19 March 2020
The impact of Coronavirus (COVID-19) on property transactions and disputes
Following the Government’s most recent directive we have been working hard to put various measures in place to ensure that we can continue to serve our property clients.
Subject to sensible and proportionate restrictions concerning non-essential physical contact; we are operating our business as usual. There will be a restriction on non-essential face to face meetings but we are able to facilitate meetings using telephone and video conferencing facilities. However, we may need your assistance given the restrictions, for example, we may request signed documents from you earlier than we would usually require.
As you will appreciate events are fast-changing and uncertain. However, we wanted to address some specific property-related issues and concerns raised as a result of COVID-19 as we currently see them.
The more obvious issues that COVID-19 raises are;
- requests for properties being decontaminated
- refusal to vacate on completion because seller is in isolation
- failure or disruption to parts of the banking system (such as CHAPS)
- inability to obtain search results if people are not available to carry out the searches
- reluctance on the part of removal company employees to enter properties
- issues in mortgage lending surveys and physical valuations
We are trying to understand (and ideally control) who bears the risk in these situations.
There’s unlikely to be any drafting solution that would be appropriate to every case.
Our advice is that you ask us to review your existing contracts and test what the position would be in certain situations on the basis of that contract. You may wish to negotiate new provisions to suit particular circumstances. For example, building in provisions for delay or non-compliance with obligations based on reasons connected to COVID-19. This will be case specific and therefore we do not consider that bespoke clauses are necessary or desirable as standard.
A distinction has to be drawn between transactions where COVID-19 is present and all the other situations where it’s a possibility.
Exchanging contracts on a ‘business as usual’ basis may be preferable to using new provisions, but we continue to review this on a case by case basis.
If completion does not take place after contracts have been exchanged due to COVID-19, the parties not completing will be in default. Until further notice, transactions must proceed as usual with default consequences if they do not.
The contract provisions relating to default will apply unless the non-defaulting party takes a ‘good faith’ view.
If the transaction forms part of a chain of transactions, it may not be possible to take such a view without incurring a penalty.
Property and property disputes
Like the remainder of our firm, our Property and Property Disputes Teams are operating on a ‘business as usual’ basis subject to a restriction on face to face meetings. As said above, we are attempting to limit/stop face to face meetings which are not essential, and to instead replace them with virtual meetings. We have all the necessary technology in place to operate virtually and we are on hand to assist with any issues that arise from pending or existing property transactions. We will continue to review the position on a day to day basis including announcements made by Government and The Law Society and will issue updates as necessary.
Our Property and Property Disputes teams are able and willing to advise on any issues that may arise in connection with COVID-19 or otherwise. We continue to support our clients through these uncertain times.
The Lord Chief Justice has issued a statement concerning the continuation of the court system. He confirmed that COVID-19 will clearly have an impact on the operation of all courts in every jurisdiction and that “given the rapidly evolving situation, there is an urgent need to increase the use of telephone and video technology immediately to hold remote hearings where possible”.