CONVEYANCING UPDATE: COVID-19 PANDEMIC:
If you’re signing a new house and land REIQ contract during at this time we now advise due to the COVID-19 Pandemic to add to your contract the COVID-19 Special Condition
CONVEYANCING DURING THE CORONAVIRUS PANDEMIC
Your conveyancing may be affected during the COVID-19 Pandemic. Horrocks Solicitors now advises that if you’re buying or selling property in Queensland to review the following:
The current COVID-19 Pandemic situation may mean that the time periods and obligations under the Contract could be impacted by further closures or unavailability of parties (including financiers) which may be outside the control of the parties. Some situations that may arise may not be currently foreseeable.
Longer than usual time periods for finance and building and pest should be considered. Even if you obtain finance approval for your purchase, given the current circumstances, your finance approval could be at risk of being withdrawn prior to settlement. Most financial institutions will reserve the right to withdraw finance approval at any time prior to settlement for any number of reasons. Reasons they may withdraw the approval include if your personal financial circumstances change or the value of the Property is adversely affected. That may cause your financier to decline to provide finance to complete the purchase.In cases where finance is withdrawn, if the Contract is no longer conditional on finance approval, then despite the financier’s failure to provide finance, you would still be obliged to complete the Contract.
If you do not have sufficient funds to pay the balance purchase price (including any adjustments) at settlement the Seller may terminate the Contract or seek to have you specifically perform the Contract and, in both instances, can keep your deposit and claim compensation from you (such as loss on resale which may be significant in the current volatile property market).
In addition to the normal cooling-off considerations, some usual steps like undertaking searches, obtaining independent reports or approvals, signing of documents, receiving vacant possession or other key parts of a conveyance may not be able to be undertaken or may be significantly delayed. You will not have a right to extend the time for conditions or settlement merely because a search or inquiry cannot be undertaken or is delayed.
If these issues were to occur then you may not necessarily have a contractual remedy to help you and you may be unable to avoid breaching your Contract, be financially impacted or suffer other loss or hardship.
In these uncertain times the only way to completely remove that risk entirely would be to exercise your cooling-off rights and terminate the Contract or, if the Contract is not yet signed, to not sign the Contract at all.
Alternatively, you may consider asking us to insert special conditions into the Contract that attempt to minimise the risk.
However, there is no way to completely remove all risks when proceeding in a conveyance during the current COVID-19 Pandemic due to the many uncertainties that arise from it and from the measures being taken in response to it.
It is important to note that as the government response to the COVID-19 Pandemic progressively increases in severity the ability of contracting parties to perform obligations under a contract of sale is becoming increasingly uncertain and unpredictable. While there may be options we can discuss to attempt to manage some of the current legal risks that have arisen in the COVID-19 Pandemic, none of them will provide the same level of certainty that existed before the COVID-19 Pandemic.
If you are concerned about taking these risks, breaching your Contract, potential litigation or unexpected delay in settling, please consider whether you want to proceed as this situation is very difficult to advise on fully as we do not know what may happen in the COVID-19 Pandemic, and there may be things that occur during the current COVID-19 Pandemic that are beyond your control and may affect you financially that cannot be avoided by adding a contract term.
COVID-19 SPECIAL CONDITIONS
Because of the aforementioned risks we recommend that the special conditions be added to contracts before they are signed:
Should either the Seller or the Buyer become incapacitated, in quarantine or otherwise prevented from signing documents or providing purchase money as a result of taking reasonable precautions in relation to the COVID-19 virus; or delivery of a parties documents necessary from the completion of this contract being delayed as a result of transport delays caused by reasonable biosecurity or Government measures being taken in relation to the COVID-19 Virus; or preparation of documents or cheques necessary for the completion of this contract, or attendance at settlement, by a financier, solicitor or settlement agent of either party being delayed as a direct result of the COVID-19 virus, these events will be deemed a delay event in addition to any other delay event in the standard terms and conditions.
If a party is unable to perform any obligation by the due date in the contract due to a delay event:
( a ) Time for the performance of the parties obligation is suspended and ceases to be of the essence of the contract and the parties are deemed not in breach of their obligations;
( b ) An affected party must take reasonable steps to minimised the effect of the delay event on its ability to perform its obligations;
( c )When an affect party is no longer prevented from performing its obligations due to the delay event the affected party must give the other party a Notice For Time to Commence;
( d ) When the suspension period ends, whether notice under ( c ) above of this clause has been given or not, either party may give the other party a Notice For Time to Commence;
( e ) A Notice For Time to Commence must be in writing and state; 1. That the Suspension Period has ended; 2. A date, being not less than 5 nor more than 10 Business days after the date the Notice For Time to Commence is given, which shall become the date the suspended date must be complied with; and 3 that time is of the essence.
( f ) When Notice For Time to Commence is given, time is again of the essence of the contract.
( g ) All subsequent Dates will be extended by the amount of days of the Suspension of Time.
Any Obligation means an Obligation in regards to dates to perform and provide notice in regards to Building and Pest ,Finance, Due Diligence and Settlement.
Subsequent Dates means the dates to perform and provide notice in regard to Building and Pest, Finance , Due Diligence and Settlement.
Suspension of Time means the amount of days between when a date was suspended and when the date when time to Commence starts.
Please contact us today if you have further questions about signing a contract during the pandemic or completing your conveyancing during these uncertain times.
Phone 07 3013 2300
Email reception@rivercityconveyancing.com.au
