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Have you exchanged contracts or are you due to move house during lockdown? How does this legally affect you?25th March 2020 Real Estate Residential
Estate agents have recently released figures that viewings have already decreased by up to 75% and that this percentage is predicted to increase further. Whilst we all try to adapt our working styles to sustain some business continuity the position seems to change daily through these unprecedented times.
Cabinet Minister Michael Gove has stated in a recent interview that people should avoid moving homes during the outbreak. But what about if you have already exchanged contracts?
The position is that you are legally bound to complete your purchase unless you agree with your seller to vary the terms of contract, in particular the date of completion, or the non-defaulting party takes a ‘good faith’ view. In accordance with the contract terms if you do not complete then the money you have used as a deposit could be released to the seller.
It may be more difficult to come to an arrangement if you are in a chain as one of the contracting parties may not take the same view (there is always one).
If you are considering entering into a contract to purchase a property during these times, force majeure (a French term) clauses can be used to protect the parties in the event that part of a contract cannot be performed due to causes that are outside the parties’ control, such as the COVID-19 virus.
The outbreak is not only having an impact on house movers but also landlords and other property investors. Also, whilst mortgage lenders still have a desire to provide mortgages, properties are becoming increasingly difficult to value because people are self-isolating as a result of the virus.
JMW has a versatile Real Estate division and we would like to overcome the challenges presented during these times. We are working closely with our clients, introducers and lenders and we are adopting new procedures and processes to ensure that there is continuity in the market.