Peter Ambrose, MD of property solicitors firm The Partnership, joined us on 1st April to explain what the reality is at the moment from a conveyancer’s perspective.
Some of the feedback from the hundreds of live attendees sums up why you should watch this recording: “Positive and practical with lots of helpful advice” … “Very refreshing!” … “Peter explained the current situation superbly” … “Reassuring that there are ways around this”.
Watch the full video recording above. Or if you’re in a hurry, read the text summary below of Peter’s key points and the answers he gave to agents’ live questions.
Summary notes from Peter’s presentation
Conveyancers are still busy – the market is not dead
What’s been happening out there?
I want to cut through some of the doom and gloom. The housing market is not dead.
In our firm last week we did 65 quotes and got 40 new bits of business, 64 instructions, 29 exchanges and 54 completions – including 9 on Friday. That’s 40 people who have come to us and said “I want to move house”. Yes that’s lower than normal, we’d expect about 70, but it shows there is still a market out there.
I scanned 250 bits of post yesterday. It is still coming in. The phones are still busy and we’re still getting mortgage offers coming through.
There’s no need to pull out of transactions
The government advice says that there is no need to pull out of transactions. That is what their advice says so anyone saying “the government has told us not to do this” hasn’t understood this properly.
Yes, there are challenges – but they are all able to be overcome.
We’ checked with the regulators and with the lenders and they confirmed that certified copies of ID are no longer required. This has solved a lot of problems and is no longer slowing things down. We can now take scanned photos, so there’s no excuse now for people not to take ID as they don’t need to come into the office any more to do it.
Exchanged contracts and completion dates
As I mentioned, we had 29 completions last week – so completions are still happening. You just might need to delay things or be flexible. And that happens sometimes anyway, where people can’t get removals etc and need to change the dates. This is nothing new to solicitors, they’ll just be doing it more often.
Three things need to happen:
All parties must a agree new date
This is not impossible! Let’s face it, we agreed a completion date in the first place, so it can be done again,
A written is agreement needed to vary the contract and re-exchange
This does make it slightly more complicated and isn’t straightforward, solicitors do know how to do this. They need to create a variation to the contract. That variation to the contract would then need to be agreed again, rather than the whole contract.
Again, this is nothing new for lawyers – it might not be straightforward, but it is stuff that has always been done before if necessary.
Exchange – should we or not?
The conveyancer’s role
Some solicitors are refusing to exchange anything. My view is that’s wrong and goes against the government advice.
There’s a lot of confusion about what the role of the conveyancer is and their responsibilities. The role of the coveyancer is to provide the client information and explain the risks. The client makes the decisions and instructs us – we don’t tell clients what to do.
Again this is something where people are taking the current situation and putting a new spin on it, saying “oh no, what happens if someone can’t complete in the chain?” That happens all the time! If a lawyer is saying they won’t go to exchange, there’s a very very fair case to tell the client they need a new laywer because if the client wants to do it, then they should be able to as long as we provide the protection for them.
The government has advised that if we can agree to defer the exchange then we should. That is absolutely fine.
The trouble is defining what a “critical move” is. Most people would say their move is critical and the law doesn’t define it, so on that basis there’s no legal authority that is stopping moves that can’t be deferred going ahead.
Obviously, we all need to be following the social distancing and health guidelines, but moves can still happen within those guidelines – you would need to just stay apart, perhaps deep clean the house etc. But the reality is, it is still possible to move.
I’m hearing two main concerns when it comes to completion dates – “what if the completion date isn’t certain?” and “what do we do if the deal fails between exchange and completion?” E.g. in the sad event someone dies, or if the mortgage offer expires.
What is the completion date isn’t certain? I say two words; New builds. 200,000 were built last year, a fifth of all transactions, and those dealing with them face uncertain completion dates every day of the week! There is nothing new here. The devil is in the detail of course, but as a concept, there’s nothing new.
In the situation of someone dying, again, sadly, this is nothing new. We deal with situations like this regularly so processes already existing.
Expired mortgage offers is trickier, but again these situations happen today already. In most cases people will be worrying about expiry but then they’ll fairly easily be able to renew it.
Example clauses wording for uncertain completions
“Completion shall take place on the tenth working day after service of a completion notice”
“The completion notice will be served no later than 14 working days before the expiration date of the Buyers Mortgage Offer”
We’ve made the decision to go with the Law Society wording. As an industry the tricky thing is we need to make sure everyone agrees with it, but my hope is that lawyers would go with this. When the Law Society says something, people typically do it.
What is the situation with lenders?
You’ll be delighted to know they’re still sending paper copies in the post. We received about 15 through yesterday.
3 month extensions have been mooted on those mortgage offers
Draw downs (i.e. when you request the money for a mortgage) are not much different to normal. Halifax is 5 days (business as usual), Natwest is 7, Barclays is taking longer – about 10 days.
Redemptions are requiring some very long telephone calls (Barclays for 4 hours was our record yesterday!) You can still get through to banks, it just takes more persistence than usual.
Valuations are looking a bit tricky but who knows – maybe there will be a switch to doing more desktop valuations.
