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Blog August 13, 2020

Increase in movers adding Covid-19 clauses into contracts

According to conveyancing experts, there has been an increase in the number of UK home movers who are insisting that COVID clauses are inserted into contracts.

The clause is to protect them should the pandemic stop them from moving, with many concerned that a local lockdown could prevent them from moving to their new home.

A COVID clause gives buyers and sellers the ability to exchange contracts while ensuring they are not at fault and in breach of contract with all of the associated costs if they are unable to complete because of a defined ‘Coronavirus Event’.

The clause would allow a ‘longstop date’ for the completion to take place, meaning that the move must be completed by a certain date if it is delayed by a Coronavirus Event.

It protects people from having their contract rescinded or their deposit being forfeited, provided that they are ready willing and able to complete.

It could also prevent potential charges for cancelled removals, legal fees, storage of furniture and the cost of alternative accommodation.

Typically the clauses have a long stop date of two to three months, and if the deal has not completed by such longstop date either party is usually entitled to serve notice on the other so that the transaction falls away and all purchasers are entitled to have their deposits back.

James Gostling, a Residential Conveyancing Lawyer from Devonshires, said: “We are seeing more people insist on COVID Clauses and I think it’s a good idea to consider having one in your conveyancing contract.

“They may not work if you have to complete on a certain date. However, they do offer people protection from breaching their contract if a local lockdown occurs.

“If you have a standard conveyancing contract, without a COVID Clause, and you are unable to move because you cannot leave your house due to a local lockdown, then you could face financial penalties.”

When considering a longstop date, purchasers should also bear in mind the recent stamp duty holiday which ends on March 31 2021.

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