The current COVID-19 Pandemic is an uncertain time for property buyers and sellers alike.
The government’s social distancing restrictions and health advice make meeting the usual time periods and obligations under contracts very difficult and in some circumstances impossible.
Buyers, Sellers and their financiers, may be prevented from meeting the condition and settlement time frames by circumstances beyond their control, often unforeseeable, resulting from travel restrictions and the disruption to, and closure of, businesses and government services.
For example: a Seller may not be able to vacate a property due to the social distancing requirements and travel restrictions; or a Buyer’s financier may not be ready on the Settlement Date due to disruptions to their operations or difficulties faced by Buyers finding an appropriate witness and returning signed documents.
Some usual steps like undertaking searches, obtaining valuations, independent reports or approvals, giving certificates, signing documents, giving vacant possession or other key parts of a conveyance may not be able to be undertaken or may be significantly delayed.
Standard contracts may allow a Buyer or Seller to terminate the contract due to a COVID-19 related delay, even though the delay is beyond the control of the delayed party, resulting in the loss of a sale or loss of deposit.
For Buyers, we recommend you be proactive in satisfying your bank’s requirements as quickly as possible; allow longer than usual time periods for finance and building and pest inspections; and start your searches earlier than usual so you have time to consider the search results before being locked into the contract.
For Sellers, also be proactive in satisfying your bank’s requirements to release your mortgage; and allow longer than usual for you or your tenants to vacate your property.
Before you sign a Contract, you should speak to us about whether any special conditions are required to manage the risk of delay caused by COVID-19. Mechanisms can be included in the contract to extend condition dates or settlement obligations where the delay is caused by unavoidable COVID-19 disruption.
To further reduce COVID-19 disruptions Fox and Thomas will be conducting all property settlements electronically using PEXA where possible. This allows the settlement to proceed without the need for a paper/ physical settlement, reducing the likelihood of delay. Using an electronic platform like PEXA has other great benefits for Sellers and Buyers. See our earlier bulletin here.
COVID-19 is a disruption, but it need not stop you, and it certainly won’t stop us, from successfully completing your property transaction.
If you would like to know more, please contact our Property Team.