Edward Sharpe
- 1 May 2020
- Law Blog
- Residential Property
Our Conveyancing teams across all 15 offices are still working and supporting our clients through the current unprecedented Coronavirus lockdown. Naturally, there are lots of concerns about what the current situation means for property transactions and we have answered some of the common questions we receive in this blog:
What does the Government advise?
Home moves into occupied properties are only permitted where contracts had been exchanged before the lockdown, and where it has not been possible for the parties involved to agree a deferral.
Home moves into unoccupied properties can continue, subject to the following:
- The move must take account of the guidance currently in force from Public Health England and Public Health Wales; and
- The move should only occur if it is necessary.
You can find further advice from the Government at:
Where the Sale and/or Purchase are part of a chain, all parties to the chain will need to agree how they wish to proceed. This could be difficult because some chains could contain a mixture of occupied and unoccupied properties.
What are Removals Companies doing?
Removal Companies have been told to honour their existing commitments if it is clear the move can be done safely for the home mover and the Removal Company staff. Our experience is a lot of Removal Companies have cancelled jobs, or are no longer accepting new ones, because they have safety concerns or because they have staff shortages due to illness.
Can Searches still be done?
Most Local Authorities have stopped processing Local Authority Searches themselves, and they are not allowing personal search agents to attend their offices. Some of the Water and Drainage Companies are also in the same position. This means, in most cases, if we have not already received your search results we are unlikely to do so until after the lockdown has ended. Even after the lockdown has ended there could still be a considerable delay with obtaining search results whilst things start to return to normal and backlogs are cleared.
What does this mean for mortgage applications or existing mortgage offers?
Some Mortgage Lenders have agreed to extend the expiry dates of their existing mortgage offers, but not all Lenders have done this. You will need to speak to your Mortgage Broker to find out what the position is in your particular situation.
We are aware of at least one major Mortgage Lender who has changed their lending criteria in response to the current situation. They have started to withdraw previously granted mortgage offers from Buyers who no longer meet the new lending criteria, irrespective of whether the Buyer has already exchanged contracts. Where this happens, it is likely the Buyer will be unable to complete the Purchase, and as a result they will be liable to the Seller for the deposit and other damages. It is very unlikely the Buyer will have any recourse against the Mortgage Lender.
We have Clients who have been contacted by their Mortgage Lender on the day before completion to make sure their personal circumstances have not changed. If personal circumstances have changed, the Mortgage Lender could withdraw their mortgage offer. If you did not tell the Mortgage Lender about a change in circumstances you would be at risk of committing mortgage fraud, which is a criminal offence. You will appreciate it is very difficult for most people to foresee if they will have a future change in circumstances at this particular time.
We understand most Valuers working for major Mortgage Lenders have stopped providing valuations. It is possible some mortgage offers will be offered on the basis of desktop valuations, but we expect there will be a general delay with the issuing of mortgage offers in most cases. We do not expect this to change until after the lockdown has ended. If you have not been issued with your mortgage offer it is possible you will not receive it until after the lockdown has ended.
What about signing documents?
The conveyancing process is reliant on wet signatures to signed documents. This causes logistical difficulties for you and us in the current situation. In many cases we will be able to send electronic copy documents to you for you to print and sign at home. You might find it difficult to arrange for a witness to your signature whilst we are in lockdown. Witnesses need to be someone unrelated to you and over the age of 18 years.
What do we advise about exchanging contracts?
Work on conveyancing transactions can still continue during the lockdown and we will continue to progress Sales and Purchases where we can. We do not however advise Clients to exchange contracts until we are through the current lockdown period and the future has become more certain, for the following reasons:
- The situation is changing and evolving rapidly, and this means there is no certainty over the length of the lockdown.
- Clients who are purchasing with the assistance of a mortgage cannot be certain their mortgage offer will not be withdrawn in the period between exchange and completion.
- Clients who are purchasing with the assistance of a mortgage cannot be certain their mortgage offer will not have expired before the lockdown has ended and completion can take place.
- The financial position of our Clients could change in the period between exchange and completion.
- The current situation might result in changes to property prices.
This is not intended to be an exhaustive list and there will be other reasons why exchanging contracts before the lockdown has ended is not advisable.
If you have a question which hasn’t been answered above please don’t hesitate to email Ed on ESharpe@sillslegal.co.uk or call on 0800 542 4245