National MP Nikki Kaye has stepped in to try to help distressed Auckland apartment buyers, asked to settle deals during the alert level 4 lockdown.
Kaye said she was asked to help in the case where settlements on apartments in The Antipodean were being sought this month.
So she went to the National Crisis Management Centre looking for guidance on buyers' positions during the lockdown.
She fears people could be penalised if they can't settle.
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One buyer who contacted Kaye says she can't settle as she can't get inside to inspect the place, although The Antipodean's lawyer says now that code compliance certificates are issued and the block finished, buyers must pay up this month.
That worried Kaye.
"Residents said to me they are worried about being served with a default notice and the potential for penalty interest and losing their deposits," she said.
The crisis centre referred Kaye to real estate guidelines under the lockdown. Buyers who had made a conditional offer should "talk to their lawyer or conveyancer and agree with the seller to extend the conditional period until the alert level is lowered", the crisis centre told Kaye.
"If a seller has accepted a conditional offer from you, it is likely you won't be able to fulfil your conditions during the lockdown. At alert level 4, non-essential services are closed or not operating, including building inspectors, for example. Also, the seller may not be able to fulfil any conditions you have requested," guidelines under the lockdown say.
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The Antipodean apartment buyers complain of settlement demand
"Some lawyers and conveyancers are still working remotely, but there may be delays in service," the centre told Kaye.
Kaye thinks a formal Government directive could be needed to clarify the situation.
The MP's moves follow a Herald story on Monday, in which buyers complained about demands for settlement in April but John Heimsath, a partner at law firm Heimsath Alexander, which acts for The Antipodean, defended the request to settle which he said fulfilled the terms of contact.
"The development finance for this building is significant. Commitments have been made on both sides of the situation - purchasers to the vendor and vendor to the bank, builders, employees, contractors, consultants etc," Heimsath said.
The time had arrived for a critical exchange to occur and pre-purchasers to pay, despite level 4 alert, and the buyers were on the winning side of the formula, he indicated.
"Hopefully, purchasers have been planning to meet this obligation for a long time. The jammed construction market has caused delays which has added to the cost of the building to the developer's detriment. Most purchasers have enjoyed an increase in the value of their apartments over the same period. The delay has also extended the time for purchasers to prepare their finance," Heimsath said on Monday.
One buyer asked Kaye: "Would it be possible to ask for a formal directive from the Government on newly-built apartment settlements during the level 4 lockdown?"
Buyers had a contractual right to inspect the properties before settlement, that buyer said.
"His lawyers are arguing that it's not the vendor's fault that purchasers cannot exercise that contractual right," she said of developer Paul Doole "and so the settlements must proceed. Similarly, the vendor cannot hand over possession of the apartments. 'Not my problem' says the vendor."
The situation was causing stress for some buyers, particularly those who need to sign mortgage documents which was not possible or must have documents witnessed, she said.
"Ironically, the development is more than a year late in achieving completion which has placed us in this situation. The vendor's approach is wrong but there is no case law or precedent to help the purchasers' solicitors. A formal direction from Government is required to avoid expensive litigation proceedings being filed," the buyer said.