Can I buy a house during the lockdown?
Yes it is still possible to start the process for buying a house during a lockdown and even in some cases complete settlement. Here are the things you can do:
1. You can still negotiate and enter into a sale and purchase agreement
There is absolutely nothing to prevent a vendor and a purchaser entering into a sale and purchase agreement during the lockdown period.
Your agent or lawyer will be able to assist you to prepare the agreement and you can also sign the agreement (see below).
If you are looking at purchasing a property you might be concerned because, due to the lockdown restrictions, you can’t obtain a builder’s report, inspect the property or arrange for a valuation. However, this is easily dealt with by inserting a condition in the agreement which allows for these things to be done after the lockdown has ended. A due diligence condition is also helpful to give you time to be really sure you want to purchase the property. Again, the date for satisfaction of this condition will need to be after the lockdown period has ended.
Your lawyer will still however, be able to search the title and advise you on any issues and obtain a LIM (see below in relation to LIMs).
Unless you are buying bare land or don’t require to physically move into the property, the settlement date will need to be deferred until after the lockdown has ended. The New Zealand Law Society recommends that settlement is deferred to the 10th working day after the Government reduces the Covid-19 Level to Level 2 or below, or to such later date as may be mutually agreed by the parties.
The most important thing to do is make sure your lawyer reviews the agreement before you sign it.
2. You can still get a LIM Report
A LIM report is a report provided by your local council that provides a summary of the current property information held by the different departments at council on the day the LIM was produced. It will contain information such as potential flooding or erosion, the placement of sewerage drains, building and resource consents, rates information and any other information that the council holds regarding the property. It is strongly recommended that all purchasers obtain a LIM report.
LIM reports can still be ordered online during the lockdown period, however there may be delays in receiving the report due to technical difficulties experienced by council workers working from home. Under the commonly used ADLS Agreement for Sale and Purchase of Real Estate, the period of time that a purchaser has to approve the LIM report is 15 working days from the date of the agreement. This period may have to be extended to account for potential delays in receiving the report from council.
3. You can still sign agreements
How is this you ask? The required documentation can be prepared and sent to you via email by your solicitor or agent. You will be able to sign this documentation with an original signature if you are able to print the documentation and scan it back to your solicitor or real estate agent.
LINZ has released a guideline as to which documentation can be signed using electronic signatures and how an electronic signature must be completed. An electronic signature must comply with section 228 of the Contract and Commercial Law Act 2017. An image of a signature that is simply inserted into a document will not be acceptable in any circumstances.
An electronic signature is a signature that is completed on an electronic device such as a computer or smart phone. The signature must be created under the control of the signatory and of no other person. Any alternation after the time of signing must also be detectable. An easy way to ensure that your electronic signature meets the legal requirements is to use a recommended digital signing service. The ADLS’s webforms digital signing service is designed to meet all the legal requirements of an electronic signature.
Your lawyer will be able to provide you with more information about using electronic signatures to sign documents.
4. You can still organise your Bank Loan
Banks are still operating during alert level 4. Most banks have arranged to have certain branches open for limited hours in order to assist customers. When funding has been approved by the bank, they will send the lending documentation to your solicitor. For most banks your solicitor can arrange to witness you signing the documentation remotely via audio-visual technology – i.e. Skype or Zoom.
5. You can still do online inspections
While New Zealand is at alert level 4, purchasers will be unable to attend a property to complete their pre-settlement inspections or any inspections of the property prior to entering into the agreement. There are other options, such as virtual inspections. This will need to be discussed with your agent and agreed upon by both parties.
6. You can still settle if bare land etc.
It may be possible to complete a sale and purchase of a property during Alert Level 4 where the property is vacant land or sold as a rental property with tenants remaining and where the buyer is still able to access settlement funds. As stated above, if you need to move into the property the settlement date will need to be deferred until after the lockdown has ended.
With the main focus of Level 4 lock down being to stop movement and contact and therefor limit virus spread, Turner Hopkins encourages all vendors and purchasers to recognise the need to conduct these transaction safely and 100% within Government guidelines.
For more information about buying or selling a property during the lockdown, contact one of specialist property team professionals.