We are now officially in our first day of level 4 lockdown. The team at Kannangara Thomson are all up and running and able to work remotely from home. We remain ready and willing to help you with all your legal needs to the best of our ability in these trying times.

If you have a current conveyancing transaction you will no doubt be wondering where this leaves you with regard to the confirmation of your further terms of sale (special conditions inserted for your benefit) or settlement of your transaction if that is scheduled to happen during the period of the lockdown?

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 loan and security documentation and all client authority and instruction forms have been signed, moving companies will not be operating so vendors will be unable to give vacant possession.

In addition, purchasers will not be able to complete a final inspection and will have no means of moving their own furniture in the absence of moving companies operating during this time. Any such relocation will likely be a breach of the Level 4 lockdown requirements as other than essential travel in any event. Add to that the issue of where and how to collect the keys given the requirement for no non-essential travel and social distancing at all times.

Although your property lawyer from Kannangara Thomson can and will continue to operate from home, there are many factors outside our control that might significantly impact on the practicalities of settlement, such as:

• Key personnel in law firms being in self-isolation
• Clients overseas in isolation who cannot access documents
• Clients unable to sign documents (e.g. elderly clients who might struggle with technology)
• Furniture removal firms unable to operate due to lockdown
• Inability to have services such as electricity/gas etc connected
• A lack of scanning capability for either you or us working from home

The Property Law Section of the New Zealand Law Society has come out with the following recommendation which we are advising our clients to adhere to. It is suggested that the following wording be added to all contracts.

“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.”

Similarly, if you have conditions due for confirmation such as a building report, finance or approval of insurance or a Land Information Memorandum, we are recommending that it be agreed between lawyers for both parties that the date for satisfaction of those conditions is extended until 10 working days following the lowering of the level 4 Lockdown to level 2.

Why are we recommending this? Well, for starters you will not be able to engage a building inspector to obtain your Property Inspection Report and nor will you be able to obtain a valuation for finance purposes during the lockdown period, with neither of those being considered as essential services. Indeed, for the purpose of your property transaction, lawyers are not considered as an essential service either.

We will be able to search titles and we may be able to obtain a Land Information Memorandum depending on staffing levels and volume of work at the relevant council. Similarly, you should be able to take steps to obtain insurance. On balance though, we feel that deferring the date for satisfaction of all conditions is the way to go.

There will be some settlements that may be able to happen. One such example is a property transaction involving bare land because there will be no final inspection required and nor will there be keys to collect.

If you have any query please feel free to contact your Kannangara Thomson property advisor by email or telephone. Most importantly, keep well and stay safe at home.

Brent Selwyn
26 March 2020

Since writing this article the New Zealand Law Society has issued a statement saying that in the current circumstances any property settlement which involves the movement of people is to all intents and purposes illegal.

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