COVID-19 and Special Clauses: What You Need to Know Before You Buy or Sell!

The COVID-19 pandemic has led to changes in the way we go about our typical everyday lives and has seen businesses and individuals alike trying to protect themselves against the economic impacts of the pandemic.

Initial forecasts indicated that the Australian property market would be one of the areas hit hardest by the pandemic, however despite this, housing prices have remained relatively steady.

Special Clauses in Contracts

While the property market remains stable for now, there has been an increase in special clauses added to property contracts to ensure buyers and sellers are safeguarded in light of the many changes seen in our communities as caused by COVID-19.

The special clauses are being added to residential and commercial property transactions and are typically included to allow parties to delay the due date for settlement or conditions without penalty if they are adversely affected by COVID-19. The clauses generally allow for a penalty-free settlement or condition extension of a defined period in cases where the following has occurred:

  • A party to the contract is diagnosed with COVID-19 and is therefore required to self-isolate; or
  • A party is unable to meet their contractual obligations due to a government-mandated lockdown.

Another common clause is the requirement for the seller to ensure the property is professionally cleaned if a tenant or resident of the property is diagnosed with COVID-19 prior to settlement.

These special clauses allow for a level of flexibility not previously seen in the context of property transactions. They are of benefit to both the seller and buyer as the possibility of settlement extensions may prevent contracts from being otherwise terminated.

How Do I Add A Special Clause To My Contract?

It is important to note that for contracts exchanged prior to COVID-19, there are unlikely to be any special conditions or force majeure clauses available to the parties to allow for delay without penalty. If you are in this scenario and are worried about how COVID-19 may affect your property transaction, it is recommended that you engage a solicitor who may be able to negotiate the terms of the contract.

If you are buying or selling a residential or commercial property and would like to speak to an experienced lawyer, contact our office on (07) 3876 5111 for an obligation-free consultation. We can assist in the drafting of special clauses and the negotiation of previously signed contract terms.

Written by

Kayleigh Whittaker, Senior Lawyer

NB Lawyers – Lawyers for Employers
[email protected]
+61 (07) 2102 7372

About the author

Kayleigh Whittaker is a senior lawyer on our Commercial and Property team who assists with Employment Law matters. With a high level of experience in commercial and retail leasing, voluntary and involuntary purchase and sale acquisitions property development and employee relations, Kayleigh provides practical advice to ensure smooth business transactions.