Following the prime minister’s announcement on Monday 23 March, a 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.”
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 have exchanged contracts and have a completion date within the next few days 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
It may be very difficult to meet this test .
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 which is important to you in your transaction .
After exchange
The key issue at every stage is to passess the likely risk .
We will assess your risk, set out the options and likely consequences for each option and establish whether you should proceed and, if you do, how this is to be acheived
Solicitors may need to discuss these issues across any chain you are involved in .
The contract for purchase may need to set out how completion might happen in the circumstances to satisfy the requirements of Public Health England
The transaction will be governed by the provisions in the contract unless the parties agree otherwise.
Completion
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 decides not to apply it in the circumstances.
If the transaction forms part of a chain of transactions, it may not be possible to take such a view without incurring a penalty.
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.
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.
These are complex issues and you will need to obtian our advice .
Variation to contracts after exchange
If contracts have been exchanged but completion has not taken place, and the parties want to vary the contract this may be possible but it can again be complex and there is a risk a new contract could be created which has financila implications including to insurance .
Remember there are risks in giving professional undertakings rather than expressly varying a contract.
Undertakings
Transactions proceed usually relying on Solicitors giving undertkaings to do things such as redeeming mortgages but in this unique situation it may not be so easy to give such undertakings .
Electronic signatures and witnessing
It is by no means certian that every document in the transaciton could be signed electorncially . The Law Society advises that :
In terms of electronic signatures, our view is that these:
- can be used to sign contracts to sell/buy unless the contract is being executed as a deed
- cannot be used for deeds
- probably cannot be used where a signature needs to be witnessed unless the witness was present when the electronic signature was affixed – in which case a wet ink signature could have been used
- cannot be used where a wet ink signature is required, for example, for documents for HM Land Registry and some lenders
Importantly the Law Society says :
At present, if contracts have not been exchanged, you should encourage clients not to exchange until the situation is more settled.
[ This article is based on the Law Society issued guidance as it stands today and any further updates willl be added ot our site ]