Covid-19 has effectively frozen the property market, making it very difficult for sellers to market their properties to buyers. Without a buyer, some vendors have given up on progressing their sales until the lockdown ends, unaware that much of the legal work can be done even before they accept an offer.
More forward-thinking conveyancing solicitors have argued for years in favour of a more proactive approach. Under the COVID-19 lockdown, the argument is even more compelling that sellers and solicitors carry out as much work as possible during the marketing stage. This approach can save weeks once a buyer is found.
So what can sellers do, during the marketing phase, to give their sale the best chance of exchanging?
Instruct a conveyancing solicitor ASAP
Once an offer is accepted, agents tend to get sales memos out to solicitors without delay. If the vendor has already instructed a solicitor, the sale pack and draft contract could go out to the buyer’s solicitor almost immediately.
If the vendor has not instructed a solicitor, what follows is an administrative process of form-filling that can prevent any work happening on the sale until this admin is complete.
Before anything else can happen, Anti-Money Laundering and ID checks must be completed. In the case of coronavirus, face-to-face ID checks and document certification is not possible. Necessity being the mother of invention has led some homeworking solicitors to actually improve on the existing ID process. Solicitors are now able to combine electronic ID verification with a video call with the client to verify their identity in real-time.
The solicitor’s terms and conditions must be read, signed and returned by the seller. Detailed questionnaires, including the Property information form, Fittings and contents form, and the Leasehold information form (where applicable) must then be completed.
This preliminary part of the process can take weeks. All of this paperwork can be completed before a buyer is found. It would, therefore, be worth reiterating to sellers the importance of choosing and instructing a solicitor whilst marketing. Given that most firms work on a no move, no fee (and fixed fee) basis, there is little reason for sellers to delay.
Obtaining management information is a major cause of delay in leasehold sales. Some managing agents work to fixed, self-imposed deadlines, but sourcing the necessary information still takes weeks on average.
Once the market restarts, there will be a surge in demand for management information. Managing agents will struggle to meet demand within a reasonable timeframe. The smart play here is for the vendor’s conveyancing solicitor to apply for management agent information without delay.
Forewarned is forearmed
The more time a solicitor has to review the seller’s paperwork, the more proactive they can be addressing issues that might otherwise cause delays.
After the sale pack has gone out, the buyer’s solicitor will respond with a list of standard and bespoke enquiries.
Again, if the seller’s conveyancing solicitor has had time to review the sale in advance of an offer, most of these questions from the buyer can be predicted. The seller and solicitor can then prepare and agree on the steps to take, to try and resolve issues at the earliest possible stage.
For example, the solicitor could pre-identify a suitable title indemnity policy for missing building regs or planning permission. This approach, presenting the potential problem and solution in the same breath, will prevent some buyers’ solicitors from adopting a time-wasting, adversarial approach.
One thing is for sure, lockdown or not, there is a correlation between the length of time a transaction takes and the abort rate.
Getting a deal agreed has never been more challenging for agents than it is at the moment. Although hard to predict how the pandemic will affect the market with any accuracy, the situation can only improve as we emerge from the lockdown measures.
In the early stages, it will be paramount to do everything you can to anticipate and prevent unnecessary delays. The good news is that for vendors on the market now, much can be done in readiness for this inevitable scramble.
By Chris Salmon, co-founder and director of Quittance Legal Services.