Transaction Guidance During COVID-19

Please note: for updated content regarding Transaction Guidance, please see Coronavirus: A Guide for REALTORS®.

Listed Properties | Properties in Escrow | Leased Properties

This is general guidance only. Members should consult their brokers, legal counsel, and government-provided public health information. In addition, check with your MLS for any changes to open house and showing fields, or other temporary rules in place due to local conditions.

In deciding how to address new issues that may come up in your day-to-day business, we urge you to find answers that will ensure first-class services to your clients, while also demonstrating care for the health and well-being of clients, agents, and the greater public welfare in reducing the risk of exposure to and spread of COVID-19.

Listed Properties

1. My seller doesn’t want any showings, what should I do?

A seller generally has control over how their property is shown and has agreed to certain marketing activity in the listing agreement. If the seller desires to prohibit in-person showings, get those instructions in writing and consider an addendum to your listing agreement to extend the listing.

If the seller wants to cease all marketing efforts, talk to your MLS provider about a “temporarily off market” feature.

2. Should we continue to hold open houses during the COVID-19 pandemic?

Please read OPEN HOUSE GUIDANCE DURING COVID-19 for guidance on this issue.

3. May I limit in-person showings to pre-qualified buyers?

Yes. Both listing and buyer’s agents may ask if a buyer is pre-qualified to purchase and limit showings to qualified buyers. Be sure to ask all buyers for a pre-qualification letter to avoid a potential Fair Housing violation. Keep in mind that it may be difficult for buyers just entering the market to obtain a pre-qualification letter given the current circumstances, as many mortgage companies have been impacted by the pandemic with high volumes of refinancing applications and other operational issues.

4. May an agent require an individual complete a COVID-19 screening questionnaire before showing an individual a property?

Yes, it is reasonable to screen individuals for COVID-19 prior to showing an individual a property, but be sure to require all individuals to complete the questionnaire to avoid fair housing issues.  Keep in mind that self-reporting may provide limited assurance, as some individuals with the virus are asymptomatic or do not realize they have symptoms. Therefore, even where a COVID-19 screening questionnaire is used, agents should be sure to take additional precautions, and continue to follow the CDC’s recommendations, including social distancing (maintaining a distance of 6 feet or more between individuals), requiring guests to wash their hands or to use an alcohol-based sanitizer immediately upon entry, and removing shoes/covering with booties, to avoid exposure to, and spread of, COVID-19.  

5. Are there any risks or potential liability to showing a property to a buyer virtually?

Buyers have purchased properties “sight unseen” for a variety of reasons long before this pandemic. Virtual, online video tours are tried-and-true alternatives to in-person showings. Others are allowing the seller’s agent to use a video-conferencing app like Skype or FaceTime to virtually show a property in real time.

Unlike an in-person showing, a buyer purchasing a property without physically visiting it is relying on photos, livestreaming, or online virtual tours. Therefore, it’s a good idea to include language in the purchase agreement that acknowledges that the buyer – not the listing broker, agent or seller – is responsible for personal verification, walk-throughs and professional inspections to confirm condition and that any given property is satisfactory.

6. The board of the condominium building where I have a listing just closed the building to visitors, including real estate agents showing properties. Can they do that?

These are unprecedented times, and we are hearing instances of homeowners associations restricting access to common areas. Authorization to implement such restrictions should be captured in the building’s Covenants, Conditions and Restrictions (CC&Rs) document. If the homeowners association is so authorized and if your client’s unit is accessed via a common area (building lobby, elevator and/or hallway), then the homeowner association may have the right to restrict visitors. This is a good time to use all the technology available to you, including virtual tours, to continue to show the property.

7. I have an offer to present to my seller, but my client is self-isolating and does not want to meet in person. How can I present the offer?

You can present the offer virtually. Consider virtual options that allow you to see your client face-to-face while also sharing a document so you can explain the offer. Web conferencing services like Zoom (http://www.zoom.us) and GoToMeeting (http://www.gotomeeting.com) and many others have this capability.

8. Does the fact that someone had COVID-19 in the home create a stigmatized property? Does it need to be disclosed?

Generally speaking, state law will govern what is defined as a stigma on property, and what needs to be disclosed. Currently, there is no evidence to suggest that the coronavirus survives on surfaces that are cleaned and disinfected per the CDC’s recommended protocols.  

Properties in Escrow

1. What additional terms should I add to a purchase agreement, in case there are delays due to coronavirus-related closures or government orders?

An extraordinary event, like an epidemic or government order, that could affect a transaction is sometimes addressed in a “force majeure” clause allowing a party to suspend or terminate performance when circumstances which the parties could not have anticipated, or which are beyond their control, make performance of the contract impossible or impracticable. Some, but not all, purchase agreements may have such a clause which can help guide the parties and the transaction to move forward or not.

