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22 April 2020

Property Settlements At Alert Level 3

Advice regarding settlements, and buying and selling:

Up until now, the settlements that have been occurring have generally been for bare land and for tenanted properties. The Property Law Council’s guidance under Alert Level 4 has been that if physical movement is required to move in or for the vendor to provide vacant possession on settlement, it should have been deferred.

With the COVID-19 Alert Level being reduced to Level 3 on 27 April 2020, naturally there have been many questions asked as to what can be done in relation to your property transactions. We have collated some of the more common questions below. 

Please note this guidance is still developing and the Law Society has yet to provide their opinion or comment.

Questions about Settlement

Can I settle my purchase and move in to my new home under COVID-19 Alert Level 3?

The guidance from the Government is that people can move homes during Alert Level 3, whether it be into a rental or a purchased house. Moving companies can operate if they can do so safely. Travel between regions for the purposes of moving house, including on domestic air services, will be permitted under Alert Level 3.

We have agreed to settle once the Alert Level is reduced to 2, can this be changed?
At the time the lockdown was first imposed the advice all lawyers received from the Law Society was that settlements should be deferred until we reach Alert Level 2. However, it does appear now that settlement can occur in Alert Level 3. We recommended you discuss bringing settlement forward with the agent, your bank, and any moving services you require. If they do not raise any issues then please let us know and we can negotiate bringing settlement forward with the other side of the transaction.

Can I sign loan documents and transfer documents?

During Level 4 the SRB Property Team have been working remotely and meeting with clients by video conference to advise on and witness the signing of loan and transfer documents. This is likely to continue under Alert Level 3 as the Government requires any business that can work from home to continue to do so. As long as you have access to printing and scanning functionality, there shouldn’t be any issues having documents signed for settlement. However, as couriers are still operating, we can send everything to you to sign if required.  

Can I carry out my pre-settlement inspection?

One of the major barriers to settlement in these times is being able to have a final inspection prior to settlement. The standard Agreement for Sale and Purchase gives this right to the Purchaser. The current guidance from the Government is that a final settlement inspection could be completed by a buyer or agent on the basis that compliance with proper social distancing and public health measures is maintained.

I have tenants that couldn’t move out in Level 4 which is delaying settlement, will they be able to move in Alert Level 3?

Not much has changed for tenants during Alert Level 3. If you wish to terminate the tenancy agreement solely to give vacant possession, you will need to come to a mutual written agreement with your tenant. The less restrictive house moving rules of Alert Level 3 may mean your tenant will be able to look for alternative accommodation. We suggest you have an open dialogue with your tenants and try to come to a mutually beneficial arrangement. For more information surrounding the changes to residential tenancy law during the pandemic, please read our earlier article.

The Vendor had to complete some works to the Property before settlement, will they be able to carry this out?

The Government’s guidance is that workers going into peoples' homes (such as electricians and plumbers) is permitted as long as they adhere to the proper social distancing and public health measures.

Questions about Conditional Contracts

I have a contract underway, will I be able to get a building report and any other professional reports required to complete my due diligence?

The Building Officials Institute of New Zealand have stated that inspection companies will be able to get back to work at Alert Level 3 but a number of important health measures will need to be undertaken by businesses to keep workers safe. We have been contacted by some building inspectors who have confirmed they will be operating under Alert Level 3. We recommend you contact your building inspector of choice and ask whether they will be operating under Alert Level 3.

My bank requires a valuation to approve finance, will this be possible?

We have been advised that valuations can be completed, subject to proper social distancing measures being in place. Some banks require specific approved valuers to complete the valuation, so please discuss this matter with your mortgage broker or bank and the valuer they nominate.

Other Questions from Buyers and Sellers

We are looking to buy / sell a property, will this be possible?

The Government has advised that a real estate agents office can open, but people should still continue to work from home if they can. The agent can enter peoples’ homes, but not have customers in the office. It appears that an open home cannot be held. We recommend you discuss this with a real estate agent, it may be that they can start marketing the Property and take some people through for private viewings (subject to proper social distancing measures) during Alert Level 3.

I have settled the purchase of some land, can my builder begin work during Alert Level 3?

The Government guidance is that where working remotely is not possible, on-site work is permitted, with appropriate health and safety measures and physical distancing measures in place for both workers and (where relevant) building occupants. We suggest you discuss this with your builder as this may affect their schedule.

These are some general questions, If you have any specific questions or want any clarification regarding the above, please do not hesitate to get in touch with someone in the SRB Property team.

Disclaimer

The above information is of a general nature only. The information in this article does in no way constitute legal advice and all readers should contact a law firm for advice relating to your specific circumstances.

Chris Boivin

About Chris Boivin

Chris is a Partner advising clients on a wide range of matters. He assists with both commercial, rural and residential property matters, as well as business transactions and asset planning.

View all posts by Chris Boivin
Callan Wilson

About Callan Wilson

Callan joined Saunders Robinson Brown in 2018. He is a member of our Property Team.

View all posts by Callan Wilson