The new normal of social distancing and working remotely have thrown up a number of unintentional consequences that affect the Charging process, a few of which we list below:
Valuations
No inspections are permitted, so no new loans can be made (unless inspected before lockdown). Desktop valuations are being issued on re-financings and these are being caveated with COVID 19 wording pursuant to RICS guidance (which valuers will not exclude), typically caveating the report as follows:
“In the current circumstances, … less weight is attached to previous market evidence for comparison purposes, to inform opinions of value. The current response to COVID-19 means that an unprecedented set of circumstances applies on which to base a judgement. The valuation is therefore confirmed on the basis of “material valuation uncertainty” as per VPS 3 and VPGA 10 of the RICS Red Book Global……. Consequently, less certainty – and a higher degree of caution applies…..given the unknown future impact that COVID-19 might have on the real estate market, it is recommend that the funder keeps the valuation of these properties under frequent review”.
Under any loan agreement there will be requirements for regular re-valuations at agreed intervals (either full or desktop), as well as representations and warranties made regarding value, amounts to be drawn down and loan to value covenants which may all be affected.
Registration of Charges
There has been concern over how certified copies of charges will be lodged whilst lawyers work remotely (which are still steadfastly required for registration at the Land Registry despite the pandemic and legal firms making representations). The Land Registry have however conceded that time to respond to requisitions can be extended to 1st June 2020 and cancellations will not be made before then. This issue has been resolved in different ways by the law firm undertaking to register by:
- posting documents to their home addresses or
- relying on skeleton staff in the office to certify or
- lodging uncertified copies and relying on a requisition being raised that can be rectified post-lockdown.