Covid Clauses

Covid Clauses

COVID Clauses: Changes to Contracts when purchasing a Property

As a result of the coronavirus crisis, it is common now to see the introduction of clauses into contracts for the sale or purchase of homes which provide for what might happen if completion of the sale or purchase of a property is delayed or prevented by an event caused by, or arising from, a Coronavirus epidemic or pandemic. This includes, for example, absences of individuals through illness, quarantining, mandatory Government measures, disruption to postal or other services. These types of clauses are loosely known as ‘Covid clauses’.

Covid clauses typically provide that a party affected by a relevant coronavirus event should give notice to the other party as soon as possible of the anticipated effects on the transaction and to provide a longstop date by which the transaction should take place and to allow for the rescission of the contract and return of any deposit paid in the event that any long stop date is not met.

Many contracts have been exchanged that include Covid clauses which allow flexibility on completion of house sales/purchases but we are of the view that care must be taken in considering the longstop period in such clauses. While the pandemic appears to be calming in the UK, a second wave could bring the clauses back into play.

With that in mind, where we act for buyers, focus is on when any mortgage offer expires and allowance must be made for notice to complete to be served under the contract.

In acting for sellers, an important issue to consider is the onward chain and care must be taken to ensure that any agreement in an onward purchase takes full account of the provisions of any Covid clause in the sale agreement.

For these reasons, buyers and sellers must ensure that contractual terms properly match up while in a property chain otherwise they may find themselves falling foul of their obligations to one party or another and suffering the consequences.

The Government has issued some useful guidance on moving home during this coronavirus outbreak, click here to read the latest guidelines.

Contact our Solicitors

If you require any specific advice or assistance about residential property transactions or any of the issues referred to in this blog, please contact Ian Pringle by telephone on 0207 486 5131 or by email to ian.pringle@mwh-law.co.uk or make an online enquiry here.

This blog was prepared on 17 July 2020. It is not intended to be advice and should not be relied upon as such.