Searches are still working. Our provider yesterday did 400 searches. Here’s a quick summary of the situation with the different types of searches:
Many authorities still working
Some issues with personal searches – mainly because of getting people going into local authorities. There are some delays.
Insurance can be used (lender dependent) to give Indemnity
Drainage & Water
Some issues with personal searches
Official still available
Business as usual
Get your clients sale ready
I wanted to remind people that this is a great time to get people ready to move by lining up all their paperwork and ID, which will save weeks further down the line.
This will not go on forever, so the more you can help them get the paperwork done now ahead of any future move, the better. People have more time on their hands now to do it.
Peter’s answers to your specific questions
What advice would you give to agents who are coming up against solicitors who are refusing to exchange?
I think any solicitor that is taking a unilateral decision not to exchange is because they don’t properly understand the risks. You’ve got to call into question whether they’re following their client’s advice and call it out if they aren’t doing that.
Is there somewhere or someone we can report solicitors to who are refusing to progress sales?
I don’t want us to turn into one of those societies where we’re grassing on our neighbours when we see them walking the dog twice a day. But if a lawyer doesn’t follow their client’s instructions, their regulator will step in – but i’d hope it didn’t go down that route.
What if we’ve exchanged but then on the day there’s a problem with completion, e.g. a solicitor is closed or a party contracts COVID-19?
We get this situation every single week in one form or another. We run about 150 cases at any one time and every week we get a case that fails to complete, for many reasons, and you have to make alternative arrangements. For example, moving people in under license. In these situations solicitors have to be more co-operative. For instance we had an agent call the other day and said they had a lawyer who didn’t know how to draft the terms of variation. So we sent them our wording and they went ahead with it. There are always solutions.
What are your thoughts on simultaneous exchange and completion? Lots of solicitors are offering it up as the only option at the moment
It’s a difficult thing to do because it’s highly risky when you’re in a chain. We tend to only do them when there’s no chain. The challenge is if you do a simultaneous and it doesn’t work, you’ve got to unwind it all. For example, if you’ve drawn down the money from the lender, you’ve got to send it back again. With draw down times uncertain at the moment that makes it even more uncertain. So, it’s risky.
Are probate sales taking longer?
I can’t advise on whether the probate office is still open or experiencing any delays, but in general you’ve got to accept that where there’s more than one person involved in a deal it’s going to take longer. If they’re working short hours or just operating skeleton staff, communication will be slower.
What would you advise where things like removal companies and surveyors are no longer working and so the move can’t go ahead?
We all have to be a bit pragmatic in this situation and from what I’ve seen, lots of people are. We’re seeing very few fall throughs, it’s more a case of people agreeing to put a move on hold until the situation clears. If you can’t progress past a certain stage, there isn’t much you can do apart from being pragmatic, agreeing to delay and wait a little bit.
What are your thoughts on offering long stop completion dates? Is 28th August is a realistic date to set?
To reiterate, long stop dates are very common and nothing new – especially in new homes.
The date is up to you. To me, the end of August seems far away. Setting a long stop is always pretty arbitrary and remember you can always change it by doing a Variation. When we set a long stop date we always have wording that says “or sooner, by mutual agreement”. There should always be a mutually agreed date in there as well but again, we get this day in day out, it’s nothing new.
I’ve got a client who won’t leave the house to post her contracts back. Can anything be done?
That’s a really good question. I’ll give you an example of something we did yesterday which was quite interesting.
We had someone wanting to exchange today and we did a Whatsapp call. I witnessed the signing of the documents and they scanned them to us and uploaded into our portal. Obviously they are also going to put the originals in the post too, but we decided that was a low risk thing to do. The guidance coming out of the Law Society at the moment is saying that video calling may be used as evidence.
Does signed ID witnessed using a video call and then scanned and sent in the post comply with money laundering regulations?
Yes. We’ve confirmed this with the regulator. Some of the bigger firms out there have been doing this for a couple of years.
What if the lender withdraws a mortgage offer between exchange and completion?
That’s a horrible scenario that thankfully we’ve only experienced once and we’ve moved about 20,000 people. There isn’t much you can do unfortunately and you’d have to be desperately unlucky. I would hope lenders would continue to honour their offering.
What advice would you give people who still want to view properties virtually and consider moving?
Go ahead! Nobody knows what the market is going to do. All I would say is for the first 2 and a half months of the year we’ve simply never been so busy and the market has never been so positive. Our instruction rate was up 70% on last year. The market is doing really well and there’s nothing structurally other than confidence, obviously, that’s affecting this.
If documents need to be re-exchanged in order to change the completion date, does that mean the previous exchange is not binding?
No. I was very careful with my words on that. It’s a change of the existing contract, it’s an exchange on the new terms of the variation and so the property is still technically exchanged.
Our buyer is busing a gifted deposit from grandparents. They can’t leave the house and are isolated but need to provide certified ID. What can they do?
The same as we normally would. Most of our deals have gifted deposits in them and we use Enhanced Due Diligence. This is where we take ID documents and do these checks online.
The regulator has confirmed to us that certified ID is not needed. If they can still get a copy of that ID into the hands of the lawyers then they should be ok as the rest can be done online.