In this post we cover some of the most common questions from our clients, in relation property transactions during the UK lockdown, including: –
- I have exchanged contracts. Will I be able to move on the agreed completion date?
- I have not yet exchanged contracts, can I continue?
- Will my mortgage offer be affected by the current circumstances?
- Can my mortgage offer be withdrawn?
- We have exchanged, but my Buyer/Seller cannot complete on the agreed date, what can I do?
- Who can act as a witness to my signature on the Transfer Deed?
Our Solicitors are still working hard to ensure that those clients who are able to safely and securely move house, can complete their transactions in a timely fashion, although parts of the transaction may take a little longer, whilst the Country is on standby.
So what is the position if you are hoping to move house during lockdown?
We have answered some of the most common questions from our own clients below, which provides general information and is not offered as legal advice. You should contact your own Solicitor or Conveyancer for advice about your own particular circumstances before taking any action.
Q: I have exchanged contracts. Will I be able to move on the agreed date?
A: In short, it depends on your own circumstances, and, if you are in a chain, the circumstances of everyone else in it.
If you and the Seller, including everyone within yours and the Seller’s households are healthy and symptom free, and your removers have confirmed their availability, you should be able to move on the agreed date. If you are in a chain, everyone within the chain will need to be in the same position. If you require a mortgage, please see the Q & A section below – Will my mortgage offer be affected by the current circumstances?
Essentially, if it is safe and practicable for everyone to do so, having regard to the Social Distancing requirements set out by Public Health England, and you are contractually bound to complete, you can move on the completion date.
However, your first consideration should be your own safety and the practicalities of moving. Moving house may increase your exposure to the virus, as you come into contact with other people, such as the Seller as they leave the property, the Estate Agent as they deliver keys and the Removers. Even if the Seller has vacated the property before you arrive, there is a risk of contamination from surfaces within the property.
It may be safer and more sensible for everyone involved to change the completion date to one later in the year; a couple of weeks may not be sufficient, but much depends on your individual circumstances and the Government’s position.
Such a change requires a variation of the Contract and must be agreed by all parties. If you are in a chain, that usually means that everyone in the chain must agree. The variation could be to another fixed date, or, some sort of rolling arrangement allowing for completion on notice, which provides the greatest flexibility, but has the greatest uncertainty, and cannot, in all reality go on forever; the must be a cut-off point.
You should speak to your Solicitor or Conveyancer about your options.
Q: I have not yet exchanged contracts, can I continue?
A: Again, much depends on your circumstances, and, if you are in a chain, the circumstances of everyone in it, but there is no legal reason that you cannot continue to prepare for your purchase, if that is your wish.
As the Government guidance suggests, the lockdown of itself does not necessarily mean that you should pull out of a transaction, but if you or the Seller does decide to withdraw, you are both legally free to do so, unless and until you have exchanged contracts.
However, just because it is legally viable to continue, does not necessarily mean that this is the right decision for you, especially if your personal or financial circumstances have changed. You may wish to take expert financial advice before proceeding. Your Solicitor or Conveyancer is not permitted to provide you with financial advice and cannot guide you on this aspect of the transaction.
If you decide to proceed, there is quite a lot of legal work that can be done in the weeks ahead despite the lockdown restrictions, unless you are at the point of exchange. That will only get you so far, if your Surveyor has not already undertaken your structural survey, or, you need to undertake a further inspection of the property, as both are, of course, not necessarily possible at the moment. You may, however, be able to get to the point at which all the legal work has been undertaken, so as to enable you to proceed to exchange once the lockdown restrictions are eased, allowing the Surveyor to complete the inspection and report to you, etc.
Once you are in a position to exchange, the Government’s advice appears to be that you should delay exchange, unless it is safe and practicable to continue. One example of when it might be safe to proceed is if the property you are buying is vacant, nobody who has recently occupied the property has shown symptoms of the virus/ been infected, and that you can safely move and observe the social distancing guidance.
If you require a mortgage to complete, you should also read the Q & A section immediately below.
As ever, your individual circumstances should be discussed with your legal and other professional advisors before any action is taken.
Q: Will my mortgage offer be affected by the current circumstances?
A: Possibly. You should, as a priority, check the position with your lender and your legal advisor.
A mortgage offer may be affected in a number of ways by present circumstances, but in our experience, the most common questions from our clients relate to: –
- The expiration date of the mortgage offer (should this date be before legal completion);
- The lender’s ability to withdraw the mortgage offer (in relation to which, please see the Q & A section below)
All mortgage offers have an expiry date, after which, the offer is automatically withdrawn. If you cannot legally complete the property purchase during the lockdown, and your mortgage offer expires before the legal completion can occur, you will need to request an extension from your lender. You will have to do this, not your legal advisor.
