Q&A: Settling on a property during the COVID-19 lockdown

Across the country, thousands of everyday Kiwis were partway through a property journey when the COVID-19 Level 4 lockdown disrupted sales and settlements.

Whether you were buying, selling or have a conditional offer now up in the air, we know this has added an extra layer of stress to what is already an unusual and unprecedented situation for New Zealand.

That’s why I sat down with Lisa Kiteley, a senior solicitor at Wakefields Lawyers, to ask about settling on a property during lockdown. Watch the video to hear Lisa’s general advice.

Can I still settle on a property?

Lisa says there are plenty of situations where settling on a property is totally possible. 

For example, if you’re buying a tenanted property and the tenants are staying, so no one needs to move in or out of the house. Other examples include settling on a plot of bare land or changes to relationship property where one person is buying out the other, but no one needs to move house. 

Most lawyers are still operating, and most banks have moved to accept digital signatures, so those in-person meetings that would usually happen can be avoided.

Does settlement need to happen on the contracted date, or can I ask for it to be pushed out?

Lisa’s general advice was no, settlement doesn’t have to be on the contracted date, but a new date (or plan) does need to be agreed to by both parties. 

The New Zealand Law Society and the Real Estate Authority both recommend that settlement should be deferred until after the lockdown period. 

Lisa says the general approach has been to shift settlement to ten working days after the country moves to COVID-19 Level 2 or below, essentially putting the transaction on hold until then. This seems to be working for most buyers and sellers but a party doesn't have to agree to this. 

Buyers and sellers are encouraged to be kind and compassionate at this very stressful time - and all parties should get legal advice before taking action. 

What if I can’t afford to settle any more?

Unfortunately, there are some people out there who are unconditional on a property that’s awaiting settlement but their financial position has changed so much that they can’t afford to complete the purchase anymore. This is a tough situation to be in. 

Before making any big decisions, it’s important to talk to your Orange Network adviser. We’ll work with you to review the situation and see what lending options might still be available to you. 

If you’re really not in a financial position to settle, Lisa’s advice is to speak to your lawyer as soon as possible. Legally, it isn't possible to simply ‘back out’ of an unconditional offer but your lawyer can still try and negotiate with the other party. It might be possible to find a solution that works for everyone.

What if I’ve made a conditional offer, but the conditions can’t be met during lockdown?

Some conditions included in your offer could be difficult or impossible to meet during lockdown. For example, if you’d allowed 10 working days to get a building inspection report. 

This is another scenario where it’s important to speak to your lawyer and have them liaise with the other party to get the timeframes moved out. Make sure you communicate, to avoid any misunderstandings. 

Most banks and lenders are still operating and processing home loan applications, so if you need help with finance, reach out to us and we’ll connect you with an expert Orange Network adviser.

In a nutshell: communicate, be kind to the other party and be sure to speak to your lawyer.

You can find more official and government advice online

New Zealand Law Society: Property Law Section recommends Level 4 property settlement clause 

Real Estate Authority: Buying and selling property during the COVID-19 lockdown

Ministry of Justice: Guidance for residential property settlements 

Covid19.govt.nz: Information for renters and homeowners

Lisa is a senior solicitor at Wakefields Law. You can contact her on lisa@wakefieldslaw.com. This is not individual or tailored legal advice and is intended as general guidance only. This information does not surpass any tailored legal advice you may have received and should not be acted upon without consulting your solicitor.