Facilitating New Yorkers' real estate moves throughout the Coronavirus crisis has been a harrowing tightrope walk. But with the aid of my extraordinary real estate attorneys, we have come up with some seriously funambulistic strategies to keep closings on track, making sure everyone has a home in which to feel settled and safe.
As we continue to navigate this new reality together, here are some beneficial insights should you find yourself in an impacted real estate transaction.
3 NEW THINGS YOUR ATTORNEY MIGHT ADD TO A CONTRACT:
Covid-19 protective provisions to allow for pandemic-related delays without triggering default.
2. Iron-clad closing dates to protect buyers and sellers from being trapped indefinitely in a delayed contract.
3. Funding contingencies - In the event the bank fails to fund the loan for any issue of buyer’s finances or employment status, the buyer has the right to cancel.
1. Most management companies are cooperating and sending board minutes and due diligence questionnaires by email, sometimes requiring signed confidentiality agreements to do so.
2. Pay close attention to whether any owners in a building have become delinquent on their maintenance payments as a result of Covid-19. Be mindful that planned renovations and delivery of new developments that are under construction may be delayed.
3. Many physical inspections are now happening with masks and gloves and 6-foot distancing. If not feasible, an inspection contingency should be negotiated in the contract.
Deals Already in Contract
Although the world is locked down, there is currently no new legal right to cancel, as real estate contracts in NYC rarely included a force majeure clause before March of this year.
Commitment letter and board application due dates are being voluntarily extended out of necessity, and it has become nearly impossible for either party to enforce closing dates with a "time of the essence" letter. With appraisals, move-outs, move-ins, walk-throughs, and remote closings all taking more coordination and consideration, some delays are inevitable.
Other delays are being orchestrated by nervous buyers who can essentially delay the closing indefinitely. So many sellers are opting to renegotiate signed contracts, leveraging a discount to encourage everyone to move forward as planned.
We are keeping close tabs on all closing data and will be happy to share the stats with you.
BOARD PACKAGES are now being emailed or completed on an online platform such as "Board Packager", instead of being hand-delivered. Hopefully a step of progress from our arcane past.
BOARD INTERVIEWS are being conducted (though not recorded) online.
VIRTUAL FINAL WALKTHROUGHS are trending, with either the broker being physically present and the buyer on FaceTime, or vice versa. If a remote walk-through proves impractical, escrow holdbacks are being put in place to ensure the property is delivered per the contract terms.
Some buildings have hit “pause” on all move-ins and outs. If a buyer needs to close but the seller can't vacate, the attorneys can negotiate a POST-POSSESSION agreement allowing the seller to stay and pay a per diem rate until the restrictions are lifted. In my personal experience, many buildings are allowing moves with increased precautionary measures. People always need a place to live especially now, so this accommodation is allowing plans to remain somewhat intact.
ARE, THANKFULLY, STILL HAPPENING! All parties (attorneys, lenders, payoff banks, transfer agents, title companies) that would formerly have been gathered around the closing table now have to agree to implement "in-escrow" or "virtual" closings. Some were resistant at first to the new procedures and extra work (you know: old dogs/new tricks), but it's getting easier.
The participants appoint a party to act as an "escrow agent". Each party signs and notarizes their respective documents, which can be signed in counterparts. The escrow agent collects all documents and monies on behalf of the parties and holds them in escrow. Once all docs and funds are received and closing conditions are met - the transaction "closes".
The parties do not physically gather but the closing funds the same day. The parties pre-sign documents and exchange funds via wire. The docs may now be signed in front of a notary via FaceTime/Skype/Zoom, an accommodation recently authorized by Governor Cuomo.
Buying and selling real estate during such a period of uncertainty may seem risky, but navigated thoughtfully can also reap great rewards. Align yourself with the right professionals and prepare to be the envy of everyone at that dinner party in 2025 that finds out you purchased during the pandemic. The market is changing (although it may not be as dramatic as the news will have you believe), and we are tracking developments daily. So please be in touch, and we will happily share the details in real time.
Compass is a licensed real estate broker and abides by Equal Housing Opportunity laws. All material presented herein is intended for informational purposes only. Information is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description. All measurements and square footages are approximate. This is not intended to solicit property already listed. Nothing herein shall be construed as legal, accounting or other professional advice outside the realm of real estate brokerage. All Coming Soon listings in NYC are simultaneously syndicated to the REBNY RLS. Compass makes no representation or guarantee that Coming Soons are available in your region, or that its use will result in the benefits described herein.