The Government’s advice states: –
“UK Finance have today confirmed that, to support customers who have already exchanged contracts for house purchases and set dates for completion, all mortgage lenders are working to find ways to enable customers who have exchanged contracts to extend their mortgage offer for up to 3 months to enable them to move at a later date.”
It is critical that you ensure that your mortgage offer remains valid until completion has occurred. You should confirm the position with your lender as soon as possible and keep in regular contact with them, especially if your personal or financial circumstances change before completion.
If you have not yet exchanged, you should consider whether it is prudent to proceed with the transaction at this time, in respect of which, please see the Q & A section above – I have not yet exchanged contracts, can I continue?
Even if you do obtain an extension, your mortgage offer may still be affected by the current circumstances, as per the Q & A section below.
Q: Can my Mortgage Offer be withdrawn?
A: Yes, but in our experience this is rare.
Generally speaking, lenders can, and sometimes do, withdraw a mortgage offer in three situations, although these are by no means the only circumstances:-
- An adverse change in your personal or financial circumstances
- The market value of the property has changed
The first of these situations needs no real explanation. If you are fraudulent or dishonest during the mortgage process, you will mostly likely have committed Mortgage Fraud, which is a serious crime and can carry significant criminal sanctions. The mortgage offer shall be withdrawn.
The COVID-19 pandemic may cause both a change in your personal/ financial circumstances and/or a change in the market value of the property. Expert advice is clearly required for the latter, and the lender will most often rely on its own valuer to advise of change. Your legal advisor cannot and should not be involved in that decision, having no expertise in property valuation. They must, however, be informed if the mortgage offer is withdrawn, and usually the lender will contact them promptly. If the mortgage offer is withdrawn, then, of course, you should not exchange contracts.
COVID-19 is already impacting the personal and financial circumstances of some people and this may need to be reported to your lender. For example, being made redundant, furloughed or any change in your income ought to be reported to your lender and legal advisor urgently, and before any further action is taken.
Lenders will almost certainly have the ability to withdraw the mortgage offer at any time before completion, even if you have already exchanged, although this is rare in our experience. If you have exchanged contracts, and your lender has withdrawn the mortgage offer, you urgently need advice on the legal implications, if you are unable to arrange alternative funding, and should speak to your legal advisor without delay.
Q: We have exchanged, but my Buyer/Seller cannot complete on the agreed date, what can I do?
A: There are a number of options, but you should be guided by your own legal advisor: –
- If possible, you could agree to vary the completion date. This is not necessarily as simple as it sounds in present circumstances, and the document varying the contract may require complex legal drafting. Speak with your legal advisor and if relevant, check the status of your mortgage offer – see the above Q & A section –Will my mortgage offer be affected by the current circumstances?
- If no variation can be agreed, it may be possible to complete the financial transaction without physically moving house, but this carries significant risk and may not be possible under the terms of your mortgage, if one is required. Generally, speaking, this is not advisable, as a great deal of care must be taken to ensure that your interests, and if relevant, the lender’s, are protected.
- If no variation or alternative can be agreed, the failure to complete the transaction is a breach of contract by the defaulting party. In essence, the non-defaulting party has certain contractual and other legal remedies, including a claim in damages for loss arising as a result of the breach, or the ability to freely withdraw from the contract. You should ask your legal advisor to explain the consequences of a breach of contract in these circumstances, and once again, you should take no action until you have taken such advice.
Q: Who can act as a witness to my signature on the Transfer Deed?
A: Generally speaking, anyone who is not a party to the Transfer Deed.
There are few restrictions on who can act as a witness to you signature on the Transfer Deed, but it cannot be another party named on the document.
Provided that they are not named on the Transfer Deed themselves, a spouse, civil partner or cohabitee can act as your witness, but it is not ideal to use such a person if it can be avoided, to mitigate the risk of allegations that the document has not been validly executed.
An entirely independent witness is preferred, such as a friend, neighbour or colleague.
With social distancing in place, this can be quite challenging, but provided the witness is in your physical presence at the time you sign the document, that is enough. So, for example, observing the signature from 2m away might be good enough, although nobody can guarantee that the validity of a document executed in those circumstances will not be challenged in the future.
The witness must also sign, print his or her name and address and, of course, great care should be taken to guard against transmission of the virus on the document itself.
It is not essential that the witness signs immediately after you, as long as they were physically present and observed you signing the document, but it is best practice that they sign in your presence and immediately after you.