Advice – Agreed sales – COVID-19
Guidance on newly agreed sales (No mortgage valuation carried out yet)
As of the 24th March banks put a stop to all non-urgent mortgage valuations, it is assumed until after the lockdown. All lenders are looking at ways in which they can continue with new applications but early suggestions are that only those with a substantial deposit (reported to be around 40%) can apply for a new mortgage. This is because there will be less risk for the lender and as such a desktop valuation can be done instead of a physical one.
Some solicitors acting for a buyer will not carry out any legal work until the buyer has their formal mortgage offer. Because of this I would envisage that nothing will happen with these sales until the valuation can go ahead. We will just have to sit tight and wait.
That being said there are some solicitors that will still be proactive with the conveyancing, despite the mortgage application process being on hold. They will still be able to submit searches with the council and raise necessary enquiries with the sellers’ solicitor, even if they are working from home.
As long as we still have committed sellers and buyers I would suggest both parties instruct their solicitors to carry out as much of the legal work as possible. I must point out though that this will mean both sellers and buyers will no doubt start to accrue associated legal costs. Draft contracts should be issued by the sellers’ solicitors and buyers’ solicitors should submit searches and raise the necessary enquiries. The idea being that the only thing left to do is have the property surveyed. This will result in a smoother transaction once normality resumes. Otherwise we will find that solicitors will be inundated with new work and will pick up all existing work that has been on hold, meaning that things will take longer.
Guidance on advanced agreed sales (The mortgage offer has been received/No survey required)
If a buyer has a mortgage offer in place or are cash buyers the conveyancing should be pushed along as normal up until all parties are in a position to exchange contracts and then a decision has to be made on whether to exchange and complete or hold off.
- If the property in unoccupied then the government has stated that the transaction can continue as normal and complete.
- If the property is occupied, it is recommend that all parties should work to either delay the exchange of contracts until after the period where stay-at-home measures to fight coronavirus (COVID-19) are in place, or include explicit contractual provisions to take account of the risks presented by the virus.
In the new emergency enforcement powers that the police have been given to respond to coronavirus, there is an exemption for critical home moves, in the event that a new date is unable to be agreed.
At no point in the government guidelines does it state that house sales cannot go through, be them occupied or not. Whilst no definition of a “critical home move” has been provided I surmise that those house sales that run the serious risk of falling through as dates cannot be delayed are then classed as critical house moves.
It goes without saying that Government guidelines are to be followed at all times, including maintaining a 2 metre distance from others, and washing their hands with soap and water often for at least 20 seconds (or using hand sanitiser gel if soap and water is not available) and no work should be carried out by a person who has coronavirus (COVID-19) symptoms, however mild.
Stay safe everyone.