25 March 2020
The effect of COVID-19 on moving home
The Government’s latest advice (25 March 2020) is that "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.”
The Law Society has published revised guidance to solicitors on the effect of COVID-19 on residential conveyancing transactions. The guidance confirms that where contracts have been exchanged with a completion date within the next few days, the transaction can proceed if there is nothing to prevent the parties from doing so and subject to current public health guidelines:
- Properties not being occupied with cases (or suspected cases) of coronavirus;
- Occupants not being in a state of isolation; and
- All parties abiding by social distancing requirements.
In practice there are likely to be significant difficulties in completing but the position remains that if completion does not take place in accordance with the terms of an exchanged contract due to COVID-19, the parties not completing will be in default and the default provisions will probably apply unless the non-defaulting party takes a ‘good faith’ view. This would become more difficult if the transaction forms part of a chain.
Further clarity from government is awaited and we will be keeping a close eye on further guidance from The Law Society.
The Government have announced numerous emergency measures in response to the COVID-19 outbreak. Earlier this week further restrictions were introduced across the UK, meaning that people can only leave their homes for a limited number of reasons, so what does this mean for those that are in the process of moving house.
So far, although Michael Gove has suggested that people pause house moves and remain in their current home, there has been no announcement or official guidance from the Government as to whether people can still move during this ‘lockdown’.
If you have exchanged contracts:
Given the unprecedented situation, there may be numerous issues that could arise between exchange and completion. A seller might not be able to vacate due to themselves//the household being in isolation, there may be a delay in mortgage funds being released, or redemption statements obtained and there could be issues and delays with the banking system.
However, if contracts have already been exchanged, then you will be legally required to complete the transaction. At this current time, there is no guidance on what happens if one party is unable to complete due to issues arising from COVID-19, the usual contractual remedies still apply. If you are unable or unwilling to complete a transaction, then as the defaulting party, you will be in breach of contract which could lead to serious legal and financial implications. This is regardless of whether the issue preventing or delaying completion is caused by or is associated with COVID-19.
Therefore, if your completion date is coming up, you should consider the following:
- If you are selling your property, you will need to provide vacant possession by the agreed time on the day of completion. You should therefore contact your removal company and check that they are still able to move you on or before your completion date. If you have not arranged removals, and need to, do so urgently. British Association of Removals has recently announced a strong recommendation to its members that any moves that have not yet commenced be cancelled or suspended but the final decision will lay with the individual companies.
- Inform your solicitor immediately if you are aware of any issue that could prevent completion taking place on your scheduled day. It is hoped that, if failure to complete is due to illness or self-isolation, parties would be reasonable and work together to agree a delay. However, this may not be possible without incurring a contractual penalty in some cases, for example if there is a chain of transactions, so it is important that any issue is raised as soon as possible with your solicitor.
- Ensure any funds needed for completion are sent well in advance in case there are any delays.
- Ensure completion documents are signed and returned to your solicitor (electronically but also hard copy) well in advance of completion.
- If you are purchasing and are worried about the property that you are moving into, enquire with cleaning services as to whether they are still operating and arrange for a deep clean of the property.
If you are yet to exchange contracts:
For all sales and purchases that have not yet exchanged the general advice is that this should be delayed if possible. Given the current challenging and difficult times, parties will hopefully be accommodating in delaying exchange of contracts and waiting until the restrictions are lifted. There may, however, be some transactions where this is not possible or where parties do want to exchange. The current approach is to look at the circumstances on a case by case basis, specific to each matter and establish whether exchange and completion can go ahead.
If you are unable to delay your exchange, then you will need to ensure that you can comply with the contract on your agreed completion date. It may be advisable to try and agree a delayed completion date, check with removal companies as to their availability and speak to your mortgage company to ensure the mortgage offer will still be valid. However, we don’t know how long the restrictions will be in place or whether these will be tightened. There are changes each day, so our advice is to be cautious when entering into any contract.
It may also be advisable to consider exchanging and completing on the same day. This would minimise the risks of any issues between exchange and completion, i.e. if tougher restrictions were announced in the coming days/ weeks which would prevent you from failing to comply with the contract.
If you are at the start of a transaction, then you need to bear in mind that you may encounter some additional delays and issues. There may be delays in local searches as a result of staff absences or some search providers may be unable to provide search results at all during this period of restrictions. There may be some additional requests, such as for decontamination of properties before completion.
If you are thinking of moving:
Estate agents are still working, albeit in a different way, for example although in-person viewings cannot go ahead some are conducting virtual tours of properties. You can still contact them if you are thinking of buying or selling your property to talk through your options, and we are able start the conveyancing process now, looking to exchange contracts and complete in a few months.
For any further information or advice related to the impact of COVID-19 on your sale or purchase, or any other property related queries, please get in touch with our property team on 01753 889 995 or email email@example.com.