With New Zealand’s return to a COVID-19 Level 4 lockdown, buying and selling property has become more complicated again. The Level 4 rules do not allow for people to physically move house, so settling and moving during the Level 4 period is not possible.
Luckily, most sale and purchase agreements now have a “COVID clause” to cover such situations. These clauses say that both parties agree that if we return to a lockdown level where physically taking possession of the house isn’t possible (Level 4) then the settlement date will move to three/five/ten days after we return to an alert level where moving is possible (Level 3). If your agreement doesn’t have a clause like that, your lawyer can still negotiate an amended settlement date with the other side, this is what happened during the 2020 lockdown. The key thing is to check your sale and purchase agreement and ask your lawyer as to the status of your agreement – if necessary, the parties agree on a new settlement date. There are limited situations where settling is possible under Level 4, so talk to your lawyer to see if you fall into one of those categories.
There are other factors to consider during Level 4 when considering the whole process:
- Do you have a builder’s report/toxicology/valuation condition in an agreement that is yet to go unconditional? Consultants won’t be able to visit a property during Level 4, so you will likely need an extension on any clause that requires time for that to occur after lockdown.
- Real Estate agents can’t show houses during Level 4, so if your agreement relies upon the other side entering into an unconditional agreement to buy or sell, that is likely to be delayed. Again, talk to your lawyer and agree an extension on that clause if necessary.
- With talk of interest rates being about to rise, it’s important to check the agreement you have with your bank. Does the interest rate they have offered you expire by a certain date? Will a delayed settlement mean your interest rate changes?
- Are you a tenant who was looking to move into your own home? Have you given notice on your rental? You may need to extend the notice period. Talk to your landlord.
- If you elect to complete a purchase with the current owner remaining in occupation until lockdown if lifted, you will legally become a landlord and your bank may require you to obtain landlord’s insurance for the property.
Looking ahead to any potential move to Level 3, a few things to consider ahead of that period:
- Are you moving between regions? If you are moving, for example, from Bay of Plenty to Auckland, then the Level 4 rules that may still be in place in Auckland would make that move impossible. Both regions will need to be at an alert level that allows moving to take place.
- Have you booked in a moving company for the move? Check with them if they have special requirements for operating during Level 3 and plan accordingly.
- Can you do a pre-settlement inspection remotely? If not, make sure the vendor or tenant has consented to the time of the visit so as to limit contact.
If you’re buying or selling, no matter what stage of the process you are at, we recommend getting in touch with one of our team who will be able to assist you.