James Wilkinson, Julie Millar
Published on

25 August 2021

The recent elevation to Covid-19 alert level four ("level 4") means there are difficulties with many property transactions around New Zealand going ahead. If you’re worried about your settlement, here’s some advice that may help.

If you are in the process of buying or selling a property, we recommend you discuss matters with your lawyer. Although our physical offices are closed, Gibson Sheat remains open for business to provide our clients with the advice they need.

Settlements requiring physical movement of people cannot take place

Settlement of most transactions require the occupants of a property to move out.  If the vendor or tenants currently occupy a property being sold, the level 4 restrictions require them to remain in occupation – meaning that you’re unable to move house. In such a situation, the vendor is unable to give (and the purchaser is unable to require) vacant possession, so settlement cannot take place. Almost all contracts provide for settlement to be delayed where neither party can settle. Even if the property is vacant, one of the settlement requirements is for keys to be made available. Usually, keys are handed over by the real estate agent, or directly between the parties or their lawyers if there is no agent involved.

Level 4 also means a purchaser will not be able to undertake a pre-purchase inspection.

The COVID-19 Public Health Response Orders mean any settlements requiring physical movement of people are, for all practical purposes, illegal. That makes most settlements problematic, as a settlement usually requires a movement of people, either for a property to be vacated or for keys to be handed over.

Many contracts now include a covid deferral clause, which may delay settlement until a later date if the covid alert level has escalated. In the absence of such a clause, the agreement will determine when settlement should take place (usually two working days after one party is ready and able to settle).

Settlements requiring no movement of people may still be able to proceed

The level 4 restrictions are less problematic for some settlements. Bare land can still be settled without the need for the movement of people or keys, as can tenanted properties (where the tenant remains in place). Most documents can be signed remotely with digital signing or video conferencing, and most lawyers are working remotely and can settle transactions, even during level 4.

Sale and purchase contracts

For new contracts, consideration should be given to the parties’ obligations during the various Covid-19 alert levels, particularly in relation to time frames for confirmations, settlement, exchange of keys, and tenancy terminations. Most lawyers remain open (although working remotely) and can settle transactions, but the other implications should be considered when drafting or negotiating a contract.

If you are in the process of buying or selling a property, contact one of our property team to discuss your specific situation.


James Wilkinson           P: 04 916 6305  E:

Julie Millar                     P: 06 370 6478  E:

Disclaimer: The information contained here is of a general nature and should be used as a guide only. Any reference to law is to New Zealand law and legislation. We recommend before acting on it, you consult your lawyer or other trusted adviser.