A more specific addendum addressing potential coronavirus-related delays is a good idea. Many brokerages and REALTOR® associations have recently released such an addendum for their agents and members to use in extending the close of escrow date if necessary. These addenda address concerns such as: a lack of inspectors or appraisers; a party’s inability to travel to sign documents; a party being subject to a mandatory quarantine; and closings of or delays in related government and business services such as closing of lenders and title/escrow companies. An addendum could also address the buyer’s loss of income due to COVID-19 related circumstances, and what happens to the earnest money deposit should the parties ultimately agree to cancel the agreement.

2. Can my sellers cancel a purchase agreement because they don’t want vendors/inspectors coming through the home?

It’s not unreasonable for individuals to self-isolate in these unusual times due to their age or underlying health concerns. Every transaction and every purchase agreement is different. Sellers should consult legal counsel to determine their options for canceling and what penalties, if any, they could incur.

Alternatively, you could seek an extension of the buyer’s due diligence period by a written addendum explaining the special circumstances. Check with your broker, or the state or local REALTOR® association for an addendum that addresses common coronavirus-related issues that may come up during a transaction.

3. My clients cannot travel to the U.S. due to travel restrictions; how can we close the transaction?

First, inform the other party’s agent and title company about the situation. Consider execution via electronic closing if available in your state. If your client wants to move forward with the transaction but is unsure when they will be allowed into the U.S., then you and your legal counsel could draft an addendum extending the closing date. Or, if your clients are near a U.S. embassy or consulate, they may be able to execute the documents abroad. According to the U.S. Department of State, notarizing officers are available at any U.S. embassy or consulate, and services are available to both U.S. and non-U.S. citizens. Check with the title company to discuss these options.

4. We are getting close to the closing date, but my clients are nervous about leaving their home to sign documents at the escrow company’s office. Can I force them to attend the closing?

Different areas of the country are experiencing different restrictions on daily life, so first and foremost be sure to consult your local and state health departments for any such restrictions that might impact real estate closings. The escrow company may be able to provide guidance and assurances as well, in terms of steps they’re taking to protect the parties to a transaction during a closing. Several states have adopted remote notarization laws, and others have enacted remote notarization in emergency orders, so that may also be an option to move the transaction forward. Find out more about remote notarization in this video and see how remote notarization works here.

5. Will mortgage approvals be delayed?

Possibly. Talk to the lender immediately about how the timing for mortgage approval will be impacted by the pandemic and specifically how they’re addressing issues such as the high volume of refinancing applications, appraisers who may not be able to access properties due to local restrictions, and underwriting offices that may be short-staffed.

6. Will recording be delayed?

Possibly. Check with the escrow or title company and find out if the local recorder’s office uses electronic recording, and if so, whether the title company is equipped to record the deed electronically. If government offices in your area are open and functioning, then the deed should be able to be recorded.

State and local REALTOR® associations are asking governments around the country to consider real estate-related services as “essential services” during any government shut downs. However, the parties should be prepared for a recorder’s office to be short-staffed or closed due to coronavirus-related issues or government orders. In this instance, an addendum to the purchase agreement could be drafted to address the issue of a disruption to the final recording due to coronavirus-related issues or government orders. Such an addendum should address who will bear the cost of any “gap” title insurance between the closing and recording.

Leased Properties 

1. The tenants in my client’s property do not want prospective tenants to view the property out of concerns for coronavirus. Can they prohibit that?

If the tenants are quarantined or self-isolating at the request of medical professionals due to having or being exposed to the coronavirus, it’s in everyone’s best interest to allow the 14-day quarantine period to end before showing the property.

If no such impediment exists, consult the terms of the lease and state law for any restrictions on showings. Generally speaking, the tenant does not have the ability to prevent showings. However, in this unique circumstance, there are some options to consider in the interest of everyone’s safety. You could obtain a written statement from the prospective tenant that they have not traveled abroad in the last 14 days, and do not exhibit any symptoms. You could assure the tenant that all hygienic precautions will be taken such as wearing a face mask, gloves and/or booties (if available), and sanitizing their hands. Or, you may be able to negotiate for a photographer to access the property, taking necessary hygiene precautions, or to arrange for a virtual tour to be made of the property in lieu of public showings until the health crisis is over.

2. The tenants in my client’s property are under quarantine and the lease is ending. What can we do?

The coronavirus pandemic is a genuine public health issue, and has resulted in a state of emergency at the national level. Numerous states and counties have similarly declared states of emergency. Be sure to follow any local or state emergency mandates regarding quarantines or sheltering in place. In addition, several jurisdictions across the country have suspended eviction and foreclosure proceedings.

If a tenant or anyone living in the property is under quarantine for COVID-19 illness or exposure to the coronavirus, they should be allowed to remain in place for the duration of their quarantine, which is currently a 14-day period. If the lease agreement calls for penalties for failure to vacate the property, the landlord may exercise discretion in choosing to enforce it or not. The landlord and tenant could agree to additional 14 days’ of rent, or however long the holdover is.

You may recommend that the landlord have the property professionally cleaned and disinfected following the CDC’s latest guidelines prior to the next tenant moving in.