Christchurch Property Settlements in the wake of the earthquake

Many Christchurch residents with upcoming property settlements are unable to get in touch with their local banks and lawyers and are unsure if their settlement will go ahead or not.  Unfortunately there is no handbook for scenarios like this, everyone understands how difficult the circumstances are and that some patience and flexibility are necessary.

The most common questions we are being asked are will – the banks still advance mortgages? and, is it possible to get out of contracts? What we know so far is as follows:

Deferment of all property settlements in the region.

We have received notification from many of the major banks informing that all property settlements for Christchurch and the surrounding areas due to settle this week and Monday the 28th February have been deferred. They will be reviewing their position next week and attempting to get in touch with all affected customers.

In order for loan drawdowns and settlements to proceed banks will need current certificates of insurance for the property. This potentially could be a problem if insurance companies are unwilling to give cover in the region.

What if the Property you are purchasing or selling has been damaged in the quake?

There is a provision in the Sale and Purchase Agreement for properties that have been damaged or destroyed prior to settlement date, it reads as follows:

4.2   If prior to the giving and taking of possession, the property is destroyed or damages, and such destruction or damage has not been made goog by the possession date then the following provisions shall apply:

(1)  If the destruction orr damage has been sufficient to render the property untenantable and it is untenantable on the posession date the purchaser may:

(a) complete the purchase at the purchase price, less a sum equal to any insurance moneys recieved or recievable by or on behalf of the vendor in respect of such destruction or damage, provided that no reduction shall be made tot he purchase price if the vendors insurance company has agreed to reinstate for the benefit of the purchaser to the extendt of the Vendors insurance cover; or

(b) cancel this agreement by serving notice on the vendor in which case the vendor shall return to the purchaser immediately the deposit and any other moneys paid by the purchaser; and neither party shall have any right or claim against the other arising from the agreement or its cancellation.

(2)  If the property is not untenantable on the possession date the purchaser shall complete the purchase at the purchase price less a sum equal to the amount of the diminution in value of the property.

This means that if a property is not in a fit state to live in the purchaser may cancel the agreement.  The term “tenantable” is not clearly defined so you would need to seek advice regarding your particular circumstances. If a property has been damaged but is still liveable then settlements should still go ahead buy it is likely to take some time to get the damage assessed and repairs and insurance quotes so expect delays in settlement.

Our thoughts go out to all those affected by the Chritchurch earthquake. If there is anything our experts can do to assist you during this difficult time please dont hesitate to get in touch.

Thada Chapman

Conveyancing Shop Lawyers

Free Call: 0800 Solicitor

www.conveyancingshop.co.nz

Readers may be interested in the following article from NZLawyer Magazine published in the wake last years Christchurch Earthquake

Quake unearths legal issues, NZLawyer magazine, issue 148, 29 October 2010