What if you lose your job to COVID-19 while buying a property?

By Tracy Pratt, Lawyer at Hillhouse Legal Partners
| 3 min. read

Key takeaways

  • If there is even the slightest chance of you losing your job or having your hours cut back, you should seriously consider whether buying property is wise at this time.
  • If your personal financial circumstances change and finance is withdrawn at a point where the contract is no longer conditional on finance approval, you would still be obliged to complete the contract.
  • While there is no way to completely remove all risks when proceeding in a conveyance during the COVID-19 pandemic, the best way of minimising the risks is to have special conditions inserted into your contract.

I previously discussed the need to allow longer time than usual to complete your contracts of sale during COVID-19, particularly as there may be delays caused by things outside your control.

I specifically mentioned delays in finance or pest and building inspections, but what happens if your personal circumstances change, particularly if you become one of the thousands of people forced out of work or suffering a pay cut by the pandemic?

Although it would appear the worst of the COVID-19 pandemic is behind us, we never know what the future holds and it is always best to be cautious in property dealings at any time.

So, the first thing I should say here is that if there is even the slightest chance of you losing your job or having your hours cut back, I would suggest you seriously consider whether buying property is wise at this time.

But even if you think your job is perfectly safe, the unexpected can happen and you need to protect yourself in advance.

Even if you obtain finance approval for your purchase, you might find it is withdrawn prior to settlement as most financial institutions will reserve the right to do that at any time prior to settlement for any number of reasons.

Chief among them is if your personal financial circumstances change or the value of the property is adversely affected.

And if that finance is withdrawn at a point where the contract is no longer conditional on finance approval, you would still be obliged to complete the contract.

Under those unfortunate circumstances, if you do not have the money to pay the balance purchase price, the seller may force you to abide by the contract and keep your deposit and even claim compensation for things such as loss on resale.

Even if they do not force you to abide by the contract, you will probably have to say goodbye to your deposit.

Once you find yourself in this position, it will most likely be too late to do anything about it. So, my advice during COVID-19 is to plan for the worst and hope for the best.

While there is no way to completely remove all risks when proceeding in a conveyance during the COVID-19 pandemic, the best way of minimising the risks is to have special conditions inserted into your contract from day one.

This is where you definitely need to get advice from a conveyancing expert such as me.

Give me a call on 07 3228 6133 or send me an email at [email protected] and I would be more than happy to steer you through what could be a very complex situation.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.