear of what could happen if their sale or purchase were to be affected by coronavirus.
These concerns are amplified when a client’s sale forms part of a property chain.
NOTE: This article has now been updated to reflect any changes that come as a result of the announcements on January 4th 2021.
The Government's announced on 4th January 2021 that the UK would be heading into another national lock down. The property market remains open, and you can still move home, though it is advised that people outside your household or support bubble should not help unless absolutely necessary.
Jennifer Smith, one of our bright, friendly lawyers in our conveyancing team, answers some of the most common questions she’s been receiving about buying or selling a home during coronavirus.
Can I still move home if I am part of a chain?
In short, the answer is yes, however there are some additional potential complications to consider.
Can I exchange contracts during COVID-19?
Exchanging contracts legally binds you to your purchase. We will not exchange contracts without your express authority on the day to do so.
In current circumstances, there are a number of things that could cause unforeseen problems once you have exchanged.
The most common are examined below, along with potential solutions.
What happens if someone in my property chain has to self-isolate?
Self-isolation in property chains
If a party in the chain has to self-isolate after exchange, all parties are still legally bound to complete on the set completion date.
This means that after exchange has taken place there is generally no basis currently on which you are able to rescind the contract due to COVID 19 or any other reasons.
We have dealt with a number of exchanges of contracts during and after lock down. We have worked closely with other solicitors, estate agents, buyers and vendors to find ways to ensure moves still go ahead and chains do not collapse.
Can I re-exchange contracts due to coronavirus?
In certain circumstances an exchanged contract can be ‘re-exchanged’ if a party has to self-isolate. However, this can only be done with agreement of all parties.
A clause can be inserted, or dates can be amended by agreement. This can ease pressure on already exchanged matters where completion has not yet taken place.
Please note, this is unlikely to be done without either a party being in self-isolation or specific government guidance as to delay.
Inserting a ‘self-isolation clause’ into contract
It is possible to ask the parties in the chain to agree an additional provision to the contract in advance. This can, if invoked following exchange, extend the completion date.
Our local society has produced a clause which can be used to help mitigate the risk of covid within a conveyancing chain. All parties must be in agreement and understand the risks involved, such as delayed removal costs, not being able to rearrange removals and delay on mortgage funds being obtained or withdrawn completely.
Can I do a simultaneous exchange and completion during coronavirus?
Parties in a chain can also agree a ‘simultaneous completion’ wherein exchange of contracts and legal completion take place on the same day.
Where these are proposed, all parties will need to order mortgage monies or arrange their funds in advance for a pre agreed date. This would be on a ‘good faith’ agreement.
This means the date is not binding and so no party could enforce the pre agreed date against the other.
Again, this raises the issues of removal costs, not being able to obtain removals at short notice, mortgage funds being required to be ordered in advance and then returned if exchange and completion does not happen on the “agreed” date and so on.
Long stop dates
Finally, another option to move a transaction to an exchange could be for the exchange to take place with completion agreed on the basis of a ‘long stop date’.
For example you can ‘agree to complete on 14th September 2020 or earlier by agreement with all parties to agree on giving each other 14 days notice of the earlier date.’
This would need to be discussed clearly as there may be issues with mortgage offers expiry dates or logistical problems.
Home buying chains and coronavirus
At the moment, the general consensus is to continue with transactions as normal unless there is some specific reason the chain is not able to.
All firms locally are trying to ensure chains do not collapse on the basis of ‘what if’s’ and are communicating directly on a daily basis.
What happens if my mortgage offer is due to expire and my home move is being delayed due to COVID-19 restrictions?
The best options are to either try to complete before the expiry date or alternatively speak to your broker/lender about seeking an extension to the existing mortgage offer.This would save needing to re-apply for the mortgage and thus creating more delay.
However, during the current coronavirus pandemic a lot of the high street lenders are reassessing their mortgage products and seeking confirmation of affordability due to borrowers being Furloughed.
What if someone in the chain pulls out due to coronavirus?
If someone in the chain withdraws from a transaction prior to exchange there is unfortunately nothing with can be done to recompense a party in the chain which may be left with a purchase but no related sale.
Most estate agents will try to resurrect chains before they totally collapse.
What if I want to pull out of buying?
You can withdraw from a transaction for any reason prior to exchange. Once you have exchanged contracts this legally binds you to your sale or purchase.
Is there any way I can avoid being in a chain?
Whilst not always the case, most vacant properties are usually chain free but on occasion the seller requires funds from the sale for an onward purchase.
New build properties are usually chain free but the new build element is significantly more complex and therefore the conveyancing process itself can take longer.
A tenant purchasing their rented flat would also be a chain free transaction, along with what is known as ‘closed’ chains or ‘house swaps’.
Conveyancing during coronavirus: Summary
Even though lock down has been eased we cannot ignore the potential impact that COVID 19 might have on the conveyancing process. We will consider the potential impact in all of our residential transactions and work with clients and other stakeholders to ensure the best outcome
We will continue to keep our clients and followers updated as guidelines change.
Conveyancing solicitors in Bournemouth, Christchurch and Ringwood
If you'd like to speak to one of our bright, friendly lawyers about moving home, or would like a quote for our conveyancing services, feel free to contact us by clicking here.