For many it is a time of uncertainty when buying and selling property in this current market, but the right guidance and advice will help you navigate these unchartered waters.
When selling, a well-drafted contract is essential in order to set out the Vendor’s legal rights and when buying, it is important that the contract reflect the agreement between the parties and protects the Purchaser. It is a delicate line depending on whom you are acting for.
The real estate market is rapidly changing as a result of the current COVID-19 pandemic and it is important that consideration is given to potential disruptions which may be caused by the pandemic.
The uncertainty caused by the COVID-19 pandemic has raised questions regarding the ability for the parties entering into a contract for the sale or purchase of land to comply with their contractual obligations and complete the contract.
In this current market both the Vendor and Purchaser need to come to an agreement in respect to what happens should there be a COVID-19 event or a Lockdown event. Parties need to work together to ensure that the Contract offers protection should either event occur.
We have defined these events as follows:
COVID-19 Event means any act, cause, circumstance, omission or incident directly or indirectly, including, but not limited to: self–isolation, and the inability or refusal of a removal company agreeing to effect removals and comply with the terms of its contract with either party relating to Covid-19, or suspicion of, or prevention of, Covid-19 beyond a Party’s reasonable control.
Lockdown Event means either party, or either party’s legal representative or conveyancer, being unable to complete due to medical isolation or lockdown of its office and/or its staff as a result of Australian Government action or advice.
Generally, property contracts do not allow termination or rescission except in circumstances where there is a breach in the contract or material and detrimental changes occur to the property between entry into the contract and settlement.
Parties may also terminate if either party dies, loses capacity or becomes insolvent.
Depending on the circumstances reciprocal rights of rescission may need to be negotiated.
All foreign buyers will now require Foreign Investment Review Board approval. The threshold needing approval for all property classes has been reduced to $0.
All contracts entered into with foreign buyers after 29 March, 2020 will need to include an appropriate FIRB approval condition. These reduced thresholds are expected to be temporary, but Purchasers need to be aware of this.
In these uncertain times, it is more important than ever that a Contract for Sale of Land be well drafted, containing all the legally required documents, and also clear provisions in respect to what must happen should either party find themselves not being able to complete due to a COVID-19 event or a Lockdown event.
With many years of experience, we at Clinch Long Woodbridge are always available to answer any queries you may have and give you concise and up-to-date advice.