Real Estate - Tip of the Month – January 2023

Published 17 January 2023

Coronation Bank Holiday 2023 – Commercial Property Contracts

An additional bank holiday has been proclaimed for the UK in celebration of the coronation of His Majesty King Charles III.

The coronation itself will take place on Saturday  6 May 2023 and the additional bank holiday will fall on Monday  8 May 2023.

While this news will be welcomed, before making any celebratory plans it would be wise to check any previously exchanged property contracts to see whether completion dates fall on this new bank holiday.  You should also ensure that any new contracts do not inadvertently oblige any party to complete on 8 May 2023.

What if contractual completion is due on 8 May 2023?

Commercial property contracts usually incorporate the Standard Commercial Property Conditions (Third Edition – 2018 revision) (Conditions).  Condition 9.7  requires completion day payments are made by electronic means in same day cleared funds.  Banks will obviously be closed on the bank holiday so it will be impossible to make CHAPS payments and comply with this Condition (unless, of course, it has been varied).  

Who bears the risk?

Where one party is obliged to make a payment to  another party on completion, the risk is likely borne by the purchaser. For example, a purchaser may fail to complete on 8 May 2023 as the balance of the purchase price cannot be transferred to the seller’s solicitor on 8 May 2023. Here the purchaser is arguably liable for interest and subject to notice to complete provisions pursuant to the Conditions.

However, some commentators suggest that in these circumstances, a Court is likely to imply terms into the contract which would defer completion to  the next working day, relying on the provisions of the Banking and Financial Dealings Act 1971 as referred to below, as it seems unjust for a purchaser to be in breach of contract for reasons outside of its control.

Practical Solutions

In advance of the bank holiday to mark the  funeral of HM Queen Elizabeth II on 19 September 2022, the Law Society recommended being pragmatic and collaborative. The same may well  apply to 8 May 2023. Sensible solutions should be sought between the affected parties.

  This might include some or a combination of the following:

• Completing on the next working day, 9 May 2023, when banks will be able to make CHAPS payments. Pursuant to The Banking and Financial Dealings Act 1971, a party cannot be compelled to make a payment on a bank holiday and payment on the next working day is considered the equivalent of making a payment on the relevant bank holiday. Therefore agreeing to complete on 9 May 2023 would,  some suggest, be a statutory change to the contract for which  a formal variation would not be required;
• If completion on 9 May 2023 is not possible or the parties cannot agree, agreeing to an alternative completion date reasonably suitable for all parties either by bringing the completion date forward or delaying completion beyond 9 May 2023. In this case, the contract will likely need to be formally varied;
• Agreeing in advance the sum of any interest for a delayed completion (where relevant) and agree any other payments (i.e. rent apportionment calculations) affected by the change in completion date in advance;
• If your contract is affected then it is important to seek legal advice well ahead of the completion date.