By Bindi Norwell, REINZ.
To help prepare the real estate profession for what will happen once the country-wide lockdown comes into effect, the Real Estate Institute of New Zealand (REINZ) has issued the following advice. This is not legal advice, but provides a recommended approach in certain situations, and as the situation unfolds the guidance could change.
REAL ESTATE SALES
Open Homes/Private viewings
These are not considered essential services so cannot take place in person. They could take place via online virtual tours or video conferencing type software, where people aren't required to leave their homes and no person to person contact occurs.
Auctions
These are not considered essential services so can only take place via phone or online bidding methods.
Settlements
Our understanding is that whilst in lockdown, vendors and purchasers will not be able to move in and out of their houses. The Auckland District Law Society and the New Zealand Law Society is recommending that the vast majority of settlements may need to be deferred until after the Alert Level 4 restriction is lifted. The party's lawyers will make appropriate amendments to the contract to facilitate this in existing agreements.
NZLS Property Law Section has suggested the following clause could be inserted into new agreements that are drafted over the lockdown period (please note, this clause may change): “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.”
Moving if a property settles during lockdown
Travel will be restricted to essential travel only e.g. pharmacy/supermarket trip, so settlements and moving house should be deferred until after the Alert Level 4 restriction is lifted. The parties lawyers will make appropriate amendments to the contract to facilitate this.
Rural sales and tenanted property sales
Auckland District Law Society have considered situations where sales may not involve people leaving their home or any in-person contact (e.g. where a property is tenanted and the tenancy will continue after settlement) and have advised that whilst settlement can occur where no one has to have contact, purchasers and vendors may encounter difficulties when trying to get Authority & Instruction forms, mortgage instruction forms, and other legal forms issued and signed. So, deferring settlement may still be the safest option. We would strongly recommend that the parties seek and follow the advice of their lawyers and not assume settlement can or will be able to occur. Physical property inspections cannot occur when we are under Level 4 lockdown.
Bridging Finance
Vendors/purchasers should talk to their bank or financial services provider in the first instance.
Conditional Contracts
These can still be confirmed during lockdown provided no travel/face-to-face meetings are required. If the condition(s) cannot be met during the Alert Level 4 period, then both the buyer and seller should take legal advice and either extend the condition until after the lockdown period or cancel the contract. The party's lawyers will make appropriate amendments to the contract to facilitate this.
Pre-settlement Inspections
These are unable to take place in person during lockdown, however, if both parties agree, these could take place using video conferencing.
Anti-Money Laundering
Department of Internal Affairs is working on guidance as to if and how verification can occur during lockdown. We will let you know as soon as this guidance is released.
RENTALS
The Government has made the following announcements:
- There is now a freeze on rent increases;
- A rent-increase notice from a landlord will not have the effect of increasing a tenant’s rent, unless the rent increase has already taken effect
- Tenancies will not be terminated during the lock-down period, unless the parties agree, or in limited circumstances, regardless of when notice was provided;
- Tenants will still be able to terminate their tenancy as normal, if they wish;
- Tenants will have the ability to revoke termination notices that they have already given, in case they need to stay in the tenancy during the lock-down period;
The measures take effect from Thursday, 26 March and the rent freeze applies for an initial period of six months while the protections against terminations will apply for an initial period of three months. At the end of both initial periods, the Government will evaluate whether they need to be extended.
Rental Viewings
These are not considered essential services so are unable to take place during lockdown unless done by virtual reality tour or pre recorded video/photos or other technology. If tenants need emergency accommodation, they should contact Work and Income.
Routine Inspections
These are not essential services, so should be deferred until after the lockdown period in consultation with the landlord and their insurer.
Routine Maintenance
As this is not an essential service it should be deferred until after the lockdown period in consultation with the landlord.
Urgent Maintenance
If this is related to essential services e.g. power, water, waste, gas then it is likely this can be undertaken during the lockdown period.
An owner wants to move back into the property during lockdown
The current law states a landlord must give 42 days’ notice if an owner or their immediate family wish to use the premises for their own use. Under the proposed changes (which are currently under review) this would increase to 63 days’ notice. We are waiting for confirmation in regard to which notice period should be used if this is required.
Tenancies due to end or commence during lockdown
MBIE is confirming the situation and we will update members as soon as we have any further information.
Tenancy tribunals
All parties who have hearings scheduled during the lockdown period time will be advised of new hearing dates, once services are open and operating again. MBIE will be processing adjournments before they are handed over to the Registry.
- Bindi Norwell is CEO of the Real Estate Institute of New Zealand.
