For those people already in the process of buying or selling their home, the coronavirus outbreak may cause worry about delays and whether the transaction will proceed as normal. We’ve answered the questions our clients are asking us right now:
Questions from buyers:
I’m worried about the long term economic impact of the situation. Can I change my mind about buying the property and pull out of the transaction?
You are not contractually bound i.e. you are under no legal obligation, to continue with a purchase or a sale of a property until contracts are exchanged. If you withdraw from the purchase of a property before you exchange you could lose out on some of the pre-work you’ve already paid for, such as any searches or surveys, or a mortgage administration fee. You will not be responsible for any legal fees or costs to the seller before exchange of contracts (unless it is a new build and you have paid a reservation fee). After exchange of contracts you could potentially incur significant penalties e.g. 10% of the deposit price and legal fees as a start.
We were due to complete in the next two weeks but the seller is unwell or in isolation. How might that affect the transaction?
Most contracts are governed by the standard contracts all solicitors use, especially if they are members of the Conveyancing Quality Scheme. If completion does not take place directly as a result of COVID-19, the losses arising from the failure to complete remains with the defaulting party. Therefore if the seller refused to complete in this instance, they would be liable to you for reasonable foreseeable losses unless you and/or the chain agreed to delay the completion date and decided against imposing any penalties. If the seller still completed you would not be able to delay completion in order to arrange a deep clean, if you wanted to. You would still have to complete on the day set and arrange for the deep clean before you moved in. If you haven’t exchanged contracts yet, you could of course agree to move the completion date as that is not fixed until you have exchanged.
Questions from sellers:
I’m worried about the future and I no longer want to sell my house. What can I do?
If you have not exchanged contracts, you can change your mind without any financial penalties. If you have exchanged, you could be liable for any costs and expenses incurred by your buyer (and possibly the chain above if there is one). We would advise you on this further, if you were minded to pursue this option.
My buyer has requested we deep clean the property before we move out. I can’t afford to pay a company to do this. Where do I stand?
You do not need to agree to this unless it is part of the contract. You could agree to allow the seller access for this to be done at their cost, if you wanted to but it is entirely up to you.