Real Estate Advice
Apr 01, 2020 03:17PM
By Pete Sabine
Real Estate Advice
Buying or selling a home during the COVID 19 Crisis
From time to time, “black swan events” overtake the ability of parties in a real estate transaction to allocate the risk of nonperformance. Such events are often addressed by a “force majeure” clause that allows a party to suspend or terminate performance when circumstances that the parties could not have anticipated or are beyond their control make performance of the contract impossible or impracticable.
The current global Coronavirus (COVID-19) pandemic has the potential for unprecedented impacts on real estate transactions, including travel restrictions, shelter-in-place government required isolation, and closure of both government and private offices required to fund, close, and record real estate transactions.
In the event compliance with purchase agreement contingencies, contractual obligations, or the close of escrow is not possible or practical as a result of unforeseen circumstances related to the COVID-19, such as a buyer’s or seller’s inability to travel to sign documents, closings of or delays in related government and business services, including delays by or closing of lenders, title/escrow, county assessor/recorder, or otherwise, the parties to the real estate transaction should consider incorporating these provisions as a part of the purchase agreement:
1. In the event a delay occurs that affects the Close of Escrow date due to any reason related to COVID-19, Buyer and Seller shall agree to extend the Close of Escrow date up to ___ days to allow additional time for either party to perform.
2. In the event a delay occurs that affects a contingency removal and/or contractual obligation by either party due to any reason related to COVID-19, Buyer and Seller shall agree to extend the contingency removal date and/or contractual obligation date up to ___ days to allow additional time for either party to perform.
3. The Loan Contingency shall remain in effect until the lender delivers loan funds to Escrow.
* This protects the buyer in the event the buyer incurs a loss of income or employment during the transaction escrow.
4. Regarding Closing and Possession, Seller reserves the right to rent back the property from Buyer up to ___ days from Close of Escrow. Seller shall deliver to Buyer a written notice to exercise rent back option and specify the Occupancy date no later than ___ days prior to Close of Escrow.
* This allows the seller to adjust timing to vacate the property, confirm moving arrangements, and prevent additional costs for interim housing before moving to their new home.
Pete Sabine. Call or Text 925.297.5335
Compass. License #00889760