By Samuel Lane, a Solicitor in Irwin Mitchell’s Real Estate Team

Following the prime minister’s lockdown on Monday 23 March 2020, estate agents have been informed by the government that they are not ‘essential businesses’ and the British Association of Removers recommends on its website that its members should “only complete any moves that are underway and immediately cancel or postpone any move that has not yet started”. 

Furthermore, on 26 March 2020 the government stated that estate agents were no longer able to start ‘…actively marketing your home in the usual manner.’. Buyers and sellers of residential properties who have already exchanged contracts to buy and sell will understandably be concerned as to whether they will be able to move in/out of their new properties. In particular we foresee that buyers and sellers who are already in the period between exchange and completion will face particular difficulties; they are locked into the contract but also ‘locked’ into their house. 

The government’s advice on residential conveyancing is that “there is no need to pull out of transactions”. However this reassurance is only of assistance to those who haven’t yet exchanged contracts. Prior to exchange, parties have the options of exchanging with a delay to the completion date, or delaying exchange until the lockdown is over. They are not legally required to go through with the conveyance.

For parties who have already exchanged contracts, they are legally required to complete. If (as is usual) the standard conditions for sale have been incorporated into the contract, these specify that there should be a 20 working day period between exchange and completion. This is very likely to fall during the lockdown period. The government recommends that parties try to agree to vary their contract to allow for these unprecedented circumstances to pass, especially as the 20 working day time period between exchange and completion specified in the standard conditions for sale is not “time of the essence”. However, what if one party is unwilling to vary the contract and delay completion?

Completion of transactions takes place when the parties are “ready, willing and able” to complete. Whilst they may both be ready and willing to complete, parties may face difficulty in demonstrating that they are “able” to complete in light of Covid-19 and subsequent government advice. For example, parties are likely to require the help of a removal company; however, as we have seen removal companies are advised to cancel any moves which have not commenced to comply with the lockdown. 

Where completion is unavoidable, the new coronavirus legislation does permit people to leave the place where they are living to “move house where reasonably necessary” unless an individual is self-isolating. Whilst ‘moving’ is therefore technically permissible, it is not without significant difficulties. Those in a chain will find it more difficult as removal companies are usually required to assist in the physical move and all individuals need to be “ready, willing and able”

If the parties are unable to agree an extension and subsequently fail to complete within the time specified, one party could be issued with a notice to complete by the other if they are “ready, willing and able”. The notice to complete will specify a date by which completion must happen, this then makes the time for completion “of the essence”. This should not be taken lightly, as if completion does not take place by the deadline specified, there are very onerous consequences. The party who served the notice can either rescind the contract or enforce it through issuing court proceedings. In addition, costs and interest are likely to be payable along with compensation.

If you need assistance with any of the above issues, we suggest you take legal advice.