How does isolation impact settlements?

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As I write this NZ is 13 hours away from the official lockdown starting – although we’ve pretty much all already started and are settling into the new routine. For me, within one day I’ve gained an enormous respect for what our teachers do on a daily basis!

The initial lock down period is 4 weeks however, if you aren’t already, I’d be preparing for 8 weeks. So get comfy.

One of the main questions I’m getting asked is what happens to those people who are settling on new purchases or sales of property over the lockdown period; and how is that transaction impacted? The NZ Law Society put out an announcement today that says at the moment it’s unclear as to whether or not property lawyers are considered an “essential service” and therefore if they can remain at work or not. It also states that during the lockdown, moving companies will not be operating so even if all documentation has been completed for the settled, the physical move will not be able to go ahead. Purchases could look to move themselves without a moving company, but that in itself would be seen as a breach of the level 4 lockdown requirements.

This scenario impacts renters as much as homeowners and has a pretty significant flow on affect. I have a friend who’s in the predicament of having to move because they’re going through a separation and is now scrambling to get that done in time for the lockdown. Banks as well are doing everything they can to accommodate early settlements today but that won’t help everyone.

The statement from the law society is encouraging the following clause be used to amend existing agreements or be added to new sales and purchase agreements:

“The parties agree that settlement is hereby deferred to the 10th working day after the Government reduces the Covid-19 Level to Level 2 or below, or to such other date as may be mutually agreed. For the sake of clarity neither party shall have any claim against the other in relation to this deferral.”

This clause makes room for the extension of the lock down period and also allows for time following the lockdown to get everything sorted.

There are without doubt some lawyers who are able to manage things remotely so the signing of loan documents and/or new sales and purchase agreements will still proceed. This is great news, but in my opinion (and the law societies) physical moving will grind to a halt and all settlements will be deferred.