Red Zone Settlements


Below is an email received from the NZ Law Society (Property Law Section).

A message from CERA
Vacant Possession

We wish to remind practitioners that the Crown offer requires vacant possession. Prior to accepting the Crown offer, vendors need to be aware of the implications of vacant possession. These implications must be taken into account when deciding on a suitable settlement date for their sale to the Crown. Prior to settlement the vendor must have removed all belongings from the property and has no further right of access once settlement has taken place. Any applicable insurance assessment must have already been completed.

Please ensure that your clients are aware that, even when Option 2 is chosen, the Crown will own the land and buildings once settlement has been completed.

In particular, tenants must receive legally correct notice of termination under any tenancy agreement affecting the property. Whether a tenancy is periodic or fixed term, the settlement date must not be prior to either the expiry of the tenancy or the date of correct legal termination. It is the vendor’s responsibility to ensure that vacant possession is able to be given on settlement so as to avoid a breach of the agreement for sale and purchase provisions. We would be grateful if practitioners could be as involved as possible in the issuing of any termination notice to avoid situations where an incorrect notice has been given.

Please note that settlement will be delayed if CERA becomes aware prior to settlement that vacant possession is unable to be provided by the vendor on the settlement date. Where CERA has been unable to confirm with the vendor that vacant possession has or will be provided on settlement, CERA is entitled to undertake a pre-settlement inspection of the redzone property. Please note that a pre-settlement inspection may occur on the morning of settlement. Confirmation of settlement will not be provided until any pre-settlement inspection has been completed and vacant possession has been confirmed.