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Lockdown Land Law: A Moving Target

Buying and selling property has been challenging across the Covid-19 Alert Levels.  At Level 4, most settlements ground to a halt.  Exceptional settlements were still possible, such as on bare land or where the parties were not required to physically move home.  If physical distancing could not be observed and non-essential workers, such as movers, had to work away from home, the settlement could not take place. 

Many purchasers and vendors agreed to defer settlement until the alert level was lowered to Level 2, on the assumption that tight restrictions would likely remain at Level 3.  Instead, when the restriction lifted, guidelines allowed for most property transactions to occur – truly a moving target.  Therefore, where both parties agreed, settlements could take place in Level 3.

The Prime Minister has announced further details about Level 2, and at 11.59pm on Wednesday 13 May we will be moving there.  The good news is that open homes and auctions will be back on the menu at Level 2 with appropriate health measures in place.

The key steps in property transactions can still be completed at Levels 2 and 3 where health precautions are followed.  Below, we address how these key steps can look.

Property transactions at Alert Levels 2 and 3

Keen buyers can organise finance with their bank to buy property.  At Level 3 most banks have a specific day and hours where they are open for meetings with clients with physical distancing in place.  Clients can contact their bank or check their website for those opening hours.  It is unclear at this time whether banks will operate more “normal” hours under Level 2, although it seems likely.  

Once we move to Level 2 auctions and open homes will recommence.  Open homes will be conducted involving fewer than 100 people, provided all attendees can always safely keep at least a one metre distance.  Stringent hygiene protocols and contact tracing measures will also need to be observed.  Sale and purchase agreements can be negotiated in person and auctions involving fewer than 100 people can also take place.

At either Levels 2 or 3, houses viewings, whether for a private viewing or a pre-settlement inspection, can be completed.  Parties will need to adhere to physical distancing.  If there is an agent involved in the sale, they will be able to help facilitate these viewings according to health regulations.  Similarly, conditions like building reports, where an inspector needs to look in the property, can occur where physical distancing is adhered to.

The need for repairs may arise while fulfilling these conditions.  For repairs to be carried out tradespeople can operate provided they have a Covid-19 control plan.  These measures will remain in place for Level 2.  If certain repairs cannot be completed due to alert restrictions, we recommend parties consider a reduction in the purchase price for the cost of repairs, allowing the purchaser to complete those works post-settlement.  

To complete settlement, clients will have to sign settlement documents, including loan agreements and a formal authority to transfer the property.  We can meet with you, and witness necessary documents, through audio visual channels like Zoom and Facetime. 

Passing over the keys has been a core “what if” in lockdown settlements.  We suggest that immediately following settlement, sanitised keys be handed over or made available by the vendor to the purchaser ensuring that there is no physical contact between the parties.  Again, where an agent is involved, they will be able to assist with the process of passing keys from vendor to purchaser.

At the finish line, when the purchaser takes possession they can move into the property.  Under Levels 2 and 3, moving services can operate with appropriate measures in place.  We recommend you contact your preferred moving company ahead of time to ensure they can help you move under the restrictions at the relevant alert level.

Despite the above workability, those selling properties with residential tenants must be wary.  Parliament has introduced measures whereby a tenancy must not be terminated by the landlord during a three month window starting on 25 March 2020 unless specific exceptions apply.  If you are a landlord that wishes to sell a property with vacant possession, please contact us for advice about whether termination would align with the law.

At McCaw Lewis we are keeping our eye on the target as alert levels continue to move.  If you are buying or selling a property, we are happy to assist you.

If you would like further information please contact Dale Thomas on 07 958 7428. 


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