Has your property transaction been affected by Covid-19? 

This is what you need to know… 

The recent lockdown put in place to combat the spread of Covid-19 has thrown up some special challenges for property transactions. Parties that have exchanged contracts are obliged to complete the sale and purchase of a property on the contractual completion date, but this may not currently be possible from a health or common sense perspective.

The Law Society has published guidance for exchanges and completions during the Government lockdown. The official advice is that there is nothing preventing exchange of contracts, but not where:

    • The Property is currently occupied by people with cases (or suspected cases) of coronavirus;
    • The Property is currently occupied by people in self-isolation; or
    • Social distancing guidelines cannot be properly followed.

Note that this guidance relates to exchange of contracts; the advice is not to commit to a sale or purchase if you know beforehand that completion is likely to be complicated by Covid-19 considerations.

For those who have exchanged contracts but have not yet completed, there are two key questions for the parties to answer. Firstly, is completion even possible at this time and, secondly, if not, whether agreement can be reached about postponing the completion date. Sellers and buyers are advised to make alternative arrangements with each other on the basis that no one is at fault for the delay. This should be done in the spirit of good faith and both parties should be informed by their respective legal advisers of their options and consequences. 

The Law Society has produced a specimen variation agreement, which can be found by clicking on this link and which can be inserted into the contract on agreement between the parties. The variation agreement covers extension of the completion date until such time as it is safe for the parties to complete.

Another option is to rescind the contract, which allows the parties to walk away from the sale and purchase without liability. Deposit funds would be returned and neither party would have a claim against the other. 

If you have any questions regarding anything mentioned above please do not hesitate to contact us here. We are operating at full strength during the Government lockdown and would be happy to assist with any legal enquiries you may have. 

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