Conveyancing Settlements: Your rights when natural disaster strikes
With the recent floods and Cyclone Debbie, in addition to the impact these events have had on the people affected, these natural disasters can also create significant difficulties for properties that are under a Contract of Sale at the time of the disaster occurring.
So what are your rights when disaster strikes?
Right to terminate:
- Contractual rights; or
- Statutory rights.
If damage to the property occurs prior to the building inspection date, the buyer will have a right to terminate if the building inspection report confirms such defect. But what if the contract is already unconditional?
Risk passes to the buyer from 5.00pm on the first business day after the contract is signed, however, the buyer will accrue a statutory right in accordance with Section 64 of the Property Law Act, which provides that if a dwelling is destroyed or becomes unfit for occupation before settlement then the buyer can terminate the contract.
What if the property is not destroyed and the seller enforces the buyer to complete the contract?
Time is of the essence and suspension or delay of performance of obligations
Following the 2011 floods the REIQ contract was amended so time was suspended until the affected party was no longer prevented by the natural disaster from completing settlement. The affected party must take all reasonable steps to minimise the impact on their ability to settle and settlement must occur 5-10 business days once the affected party can settle. Once a notice to settle is issued then time becomes of the essence again.
If you or anyone you know has been affected by the floods or Cyclone Debbie and are wanting more information on their rights under the Contract of Sale, make contact with our property law team.