Time seems to have stopped since the restrictions imposed by the government to control the spread of COVID-19. Restrictions on movement and the closure of certain businesses has placed everyone’s life on hold. Despite the Coronavirus, though, real estate business still continues because it is a crucial business, especially when people need to change homes or transfer to a home immediately. Some adjustments need to be adhered to, however, due to the COVID-19 pandemic, and the advisory of the government in property transactions involves measures to protect public health.
Government Advisory on Property Transactions
People who are buying or selling private residential homes should take note of the COVID-19 precautions issued by the government which is mainly aimed at protecting public health through social distancing. These social distancing rules have become an inconvenience to real estate because they interfere with the stage where families are moving into and out of the home that is being sold/purchased. Despite the inconvenience, people are still required to follow social distancing rules while purchasing a home. Some important things to note about the Coronavirus and its impact on the real estate business are as follows:
- People are not required to suspend transactions, but they should make sure they are following government measures through social distancing to protect public health.
- If the property has no one living in it, and it is vacant, the transaction can continue, and the buyers can occupy the property immediately.
- In instances where the property will not be occupied by the new owner/renter immediately or where the current renter has yet to fulfill their tenancy, transactions can proceed as normal.
- If the property is unoccupied, it is advised that parties moving in follow protocols on social distancing.
- If there are still people occupying the property, completion of the transaction should only take place if absolutely necessary. It is advised that people enter the exchange and completion when social distancing measures are lifted, and the situation has returned to normal.
- If the parties have already exchanged contracts, they should agree to the completion date being postponed. If this is not possible and parties cannot agree to a deferment, completion can still take place, but they must follow social distancing measures to minimize the spread of COVID-19.
- If parties have not exchanged contracts yet, they should consider delaying the transaction. If they still want to proceed with the exchange, both parties should consider the effects and risks of the virus and ensure that certain conditions are included in the contract to avoid the spread of the virus.
The Risks of Exchanging Contracts during the COVID 19 Pandemic
Exchanging contracts on a property forces parties to establish an agreed completion date, but there is always the possibility that government orders and changes in either parties’ personal or financial situation can impede their ability to complete the transaction on a certain date. In certain situations, if there is a delay in completion, parties are liable to pay a late completion interest which is calculated between the period of the agreed completion date and the actual completion date. Furthermore, if a party is already willing and able to complete a transaction, they must submit a notice to complete. If the completion still doesn’t take place within the notice, there is a possibility that the contract will be terminated, and the buyer will lose their deposit.
Contractual Requirements to be Considered in the Coronavirus (COVID-19) Pandemic
During the uncertain circumstances of this pandemic, both parties should consider applying some measures before deciding to proceed with the transaction. For example, they can agree to an extended completion date, they can agree that there will be no set time period between exchange and completion, or they can wait until social distancing measures are lifted. To be more specific, the parties can state in the contract that completion dates can be delayed due to Coronavirus related events. If the parties specifically state the issue of Coronavirus in their contract, the payment of late completion interest and the serving of a notice to complete can be waived.
The business of real estate is something that is crucial not only for homebuyers but also to a country’s economy, so it is necessary for businesses to continue even if it is in a slowed or restricted phase. Hire trusted conveyancers at Glenferrie Conveyancing and know that you can have reliable and professional services when buying or selling your property even in the time of COVID-19