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Use non-physical contracts and prepare for transactions to fall through, CA advises

  • 30/03/2020
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Use non-physical contracts and prepare for transactions to fall through, CA advises
The Conveyancing Association (CA) has asked conveyancers to consider electronic or telephone contracts to avoid contamination in new guidelines related to the coronavirus outbreak.


The association has also warned that clients who have already exchanged contracts may not see the transaction through to completion if financial circumstances change while restrictions are in place. 


Clients who have already exchanged 

For clients who have exchanged contracts, those with mortgages should check if they need written confirmation from their lender regarding any extensions to their offer.  

The association also advised that clients agree the transaction be deferred either directly through each party or via the estate agent. 

The CA said clients must be asked to consider if they will still be able to afford the mortgage if their circumstances change while government restrictions on movement are in place. 

Furthermore, those with sizeable mortgages of 60 per cent loan to value (LTV) or higher must be informed that house prices may fluctuate which can impact a lender’s ability to lend. 

Clients who have already exchanged should be told that even when restrictions are lifted unavoidable delays may happen, such as the death of someone in the chain which means their estate will need to be settled before a move can take place. 

The association echoed government advice and said home moves should only take place if necessary and public health guidance on social distancing and home cleaning should be followed. 


Existing contracts 

Conveyancers have been asked to consider signing contracts on behalf of buyers and sellers or make use of electronic contracts to avoid infection through a physical document. 

It should be made clear that these measures are not an intention to create a new contract, but an intention to vary an existing contract. 

Conveyancers can use telephone contracts where terms are agreed by either party, the date is confirmed on the document by the conveyancer and then sent off to either party to sign. 

Clients must also be advised of any additional costs in relation to the handling of the transaction. 


Before contracts are exchanged 

Clients who have not yet exchanged are still able to continue with the transaction, the CA said, and use the time to read the documents involving the house move. 

The association said they should be advised to “think very carefully” before exchanging even if the completion date is long term as financial circumstances may change. 

If a contract is exchanged, clients should make sure they have included a clause to deal with risks caused by the virus. 


‘No simple solutions’ 

The guidance was put together by the Law Society, the Society of Licensed Conveyancers (SLC), the Chartered Institute of Legal Executives, Bold Legal Group and the Conveyancing Association (CA). It also has the support of government departments including HM Land Registry. 

Paul Smee, chair of the Conveyancing Association, said: “Firms should be prepared for a changing situation and their service will need to respond flexibly in order to comply with the government’s evolving objectives.” 

Simon Davis, Law Society president, added: “The Law Society recognises the real difficulties faced by those who are trying to move home, particularly for those who have exchanged contracts, but are not able to complete, for a variety of reasons created by the restricted movement requirements.   

“There are no simple solutions and the position is one that is fluid and changing. We will keep it under review and if necessary, step in again.” 

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