News | December 21, 2022

Dear Gemma

Perplexed by property law? Our Professional Support Lawyer Gemma Cook is here to answer your most pressing questions.

An extra bank holiday has been announced for the coronation which means an extra-long weekend but does this affect my property completion date?

On 6 November 2022 the Prime Minister proclaimed an extra bank holiday in honour of the coronation of His Majesty King Charles III. The bank holiday will fall on Monday 8 May 2023, following the Coronation on Saturday 6 May 2023.

Even though it is January 2023, it is still possible that parties could have contracted to complete on 8 May 2023 and the bank holiday could throw a spanner into the works because:

  • it won’t be possible to transfer completion money as the banks will be closed; and
  • the professionals involved will be on leave.

What is the completion date?

It might be that the bank holiday doesn’t affect many transactions given that 6 months’ notice has been given. Ideally the parties can think ahead and avoid using 8 May 2023 as the completion date.

But sometimes a completion date is not fixed and instead, it is triggered by the happening of a certain event. This event is often referred to as a condition precedent. For example, a sale and purchase might be conditional upon the grant of planning permission. The completion date for such a deal could be 5 – 10 working days after the satisfaction of the relevant condition.

In this situation, much will depend on the definition of ‘working day’ in the contract. The Standard Commercial Property conditions (“SCPCs”) are usually incorporated into most commercial sale and purchase contracts. The SCPCs define a working day as “any day from Monday to Friday (inclusive) which is not Christmas Day, Good Friday or a statutory Bank Holiday”. If this definition is used, 8 May 2023 would not be included as a working day and would be excluded from the relevant period and completion would naturally fall to 9 May 2023.

But what happens if there is already an existing contract and completion is fixed for 8 May 2023?

Everyone involved in the deal is going to need to be pragmatic.

The risk of being unable to pay the completion money on the completion date is one for the buyer. Under the SCPCs, the non-payment on the relevant day will attract interest. The seller also has the ability to serve a ‘notice to complete’. The effect of the notice to complete is usually to set a specified time frame by which the money has to be paid and completion, otherwise the seller has the ability to terminate the contract and keep any deposit paid by the buyer for itself.

Hopefully, everyone would proceed as planned but a day later being the first working day afterwards. The Banking and Financial Dealings Act 1971 provides that:

  • no-one can be compelled to make a payment on a bank holiday, and
  • the making of a payment on the first working day after a bank holiday is deemed the equivalent of making a payment on the due date

Everyone could look to agree that the operation of law means completion will take place on Tuesday 9 May 2022 and ideally, pre-agree what is going to happen about any interest due in advance.

Recording the agreed changes to the contract

There is a difference between agreeing completion will take place on 9 May 2023 by operation of law and making other changes.

The Banking and Financial Dealings Act 1971 defers the obligation to pay completion money to the following working day. This dovetails with case law that if an act required by a contract is impossible to perform lawfully at a given time, then enforcement of the obligation cannot take place until the act can be performed lawfully (John Lewis Properties v Viscount Chelsea [1994] 67 P&CR 120).

If a change of date to 9 May 2023 is the only change, there is a statutory change to the contract pursuant to the Act and the contract is unlikely to need to be formally varied. If completion is going to be any date other than 9 May 2023, or if other changes are made to the contract, it will be necessary to comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and formally vary the contract. Any party should take specific advice as to the precise terms of their contract as much can depend on the given circumstances.