Conducting real estate business during COVID-19 alert level 4
The following guidance is for licensees working at alert level 4. All real estate work should occur remotely.
This page was updated on 24 September 2020. More information will be added to this page as soon as it’s available.
The primary objective of your actions when working at alert level 4 is to lockdown to restrict the spread of COVID-19.
All businesses operating at alert level 4 have a responsibility to adhere to public health guidance and health and safety obligations.
Read the government alert level 4 guidance on the COVID-19 website.
Read the key steps to stay healthy on the COVID-19 website.
What you can and can't do during alert level 4
Only essential services are exempt from alert level 4 restrictions. Real estate is not an essential service.
The basic principle is that real estate business can only go ahead if it doesn’t involve people moving out of their lockdown address.
All licensees should remain in their own homes, and any real estate work must be conducted from there. You can only leave your property for essential personal movement.
You can talk to clients and buyers by phone, video or email. You must not have any face-to-face visits with clients and customers.
You cannot visit properties for appraisals or conduct property viewings, open homes or pre-settlement inspections.
All agency offices must be closed at alert level 4.
What to do about current listings
You can continue to work on current listings from your home. Call, video call or email your vendor to agree what work you will do during lockdown.
Things may change during the lockdown period, for example, many buyers will face financial uncertainty. In addition, buyers' due diligence will be difficult as will negotiation.
Review the marketing plan with your vendor.
Your obligations do not change in the current environment — buyers must be advised to seek legal support and be given the opportunity to do so.
Be aware both parties are unlikely to be able to meet conditions during alert level 4. Have an early conversation with your vendor and the buyer about how they want to manage this, for example, by agreeing to extend the conditional period.
What to do about listings due to settle soon
REA recommends that settlements are deferred until relocations are permitted.
We hope that all parties will agree to defer settlement. This will rely on co-operation and compromise.
If there is a clause in the sale and purchase agreement that addresses how settlement should occur if the alert level changes, review the agreement to understand how to progress the settlement.
Property settlement can take place if there is no movement of people, for example, when a tenanted property is sold and the tenants are staying. Moving homes isn’t allowed at alert level 4.
REA recommends that pre-settlement inspections are delayed until alert level 3. If a pre-settlement inspection is offered by video or similar, both parties should seek legal advice about the risks of a video inspection. This type of inspection may not pick up issues you would see if you were physically inspecting the house.
We recommend you refer the vendor and buyer to their lawyers to seek legal advice early. In the current situation, both parties are unlikely to be able to meet their contractual obligations. Legal costs may be higher because the COVID-19 situation is complicated and may require more work than usual.
We recommend deferring settlement until at least 10 days after moving to an alert level where relocating is permitted. Note that if everyone uses the recommended default 10-day deferral period, there may not be enough moving resource available to help settle all properties at one time. Consider recommending a longer deferral period.
Here are examples of compromises that could allow settlement to take place during alert level 4:
- The vendor stays at the property on a rental basis.
- Both parties agree to share any late settlement interest penalty.
- The vendor leaves money in the sale for later payment.
There are practical issues listing a property during alert level 4, including difficulties completing your AML obligations, taking photos and arranging a property inspection.
Department of Internal Affairs (DIA) has guidance about your AML obligations on the DIA website.
Conducting appraisals and meeting disclosure obligations
If you can’t defer a new listing, you cannot physically inspect the property to appraise it or help to meet your disclosure obligations. You must make sure that every party knows that you have not physically inspected the property.
You should conduct a physical inspection of the property as soon as the alert level allows this to take place. You must tell the vendor about any changes to the initial appraisal and discuss any changes to disclosure statements. You must also advise any interested buyers about any changes to the disclosure statements.
Buying a client’s property (section 134/135 and Form 2)
If you, or a person related to you, has an interest in your client’s property, it may not be possible for a valuation to be completed as required, at alert level 4. This is because the valuer cannot carry out an in-person inspection of the property.
We suggest that you consider:
- raising your interest in the property with the listing agent/vendor
- exploring the possibility of having a valuation done remotely by a registered valuer (sometimes called a ‘desktop valuation’)
- waiting until alert level 3 or lower before making an offer, when valuers may be more able to fully function.
If you are pursuing an online valuation you must ensure the vendor understands this, and understands the limitations of an online valuation. We recommend you ask the valuer to set out the differences between an online valuation and a standard valuation, and share this with the vendor. We strongly recommend that you follow up your conversations with the vendor in writing.
Find more information about buying a client’s property (conflict of interest) here.