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With the current COVID-19 pandemic, the federal government has labeled residential and commercial real estate as an essential business. Yet, COVID-19 has changed how real estate is conducted not only with how Realtors are showing properties but also how real estate transactions are closed.

One thing is certainly sure: being an “essential” business does not necessarily mean business as usual.

Pre-Closing

The New National Association of Realtors (NAR) guidelines follow and strictly adhere to all CDC safety guidelines. NAR supports and encourages that all brokerage firms order their agents to shelter in place and avoid all social interaction.

Such stay at home mandates and social distancing regulations have pushed real estate agents to become creative. Instead of having open houses, real estate agents are using virtual property showings, and Facebook live open houses. There are programs for customers to even design their home using digital tools, watching videos of the construction as their property is being built. Some Realtors are doing initial showings over video chat services like Face Time or Zoom.

While closings where buyers had never visited the property are not new, when a buyer purchases a property without physically visiting, relying only on photos, livestreaming, or online virtual tours, it is advisable for agents to include language in the contract indicating that the buyer acknowledges and accepts responsibility for personal verification, walk-throughs and professional inspections to verify that the condition of the property is satisfactory.

Contract

Perhaps the real challenge COVID-19 poses to homebuying is not necessarily shopping for the home—rather, it is closing on one.

Issues with contracts focusing on force majeure clauses, or clauses that provide for a delay or opportunity to get out of underlying obligations in the event of unforeseen or uncontrollable events have been an emerging issue during this pandemic. The language of these clauses is key as to its potential enforceability.

The development of the COVID-19 Extension Addendum to Contract allows for time periods and dates to be extended as a result of the Coronavirus pandemic.

Closing

Once contract issues are overcome, the closing itself has evolved due to this crisis.

Check with the escrow and/or title company

First, make sure that the title and/or escrow company is capable of handling the closing. Specifically ask whether they have online notaries. Then, find out about whether the local recorder’s office uses electronic recording and whether the title company is equipped to record the deed electronically.

Many documents in the closing process require a notary, and notarization is normally required to be done-in person. The Florida legislature and Governor signed into law effective January 1, 2020, a new law that allows for what is called remote online notarization (RON). This is a huge game-changer in the State of Florida, particularly in the area of real estate closings. No longer do parties all have to get together at a certain set time around the conference room and execute documents. Now, from the comfort of your own home, provided that you have your own laptop or smart phone, you can execute documents online and remotely and have those documents notarized. While the technology is new, it is not that new. It is the same technology that is used to validate your passport or driver’s license when you go through security at an airport. This validation technology is now being used for remote online notarization (RON). Our sister company, Weston Title & Escrow, has RON capabilities and  we have remote on-line notaries available at Oppenheim Law.

If, for example, you are in another state and are closing on real estate located in Florida, or, perhaps, you are in a profession (such as being a doctor and on call) that makes it difficult to attend  a closing, you can now  remotely video into the closing  and notarize your documents from the comfort wherever you might be. Documents are produced online for your review, and at the point that you are prepared to execute those documents, you can do so remotely. A notary is present at the time online, not physically with you, and that notary is then able to confirm and validate that you executed the documents without any duress or coercion.

There is a caveat, however, and that is that while remote online notarization, in theory, should work all over the world, it really is more of a domestic service for people within the United States. It is difficult for the technology, at this stage, to validate foreign credentials.

Appraisals and home inspections are other aspects of residential real estate closings are evolving during this pandemic. The Federal Housing Finance Agency is allowing alternative appraisal methods such as “drive by” appraisals where appraisers drive through the neighborhood and walk around a property without going into it. They are also doing “desktop” appraisals using public data to generate property values.

Further Real Estate Etiquette Post Quarantine

As things go back to normal and restrictions lift, Realtors will have to adjust to a new etiquette, both to avoid re-spreading the virus and to provide peace of mind to all parties involved. The objective is to facilitate the adjustment to a more socially isolated way of transacting real estate business.

Open houses should not allow more than 10 people inside of a property at the same time. Moreover, listing agents should try to require sign-up for potential buyers so only real potential buyers get access to the property. This is not the time to go out window shopping.

Clean and disinfect frequently touched surfaces and request visitors to wear masks and sanitize their hands before entering the property and before they leave. Realtors should provide hand sanitizer as you cannot rely on the seller’s supply.

Send emails and texts requesting visitors to leave children at home.

These are unprecedented times, and some homeowners’ associations are restricting access to common areas as part of community efforts to prevent the continued spread of COVID-19. Contact the association and ask about their protocols.

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

Additional Help for Small Businesses including Realtors.

No Doc Stamps for CARES Act Loans, including PPP loans.

The Paycheck Protection Program (“PPP”) included in the “CARES Act” allows businesses with 500 or fewer employees to receive federally guaranteed loans to pay for certain expenses in an effort to keep these small businesses afloat during and immediately after the pandemic. As Florida businesses rushed to apply for these PPP loans, potential expenses for these loans surfaced. For instance, the State of Florida imposes a documentary stamp tax on promissory notes and other written promises to pay a fee at the rate of 35 cents per $100 of principal, subject to a maximum tax of $2,450. This additional expense is a real burden for small businesses in these trying times.

Responding to those concerns, Governor DeSantis issued Executive Order Number 20-95, which provides that the Florida documentary stamp tax would not apply to any of these loans.  It should be noted that the executive order was explicitly limited to Title I of the CARES Act, which governs the PPP loans and does not apply to loans for large businesses.