Your COVID-19 Closing Related Questions, answered by Berlin Patten Ebling

We know you are all tired of receiving COVID-19 related bulletins, but due to the flood of questions we have received on the topic, we felt that this would be a useful and timely topic. This Q&A will answer some of the most common questions we have received over the last few days. We will try to keep the answers brief, and urge you to contact your real estate attorney for more detailed answers regarding your specific contract situation. This is not intended to be legal advice but only our general observations. The law and case interpretations will likely develop and change to address these issues.

Q: Assuming my buyer is beyond their inspection windows, can my buyer (or the seller for that matter) cancel the contract due solely to COVID-19 concerns?
A: In our opinion, the answer at this time is no. The COVID-19 virus, at this time, does not rise to the level of a “Force Majeure” event that prevents a party from performing its obligations under the contract. The parties are still obliged to “exercise reasonable diligent effort”. Further, as long as services, insurance, required approvals essential to Closing (which may also include banking, funding, recording, etc.), are not disrupted, delayed, or prevented, then “the show must go on.”

Q; But I was told the Force Majeure provision of my contract absolutely allows my client to get out of the contract?
A: No one should be giving advice in absolutes at this point. The contract does not specifically speak to a pandemic (it could have), and settlement services are readily available at this time. The only thing holding back most parties right now are justifiable COVID-19 related concerns. But Force Majeure generally speaks to impossibility of performance, not a lack of desire to perform on the part of one or more parties due to COVID-19 related concerns.

Q: So then what is Force Majeure and when/how might it apply in connection with COVID-19 concerns?
A: This is an extremely complex question and one we urge you to speak with your real estate lawyer. Generally speaking, Force Majeure is an “Act of God” type event that essentially prevents performance (an admittedly overly simplistic, if not incomplete explanation of the concept). If such an event occurs, then most standard contracts provide for a mechanism to extend the closing date automatically for a period of up to 30 days. Whether COVID-19 gets to the point that it might be considered a Force Majeure event is anybody’s guess, and it is entirely possible that the courts will need to make that decision.

Q: Would a positive test or mandatory quarantine qualify as a Force Majeure event?
A: A positive test might if someone cannot physically complete their closing. A mandatory quarantine on the other hand might depend on the ability of the party to execute closing documents. This is uncharted territory and beware of anyone who provides definitive answers to these types of questions.

Q: Well, then can my client cancel the contract due to recent events pertaining to the stock market?
A: No. A parties’ decision to place and keep money in the stock market does not excuse performance, no matter how the market performs or why.

Q: Are closings still taking place?
A: Yes, but closings look a bit different than they did just a week ago. Most closing agents are taking the typical CDC recommended precautions, but some (such as BPE) are going even further. E-closings (to the extent possible) are being strongly encouraged (if not required), and in person closings have been streamlined to speed up the document signing process. Closing documents are now being pre-approved by buyers/sellers in advance of the closing, so the time spent in the closing room for document signing has been drastically reduced. So called “point and sign” closings are becoming more common for obvious reasons.

Q: Should I attend the closing?
A: Tough call. We recommend that you consult with your client and ask them if they want you to attend or not. If the closing agent has streamlined the document signing, the “closing” will be very quick (ideally less than a few minutes) and therefore there may be little need for your attendance at closing. Now of course you can always spend time with your clients pre-closing going through anything you feel is appropriate to discuss with them. The exchange of keys, documents, remotes, and other items can be made outside of the closing if you elect not to attend for health or other considerations.

Q: Should I use the new FAR addendum that was just put out yesterday?
A: It depends on what you hope to accomplish. For new contracts, the FAR addendum addresses challenges in securing financing due to COVID-19 issues. It does not address the unavailability of a party due to COVID-19 issues. If you want to get in front of the possibility of the need to extend due to a person being unavailable due to COVID-19 issues, we urge you to review our blog on the subject last week and the proposed language we suggested you consider.

Q: Then, when should I use the FAR addendum?
A: Use it when you are looking to extend an existing contract’s deadlines, or if you have a financed deal and your buyer has concerns that COVID-19 issues could delay or prevent funding of their loan. Note that since the addendum forces you to pick a date, you should pick dates as far out as possible given the uncertainty of the current situation.

Q: What is RON and how can RON help to close my transactions.
A: RON is remote online notarization. RON was passed and went into effect early this year, but the rules to implement RON by the legislature were not promulgated. That has since changed, and many closing agents (including BPE) are moving rapidly to implement RON into their closing process (which would effectively eliminate the need for a party to physically attend a closing). To minimize the chances that your client’s closing might be interrupted, you should ask your closing agent (a) if they are cloud based and able to work remotely, (b) whether they e-record documents, and (c) when they will be in a position to implement RON to facilitate remote closings.

We know you have more questions, and it is likely that the answers to these questions may have raised even more questions. For this reason, we cannot emphasize enough how important it is for you to have your real estate lawyer assist you and your clients in navigating through these unique times.

