Our property team has been working through the national state of emergency and lockdown. Below are some questions we have been fielding from our clients and we hope our answers will assist those in a limbo.

We assume that the standard form ADLS Agreement for Sale and Purchase has been used. The best advice for parties is to discuss matters with your legal advisors and to be willing to understand each parties’ situation and negotiate the steps forward.

What is the New Zealand Law Society recommendation for property settlements?

The NZ Law Society recommends that the parties to a contract defer settlement until the 10th working day following the reduction of the Covid-19 Alert Level from 4 to Level 2 or below, or such other date as mutually agreed between the parties.

I have a settlement scheduled during the lockdown period, what happens now?

If both parties cannot give and take possession, a deferment of settlement in accordance with the NZ Law Society guidance may be the best way forward.

The vendor and purchaser are able and willing to settle but no one can move. What are the options?

The parties can agree to settle and move after the lockdown. In some instances, the vendor may be willing to rent the property for the period of the lockdown. The parties need to agree as to when the property will be vacated by the vendor post lockdown to allow the purchaser to move in.

What if the property is vacant? Can I complete settlement and move in?

Under a state of emergency, the movement of people is only allowed for performing essential services. Moving house is not considered an essential service. Currently, we await guidance from the government and NZ Law Society if moving home will be a permitted activity under a Level 3 Alert. You may proceed with your purchase but moving in will have to wait until the appropriate Alert level.

Can the vendor insist on settlement if the vendor can give vacant possession?

The parties retain their contractual obligations under the Agreement, and the vendor is legally able to insist on settlement. The vendor may charge penalty interest if settlement does not occur. In this event, we suggest you talk to your legal advisors and see if they can negotiate with the vendor for a practical solution.

What steps can I take to protect my interests should I decide to proceed with settlement but have not completed any pre-settlement inspection or inspection of any agreed works?

Your rights under a standard ADLS Standard Sale and Purchase Agreement are retained following any settlement and are not lost. Alternatively, you could agree with the other party that a retention sum to be held pending completion of any inspection at a later date to be agreed.

Can I insure my house and obtain a certificate of currency?

Yes, most insurers are working remotely and able to process applications for new insurance. We suggest that your application be submitted as soon as the agreement is unconditional to allow time for the policy to be agreed and the certificate of currency sent to your legal advisor.

Can my transfer of ownership and mortgage documents be registered on the title?

Yes, registration of the title transfer and mortgage is automatic in most instances and Land Information New Zealand (LINZ) and most banks are continuing to work remotely.

What happens if we agree to move our settlement until after the lockdown, but we still cannot move on the agreed date?

A vendor can insist that the purchaser settle as agreed as it is not dependent on the purchaser’s movers being able to perform. We suggest that you have an early discussion with the vendor and the movers to discuss this potential issue and agree on a realistic settlement date.

Can I withdraw my Kiwisaver to fund my house purchase?

This should be discussed with your provider and legal advisor prior to your confirmation of any conditions to ensure that they are both able to process your withdrawal. The ability to sign the required statements for the provider to enable the withdrawal are able to be completed remotely and most providers are happy to have the documentation returned to them by email.

What if my KiwiSaver has been paid to Anthony Harper’s trust account?

Our undertakings to your provider require us to hold your KiwiSaver funds for settlement purposes. We will contact your KiwiSaver provider and arrange to hold your KiwiSaver funds in our trust account pending settlement.

What happens with my loan documentation if I do not settle?

This is best to be discussed with your lender and legal advisor. Where loan documentation has issued, your lender may agree to hold the loan offer on those terms for you pending the deferred settlement date.

How will I sign my legal settlement documents such as loan, mortgage and transfer of ownership documents?

The NZ Law Society and LINZ have released guidelines around acceptable signing of legal documentation and this includes a video conference call with your legal advisor to witness the signing (where you can print), or electronic signing where the platform used complies with the requirement of the Contract and Commercial Law Act 2017. There are other complying and innovative ways to have your documents signed and returned.

What about the sale or purchase of tenanted properties?

Where a property is and will remain tenanted after settlement, the settlement most likely can proceed. This depends on each party’s ability to sign settlement documentation and should be discussed with your legal advisor.

Can I get out of my unconditional purchase as Covid-19 is an event outside of my control?

There is no legal right for a purchaser to cancel an unconditional contract to purchase under a standard form ADLS Agreement for Sale and Purchase as a result of Covid-19 being an event outside of the purchaser’s control. The vendor retains its legal rights including the right to forfeit your deposit, sell and sue for the difference and you may be liable for further damages and costs. We recommend that both parties negotiate to find a solution as the property market may remain unstable for some time.

Disclaimer: The material contained in this document is provided only as an information source, and is correct at the time of writing. The material is a generalised summary of the key issues and is not intended as a substitute for specific professional advice and should not be relied on for such a purpose. Independent professional advice should be obtained before relying on any aspect of this material and we would be happy to assist in this regard.