Selling homes and writing real estate purchase contracts is challenging during the COVID-19 quarantine. Finding ways to list homes for sale and host open houses and showings is changing how real estate is marketed and sold. Consider the uncertainty in the world when drafting up purchase contracts for clients, and include clauses to best protect them during the pandemic and in the weeks that follow.
Deadlines to Watch
Many parties are part of a real estate transaction, and most businesses are facing closures and restrictions. As a result, milestone deadlines could be impacted and cause delays in critical steps, such as inspections and closing dates. Local regulations and lockdowns might make it impossible to perform specific necessary actions to move the deal forward. Including a coronavirus addendum in the contract ensures both parties agree to essential extensions. Also, the contract will define who keeps the earnest money if all else fails. Critical milestones to watch are home mortgage funding, appraisals, home inspections and repairs, title searches, and closing and move-in dates. An additional factor to consider is new construction, and the construction moratoriums occurring around the nation.
Get to Know Force Majeure Provisions
The meaning of force majeure is an unavoidable delay. Force majeure provisions are included in real estate contracts to excuse parties from performing contractual obligations because it was impossible because of an uncontrollable and unanticipated event. The global pandemic that began on March 11 is considered such an event. Many state Realtor® associations are suggesting agents specifically reference the coronavirus in these provisions. An essential aspect to include is the additional time necessary for parties to fulfill their contractual obligations. A deadline extension is agreed to by the buyers and sellers. If the deal falls through, the contract will state who will get the earnest money.
Homes With Tenants
Another consideration when selling homes during the quarantine is how long the tenants will remain at the property. With extensions to tenants and no eviction proceedings, move-in dates should change for the buyers. Clauses must be included to determine realistic times for moving in, and the recourse if the tenants do not leave within the designated time frame. For commercial properties, business interruptions and lockdowns also impact closing and move-in dates. Purchasers are protected when specific coronavirus clauses are included in the real estate purchase contract.
Keep Adding the Clause
Every state is opening up the quarantine at a different pace. As a result, this will impact both local and interstate real estate deals. Another outbreak could lead to additional lockdowns. With that in mind, it is smart to include a coronavirus clause in purchase contracts to ensure both sides agree to necessary extensions. Including these clauses will also reduce any confusion if the court is involved in a failed real estate transaction. Incorporate a provision that permits cancellation within a defined time frame if the purchaser is diagnosed with COVID-19.
Stay Connected With Professionals
During the confusing days of a pandemic, staying in touch with knowledgeable professionals in the industry is critical to remain on top of the latest developments. Both the National Association of Realtors® and state Realtor® organizations offer updates about facilitating transactions during the pandemic. Real estate licensing boards and the local MLS are excellent courses of information. Real estate attorneys are essential resources to protect purchasers. Agents can also turn to their real estate brokerages for education and updates. Better Homes and Gardens® affiliated real estate agents have access to the Be Better University® and a robust social media community to get more information.
Work With a Real Estate Attorney
Real estate agents should encourage purchases to work with an experienced real estate attorney. Sending these referrals to a local attorney is a way to promote reciprocal referrals in the future. Establishing a communicative relationship with a real estate attorney helps agents provide their clients with the highest level of service. Plus, an attorney is educated in the best ways to protect purchasers in any situation, including a global pandemic. The best legal advice source is an attorney, and that also helps protect agents from potential liability.
Selling homes during a pandemic is possible with guidance and a new approach. Protect clients by including a coronavirus clause in all real estate purchase contracts. Use this opportunity to become a trusted authority and connect with legal professionals who appreciate reciprocal referrals.