The government has issued some guidance for the public and the industry in relation to home buying and selling Buying and selling homes during this stay-at-home period Given the situation in the UK with regard to the outbreak of coronavirus (COVID-19), we urge parties involved in home moving to adapt and be flexible to alter their usual processes. There is no need to pull out of transactions, but we all need to ensure we are following guidance to stay at home and away from others at all times, including the specific measures for those who are presenting symptoms, self-isolating or shielding. Prioritising the health of individuals and the public must be the priority.
Where the property being moved into is vacant, then you can continue with this transaction although you should follow the guidance in this document on home removals. Where the property is currently occupied, we encourage all parties to do all they can to amicably agree alternative dates to move, for a time when it is likely that stay-at-home measures against coronavirus (COVID-19) will no longer be in place. In the new emergency enforcement powers that the police have been given to respond to coronavirus, there is an exemption for critical home moves, in the event that a new date is unable to be agreed.
Recognising parties will need to alter common practice, we have sought to ease this process for all involved by: Issuing this guidance, developed with Public Health England, to home buyers and those involved in the selling and moving process. Agreeing with banks that mortgage offers should be extended where delay to completions takes place in order to prioritise safety. Working with conveyancers to develop a standard legal process for moving completion dates. government spokesperson said on 25 March: "Home buyers and renters should, as far as possible, delay moving to a new house while emergency measures are in place to fight coronavirus. “If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on social distancing to minimise the spread of the virus.
“Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being.” We’ll be publishing further guidance as soon as possible. Where moves do need to go ahead, all those involved should take care to follow government guidance on social distancing and hygiene. See Public Health England’s guidance for households with possible coronavirus (COVID-19) infection. If you’re acting for someone who has exchanged contracts and has a completion date within the next few days, and you, your client and the other side are able to proceed, which may be very difficult given the position with removal firms, there’s currently nothing to prevent you doing so. This is subject to following current guidelines in respect of public health: properties not being occupied with cases (or suspected cases of) coronavirus (COVID-19) occupants not being in a state of isolation, and all parties abiding to social distancing requirements .
This is a very high bar and it may not be possible to comply. We’re seeking further clarity from government and will monitor closely as the situation develops. We’re hoping for official guidance to be published in the next few days. The announcement about social distancing has obviously increased the impact of coronavirus (COVID-19) on conveyancing transactions. We continue to receive many questions from members but the nature of these has now changed. Many relate to the immediate issues in relation to completion where contracts have been exchanged. We understand that this is a very difficult time for you and your clients. The situation is unprecedented, and we’re becoming aware all the time of different aspects of the impact of the pandemic on those moving home and our members.
The restricted movement requirements impact on many parts of a conveyancing transaction. What everyone wants to understand (and ideally control) is who bears the risk in various situations. The focus of this note, now that the restrictions on movement are severe, are on those transactions where contracts have already been exchanged. After exchange The key issue at every stage is to point out as many of the likely risks as you can. You’ll want to assess the clients’ appetite for risk, set out the options and likely consequences for each option and establish whether your client wants to proceed and, if they do, how they want to do this. It’s important to: explain all risks confirm advice in writing make sure the client acknowledges having had the advice in writing You may need to discuss these issues across any chain.
The contract may need to set out how completion might happen in the circumstances to satisfy the requirements of Public Health England: information for the public guidance for employees, employers and businesses The transaction will be governed by the provisions in the contract unless the parties agree otherwise. If completion does not take place after contracts have been exchanged due to COVID-19, the parties not completing will be in default.
The contract provisions relating to default will probably apply unless the non-defaulting party takes a ‘good faith’ view. Notices to complete, penalty interest and deposit loss may all come into play. If the transaction forms part of a chain of transactions, it may not be possible to take such a view without incurring a penalty. There’s no specific ‘force majeure’ provision in the Standard Conditions of Sale and it may be that it would be difficult to imply one. Frustration A contract is frustrated if it’s incapable of being performed due to an unforeseen event (or events) which is not the fault of either party. It may be that the contract might be frustrated by isolation or restrictions on movement and activity, but it’ll depend on the circumstances of the individual case and, ultimately, the attitude of the courts.
It’s difficult to envisage what might happen to a contract if it’s frustrated. Some commentators have suggested that the provisions relating to rescission might apply. It may be that contracts will not be frustrated. So many factors are involved in making the determinations and the court has, in recent times, shown a marked reluctance to make such a finding. The expectations, assumptions and responsibilities of the parties must be taken into consideration. That a contract would be held to be frustrated in the current circumstance is not something that can be treated as a presumption. Each situation is likely to have different implications and a different outcome. There’s no certain and fixed answer.
Variation to contracts after exchange If contracts have been exchanged but completion has not taken place, and the parties want to vary the contract, care must be taken not to create a new contract unintentionally. Creation of a new contract may impact on insurance. Risk passes on exchange – will insurers need to be notified that technically a new contract has been formed? Even changing the date of completion may create a new contract rather than varying an existing one. You’ll need to review the standard and special conditions if a new contract may be formed on the revised date. Remember there are risks in giving professional undertakings rather than expressly varying a contract.
Undertakings In response to the question ‘What if I am struggling to comply with a conveyancing undertaking?’, the Solicitors Regulation Authority say: “Our rules provide that you should perform all undertakings given by you within an agreed timescale or if no timescale has been agreed then within a reasonable amount of time. Before giving any undertaking in these current circumstances you should always consider if you can properly implement it and you should have regard to all the eventualities that may affect your ability to perform it. You may want to add something new into your undertakings to take account of the risk of delay due to the effects of coronavirus. “If you find yourself in a situation that you are not able to comply with an undertaking that you have given, you should let your client or the other side know as soon as possible. If a failure to comply or delay is beyond your control due to the impact of coronavirus, should any complaint be made, this would be taken into account by us as a mitigating circumstance”.
