Certainly, everyone has been drastically affected by the COVID-19 crisis. Although we are all trying to work through this unprecedented event, everyone should take solace in the fact that we will get through it, and more importantly, we will find new and innovative ways for us to do business after the pandemic is over. Exciting and new techniques that we have learned to employ in order to get us through the stay-at-home orders when conducting business will translate into more effective means of completing commercial and residential real estate transactions, particularly in marketing and the settlement/closing aspect.
With regard to marketing, many innovative and forward-thinking realtors are employing virtual showings and now leveraging video and video conferencing to conduct their marketing efforts. People have wondered how anyone can view a house from a video or a virtual presentation, and then place an offer. Yet, it can be done and can be done very effectively. Similarly, Sellers have questioned how serious a Buyer can be who places an offer on a home without first physically seeing it. The answer here is also straightforward as it highlights the cooperation and coordination between a forward-thinking realtor and a technologically astute and experienced real estate attorney.
Simply, when a home is viewed virtually or on video, the Contract should reflect it. Specifically, in Paragraph 42 “Additional Comments” Section of the Standard Realtors Form Contract, it should be indicated by the realtors that the Buyer has three (3) business days from the signing of the Contract to physically view the property. This stipulation will coincide with the attorney review period. Moreover, such a stipulation also allows an offer to be submitted with regard to material terms such as purchase price, deposit, and closing date while affording a reasonable amount of time to actually view the property.
Depending on the situation, during attorney review, the Buyer’s attorney and Seller’s attorney can outline the time that Buyer shall be permitted to view the property and retain the right to cancel. Typically, attorney review would remain open until and unless such time Buyer sees the property and commits to same which gives both parties incentive to want to keep the time period to physically view the property short and to conclude attorney review expeditiously.
The attorneys should also account for a reasonable extension of time to the closing date in the event that there is a COVID-19 related delay with regard to meeting any of the contingency deadlines in the Contract of Sale such as inspections or obtaining mortgage approval. This way, despite the complexity and challenge of transacting at a time when not all businesses are up and running, and certainly may not be at the same speed, the parties can still move forward with the transaction acknowledging that there will be a certain amount of patience and cooperation to get things done in order to get to the closing table.
It is also important for real estate attorneys to embrace technology in how to transact moving forward. Videoconferencing and digital signatures in moving transactions should be employed. As New Jersey starts to reopen, there will be a return to people at the closing table; however, it should be noted that closings will conceivably be conducted differently in the coming months. If the Sellers are not already doing so, they will be closing by overnight mail to lessen the amount of people physically appearing at the closing. Similarly, only essential individuals will be permitted to appear at closings. Notably, Gov. Phil Murphy has passed the provisional electronic notary law that allows a procedure for notarization to be done digitally foregoing in-person closings. While this is new and untested, it offers an alternative way of completing closings, but it remains unknown how widely accepted this electronic notarization by lenders.
Ultimately, we often say that “sellers want to sell and buyers want to buy” which makes it vital in these unprecedented times to have innovative professionals that work together as a team to help facilitate your transaction regardless if you are a seller or a buyer.
Please contact Abdou Law Offices, LLC at (732) 540-8840 for more information about the contents of this blog or any of our other services.