What happens if my property is due to settle during the lockdown?
April 2, 2020
With nearly 6000 residential property sales taking place across New Zealand in February alone, it was inevitable that the Covid-19 Alert Level 4 lockdown would impact the ability for people to move into newly purchased homes. At this stage, Alert Level 4 is set for a minimum duration of four weeks – however the Government has made no secret of the fact that Level 4 (or other degrees of personal movement restriction) may be in place for further time.
What are the implications if your property is due to settle during the lockdown?
In short, settlements are still able to proceed during Alert Level 4 if there is no movement of people. Examples could include:
· Rental property sales where the tenant remains in the property.
· Commercial property sales where the tenant remains in the property.
· Vacant land sales.
· If an agreement is reached for the occupier to pay rent until such time that moving becomes possible.
Unfortunately, in most situations, it’s likely that the parties involved in the sale and purchase will not be able to settle during lockdown – even if the prerequisite documentation has been completed. This is simply because vendors will not be able to leave their homes to give vacant possession – and purchasers won’t have the ability to move in.
What should I do?
The first step is to get in touch with your lawyer who will advise on your personal situation and help you liaise with the other party. More than ever, this is a moment when cooperation and flexibility on a settlement date – and perhaps a little compromise - is needed to help each other out.
What’s likely to happen next?
At this point in time, it is likely that moving house will be restricted until the Covid-19 Alert Level is dropped to Level 2. The Property Section of the New Zealand Law Society has recommended that the clause in italics below (or one to similar effect) is used to amend existing Agreements for Sale and Purchase or Auction Agreements that are due to settle during the Level 4 lockdown:
“The parties agree that settlement is hereby deferred to the 10th working day after the Government reduces the Covid-19 Level to Level 2 or below, or to such other date as may be mutually agreed. For the sake of clarity neither party shall have any claim against the other in relation to this deferral.”
Vendors and purchasers can also mutually agree to an alternative arrangement that suits their individual situation.
Finding a future settlement date
Flexibility
A suitable date for settlement will require some flexibility from both parties. For example, it may take some time for moving companies to get through the backlog of services they were unable to complete. Or the vendor or purchaser may have personal circumstances (for example being ill) that prevent them from making the move immediately. To complicate matters, there has also been some discussion in the media that certain regions of New Zealand may be in different stages of Alert Level depending on the outbreak in that area.
Work together
We know that buying, selling and moving are stressful situations at the best of times. It’s important to work amicably together to find a mutually acceptable agreement. Finding a solution that works for you both is the best way to avoid court proceedings which can be even more stressful, expensive and time consuming.
If you have a property settlement scheduled to take place during the lockdown and would like some advice, please get in touch. We are operating as normal from our home offices. In most situations we will be able to use audio-visual technology and digital document signing to complete any legal work you require.
Keeping up to date during Covid-19
The situation with the Covid-19 outbreak is rapidly evolving. This means the above advice is subject to change as well – keep an eye on our Facebook page for any updates or please send us an email.
Please note this article is intended as an overview only and does not provide specific legal or property advice. Please get in touch if you have any questions and we’ll be able to discuss your individual situation and needs.