With government plans to end gazumping, Janine Edwards, Partner and Head of Conveyancing at Watkins & Gunn considers the latest development in conveyancing.
Watkins and Gunn, with offices based in Newport, Cardiff and Pontypool, says that even though the change could save clients hundreds of pounds, it would require an entire overhaul to the conveyancing process.
As part of Government plans to streamline the property buying process, ministers will soon be looking at ways of removing stress for home buyers and sellers after releasing reports which demonstrated that delays cause up to 69% of sellers to experience increased stress, along with 62% of buyers.
With a quarter of purchase transactions falling through annually, the process can be costly and frustrating. The government are currently looking for views on gazumping (when a seller accepts a higher offer after agreeing to a sale), lock-in agreements, innovation and the availability of online data together with an encouragement for buyers and sellers to collect all information before making an offer of sale.
Should the proposed plans move forward, this means a legally binding document would eradicate the current system of gazumping. However, this could also mean increased legal fees with such a process needing to be managed by a solicitor, rather than the estate agent.
After an offer for sale is accepted on a home, the current process sees the buyer instructing solicitors to carry out necessary due diligence exercises and investigations of the property. As it stands, the buyer has every right to pull out of a purchase up until the point of a legal exchange of contracts should any issue arise, without incurring any fees or legal penalty.
However, the proposed lock-in agreement would require for due diligence and searches be carried out beforehand. This in itself will incur legal fees and disbursement costs for the buyer should they choose to abandon the purchase.
Janine Edwards, Head of Property at Watkins and Gunn has said: “Lock-in agreements would mean solicitors would need to be instructed and involved at the point where properties go on the market, rather than receiving the instruction later down the line. This would mean the estate agent having less control of the process, due to the increased legal involvement.
Lock-in agreements would result in far less stress for buyers and sellers, with the increased security provided by legally binding documents. Many people dread the stress of buying and selling their properties, and gazumping can be incredibly stressful and disappointing.
Whilst the Government has no plan to ‘rip up the existing system and start again’, I cannot see how this is not inevitable. Only time will tell if practical or ambitious changes are the way forward.”
The call for evidence will run for eight weeks, with professionals having until the 17th December to put forward comments and suggestions.
Watkins and Gunn offers a wide range of legal services including Accident Claims, Medical Negligence, Wills and Probate, Employment Law, Education Law, Public Law, Business Law, Divorce and Family Law, Childcare Law, Criminal Law, Road Traffic Law and Property.
It now provides a wealth of corporate and commercial services including partnership and investment agreements, buying and selling of businesses and shares, shareholders agreements, advising on commercial contracts and drafting terms and conditions of business.
This article is for general information purposes only and does not constitute legal or professional advice. For more information call us today on 0300 1240 400.