What happens if I’m settling my property purchase during lockdown?
You’ve gone unconditional and your property is due to settle this week, in the middle of the level 4 lockdown, what happens?
Being under alert level 4, there are heavy restrictions on unnecessary travel outside people’s place of residence, so essentially settlements on property requiring tenants or owner occupiers to vacate is not allowed.
The Real Estate Authority (REA) have suggested measures to minimise disruption to this process, and most Sale and Purchase Agreements will have the below clause or similar as part of their additional clauses:
Most notable, is clause 24.3 and 24.4 in the example above which states that if this property settles in an alert level like the current alert level 4, settlement will be delayed until five working days into an alert level that allows movement that satisfies settlement conditions. It also states that neither party, the purchaser or seller can make a claim against the other for the delay.
In short, settlement is paused until it’s clear when it’s possible to do so.
I’m under a conditional contract, what happens if I can’t meet my conditions during lockdown?
Considering the short notice and unexpectedness of this current lockdown, it’s probably not a condition you may have thought to include in your agreement like the one regarding settlement. So what can you do?
The sellers are likely to want to cooperate with you to make the sale happen. The REA recommends that you talk with your lawyer or conveyancer to come to an agreement with the seller to extend the conditional period to when both parties are at alert level 3.
I’m property searching, is now a good time to buy?
In a crisis there’s always opportunity. Given that you’re reading this right now, you’re already ahead of most through educating yourself around property. There will be people out there who will be spooked by an event like this lockdown and hesitate around purchasing or sellers panicking about not being able to sell.
Immediately after the news broke about the new community case yesterday afternoon, one of our team spoke to a client who had an agent who had initially rejected their pre-auction offer on a property they were keen on, called them to say they would take their offer now… Stay focused on your goals, this is where the bargains and opportunities can be found, don’t hesitate if you’re confident in your choice.
Looking for more advice?
Our team is working as normal during all alert levels, however under Level 4 and 3 our office will be closed as we work remotely. Feel free to reach out to us or contact your FINAX mortgage advisers. Even better, beat lockdown boredom and stay ahead of the property market with our live PROPERTY WATCH webinar next week. Our expert mortgage advisers have their fingers on the pulse of the finance industry and translate bank and government changes in policy into understandable and actionable advice to help you make educated decisions quickly in your property endeavours.
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Lucia Xiao | support@luciaxiao.co.nz