We never know when another snap lockdown is just around the corner. If you are buying or selling property anywhere in the country, you should have a Covid clause for deferring settlement in your agreement for sale and purchase.
Unfortunately, this time around it has become clear that many Covid clauses are not fit for purpose due to the split in alert levels across the country.
Buyers and sellers are getting caught out by agreements that either don’t have a Covid clause or the Covid clause they do have does not allow for more complex circumstances across different alert levels. This can result in financial penalties or in the worst case, agreements being cancelled, and deposits forfeited.
The majority of Covid clauses allow for settlement to be deferred if the region in which the property is located is under an alert level which restricts personal movement associated with settlement.
This does not help buyers or sellers who are residing in a different region to the property they are buying or selling. For example, a buyer who needs to sell their existing home first may get caught if it is located in a different region to the new home they are buying.
Similarly, buyers and sellers in a chain of transactions are getting caught where one transaction in the chain has a Covid clause and the other doesn’t. Or respective Covid clauses in a chain of agreements lead to different outcomes regarding settlement dates.
It is also important to consider whether Covid restrictions could affect your ability to satisfy conditions, such as finance conditions which require access to a property for valuation inspections. Your Covid deferment clause may need to extend to deferment of dates for satisfaction of conditions as well.
Careful consideration is required to ensure the Covid clause in your sale and purchase agreement is fit for purpose. The standard Covid clauses inserted by real estate agents may not be adequate to cover your particular circumstances.
We can assist you with tailoring Covid clauses so that you don’t get caught out by a snap lockdown.
If you require any advice or further information on the matters dealt with in this publication, please contact the lawyer at Farry Law who normally advises you, or alternatively contact:
Fahra Manning
fmanning@farry.co.nz
09 353 6678
The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this publication, Farry Law does not accept liability for any errors it may contain.