Buyer registrations and sales enquiries are reportedly back to pre-Covid levels. Completions, however, are lagging behind. This is probably down to the market cessation, but ongoing delays are expected in the conveyancing process.
Now, more than ever, vendors should be encouraged to take a more proactive approach to the legal process. In doing so, many of the typical SSTC delays can be avoided.
Why all the delays?
Conveyancing involves the coordination of multiple parties including buyers, sellers, agents, lenders and landlords - up and down the chain.
As they return to work post-lockdown, property service providers are balancing the constraints of social distancing with rapidly increasing, yet unpredictable demand.
Despite temporary concessions to ease the registration process, HM Land Registry has signalled that it is experiencing backlogs. Some local authorities are also reporting delays in the provision of searches.
The Law Society has backed property industry bodies, including RICS and the Conveyancing Association, in calling on the government to give “more flexibility in the government’s coronavirus job retention scheme to help conveyancers get the housing market back on its feet.”
The Law Society’s request is based on the anticipated fluctuations in demand to complete transactions. Services such as EPCs, lender valuations, surveys, searches and Land Registry registrations could also be affected.
Without greater flexibility, some firms will have no option but to be cautious in staffing up. This makes backlogs more likely.
With backlogs comes a greater chance of delays once an offer is accepted. The longer a transaction is delayed, the greater the likelihood of a buyer seeking to renegotiate or, worse still, pulling out.
Avoiding unnecessary delays
Many of the typical post-offer delays can be prevented with a proactive approach to the legal side of the sale. Instructing a solicitor when going on the market can shave weeks off the conveyancing process.
Clients tend to wait for a buyer before contacting a solicitor. This is the case even though no move, no fee addresses any concerns about speculative costs. When we ask clients why they wait, most sellers simply say they just didn’t think about it.
Most agents probably do recommend a solicitor at the earliest possible stage. Yet somehow seller’s aren’t getting the message.
Delaying instruction is a mistake, as a lot of the legal work on the seller’s side can be started even without a buyer in place. The sooner the process starts, the sooner potential obstacles can be faced and overcome.
Sometimes the initial file setup, money laundering and identification checks can take weeks as paperwork volleys back and forth by snail mail.
The clock doesn’t even start ticking for most delays until a solicitor is formally instructed.
Legal kerb appeal
Just as hiding the bins and painting the front door can boost kerb appeal, being able to explain the property’s strengths from a legal perspective can help with the marketing of the property. Common examples of ‘legal kerb appeal’ include existing planning permission for a proposed extension, and rights of access over another property.
Legal kerb appeal can also mean proactively addressing potential legal issues before a buyer is found. Solicitors can address issues, guide sellers and identify solutions whilst the property is on the market. If the solicitor communicates with the agent, they can empower the agent to confidently address any concerns raised by potential buyers.
If a solicitor is instructed on a sale at the outset, the following steps can be completed while the property is being marketed:
1. Completion of property forms
The seller will need to complete the standard property transaction forms.
Many sellers procrastinate and let the forms sit on the hall table for a week. Sellers often don’t realise until they open the paperwork that these forms are lengthy, take time to work through and usually require some back-and-forth between the seller and solicitor.
Sellers may need reminding that, until the forms have been completed, the initial contract papers cannot be sent to the buyer's solicitor and no progress can be made on the sale.
2. Problems can be anticipated
The seller's answers to the property information forms will prompt the buyer’s solicitor to raise a set of standard and bespoke enquiries.
If the seller’s solicitor has reviewed the sale before a buyer is found, most of these enquiries are predictable. The solicitor will know what the potential sticking points are likely to be.
Together, the seller and their solicitor can decide in advance how to address any potential problems and agree on the best course of action.
3. Managing agents information can be obtained
Sourcing managing agent information on leasehold properties can take weeks (or even months).
Post-lockdown, many managing agents are already reporting delays as they struggle to meet the sudden increase in demand from sellers’ solicitors.
A solicitor can get the ball rolling and apply for this information before a buyer is found. The upfront cost may deter sellers but the potential consequences of holding off are usually a false economy. Attempts should be made to convince sellers of the value of this upfront investment.
4. Missing documents can be identified and obtained
Missing documents can be another source of delay. In some cases, sellers will need to hunt through years-old email threads or old filing boxes to find a missing certificate. In other cases, they may not be able to find a document. Certain paperwork, like an electrical completion certificate, for example, may never have been issued in the first place.
If the seller has lost their title deeds and they have owned the property for more than 30 years, the solicitor will need to reconstitute the deeds. This can be a drawn out process as the solicitor needs to reestablish that the seller is the owner.
Missing warranties, NHBC and FENSA certificates, building regulations sign offs - all have the potential to cause delays. The solicitor can advise the seller on what to do if a document is missing.
5. Offer solutions, not problems
After reviewing the property information forms, the buyer’s solicitor will have follow-up enquiries, asking for more detail or clarification on certain points.
Most of the points will be fairly standard, covering issues like missing planning permissions for internal alterations or VELUX windows.
The solicitor can anticipate these enquiries. They will be able to advise on the best strategy to adopt in answering these enquiries, and identify suitable indemnity policies or other solutions in advance.
The solicitor can present each potential issue with a proposed solution, reducing time wasted on legal debates between solicitors on the finer points of property law.
Getting the legal process underway when the property is first marketed can be the difference between getting a draft contract pack issued within days of accepting an offer, and the vendor looking blankly at you when you ask for their solicitor’s details.
No move, no fee agreements mean that there is no disincentive to instruct a solicitor ‘early’. Instructing early is a strategy with basically no downside. However, because this advice hasn’t consistently percolated through to the property magazine and TV shows, sellers are often simply unaware of even the option.
Informing sellers of the benefits of instructing early will help them to feel more engaged and empowered regarding the whole sales process.
Running sellers through the reasons set out above also reminds them they have some control over the process and, crucially, helps sellers become proactive and less likely to be the cause of any delays themselves.
*Chris Salmon is a co-founder and Director of Quittance Legal Services, a panel of Conveyancing Solicitors in the UK.