House settlements are unable to proceed during the COVID-19 Level 4 lockdown forcing sellers and buyers to stay where they are.
Having sold her house unconditionally, Auckland homeowner Trish Turney was working towards a March 20 settlement date on her property only to have it postponed until May 8.
House movers were booked and plans put in place to renovate her new property when Turney’s solicitor said the New Zealand Law Society had instructed everything to be put on hold.
“I panicked, to begin with, I thought ‘what am I going to do here?’,” Turney explained.
“They said ‘exactly where it is now, that’s where it stops – if you’ve sold, you’ve still sold’,” she continued.
Agreements had been signed and were still legally binding, but instructions were that everything else had to stop for a month. Movers had to be cancelled and renovations – including a new kitchen design and install and an upgrade to the bathroom – had to be put on hold.
“The purchasers who were in a leasehold property, had to be out by 3 April, so there was a ‘domino effect’ on all of us,” Turney said. “The saving grace for me was I’m buying a granny flat off the council and they were very flexible,” she added.
Turney said throughout the process, all parties were “incredibly reasonable”.
“I think everybody realises that this is a whole country at risk and so let’s be sensible and use some common sense,” Turney added.
“I was told ‘it’s all legal, nothing needs to happen except you all just need to stop’.”
The NZ Law Society recommends existing Sale & Purchase and Auction Agreements be amended with a clause that pushes the settlement date out to the 10th working day after the Government reduces the COVID-19 alert level to 2 or below.
“Unfortunately, the vast majority of transactions due to settle over the next four weeks of Level 4 lockdown will most likely have parties that are not in a position to settle.
“Even if the prerequisite documentation has been attended to, moving companies will not be operating so vendors will be unable to give vacant possession; equally purchasers will have no means of moving their own furniture. Any such relocation will likely be a breach of the Level 4 lockdown requirements,” the NZ Law Society website states.
REINZ chief executive Bindi Norwell said she supports the recommendations of the Auckland District Law Society and the New Zealand Law Society.
“The party’s lawyers will make appropriate amendments to the contract to facilitate this in existing agreements,” Norwell said.
Property coach Steve Goodey said one of his clients due to settle on a tenanted block of flats had been pushed by the vendor’s lawyer to continue with an April 1 settlement.
“On the seller’s side, do they really want to upset somebody who has purchased prior to COVID-19?” Goodey said.
“My client does want to settle, just not today.
“Everyone should just take a deep breath and push it back a month.”