Sincerely,
Berlin Patten Ebling, PLLC

This communication is not intended to establish an attorney client and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com

SARASOTA
3700 South Tamiami Trail, Suite 200, Sarasota, FL 34239
P (941) 954-9991 F (941) 954-9992

VENICE
247 Tamiami Trail South, Suite 201, Venice, FL 34285
P (941) 955-9991 F (941) 484-9992

LAKEWOOD RANCH
8433 Enterprise Circle, Suite 100, Lakewood Ranch, FL 34202
P (941) 907-9022 F (941) 907-9024

TAMPA
442 West Kennedy Boulevard, Suite 312, Tampa, FL 33606
P (813) 467-7500 F (813) 251-1662

Did you find this real estate law content useful, but need actual legal counsel?

Speak to a real estate attorney!

, , , , , , ,

“Save Our Homes” And Portability

  On Election Day a couple weeks ago, Florida Amendment 5 was approved with strong support. This amendment extends the period during which property owners in Florida may transfer their accrued “Save Our Homes” benefit to a new homestead from two to three years. Beginning January 1, 2021, an owner of homestead property will now…

Jump On The Refi Train, But Don’t Leave Your Estate Plan at the Station

  The mortgage business is booming in many parts of the country with historically low interest rates. However, one often overlooked consideration is the impact that refinancing your home could have on your estate plan. Most of the effect of a refinance on an estate plan will depend on the following factors: 1. How the…

Almost to the Finish Line…

Closing day is almost here! The loan is approved, the final wire has been sent, and Buyers cannot contain their excitement! Both the AS-IS Contract and the Standard FAR/BAR Contract provide the Buyers with the opportunity to conduct a walk-through inspection on the day of Closing or the day before Closing, to confirm that 1)…

Don’t let your Coach turn into a Pumpkin!

Here we are on All-Hallow’s Eve, so I witch you a Happy Howl-o-ween. If you work in the real estate industry, you have come to accept, warts and all, the current practice requiring buyers to wire the balance due at or before Closing. The need for this requirement arises out of the “I need it…

Fill in the Blank

One of the most important parts of any real estate contract where your buyer is relying on financing to purchase the property is the financing contingency. Since most buyers will need to borrow money to purchase that dream home, a financing contingency protects those buyers by allowing them to back out of the contract and…

The Perfect Date

Although you may not have signed up for a dating website, the key to a perfect end to a real estate transaction involves selecting the perfect date! Whether you are putting an offer together for your buyer, or reviewing an offer with your seller, it is important to consider the practical implications of the selected…

The Eviction Moratorium Impact On Your Next Residential Contract

  As a new investor, Stephen is purchasing his first investment property. He reviews the contract and notes Provision 6(b) is checked, indicating the property is currently occupied by tenants. Great! He thinks I can collect instant rental income. Stephen does not realize, however, that the Federal eviction moratorium is still in effect, and his…

My Cousin “Minny”

Your Cousin Minny dies in Florida leaving you Florida real property. Now you are tasked with how do you get clear title to the real estate to sell the property? A full blown probate or ancillary probate is costly and time consuming, but it may be the only way to clear title. However, you should…

Hurry, We Need to Sign…

When discussing a potential purchase with a client, you may hear, “It does not make a difference to us what type of contract we sign, we love the house and just want to make sure that we don’t lose it”. Stop! There are two standard forms, the FAR/BAR “AS IS” Contract and the FAR/BAR Standard…

Home Inspection Reports: A Life Isn’t Fair Teaching Moment

Mel and Dani are your typical first-time homebuyers. They have scrapped and saved for years to accumulate their earnest money escrow deposit and mortgage down payment. To keep down costs, Dani convinced Mel a home inspection was not necessary because the lender was performing a 4 point inspection. As a result, their contractual due diligence…

No Pets Allowed!

Stop me if you’ve heard this one before: After months of searching for the perfect Florida condo for your picky buyers, you have finally found the perfect unit that checks all of your buyer’s boxes. There is just one problem: NO PETS ALLOWED! As anyone who has ever had a beloved pet knows, pets are…

This Is Not A Bill

  Believe it or not, September is here and the football season is upon us!…. well maybe…hopefully? I am more excited than ever for the toe to touch the leather, as it will mean that things are that much closer to getting back to normal, or the new normal. However, all that glitters is not…

The Old Switcheroo!

  You have a Seller ready to list the residence for sale, you’ve confirmed that the Estate of the original owner who passed away has been opened, and a Personal Representative has been appointed by the Court. Your Buyer is an investor who works with a Limited Liability Company (LLC) who wants to buy the…

Prepare Your Buyer/Borrower for the Closing

  With the volume of closings that we have, we handle a lot of different personalities, situations, and behaviors when we go through our closing process. Being aware of these in advance, and perhaps trying to get ahead of the issues, can sometimes make the difference between a happy closing and a dramatic one. 1.…

My soon to-be-ex Needs to Sign What?

  Your friend of a friend from Michigan, Mr. Buyer, tells you he is newly retired, single, and ready to start the next chapter of his life in the Sunshine State, so he reaches out to you as his real estate agent to begin the property hunt. Two weeks later, he has found his dream…

Congratulations On Your Loan Approval… Now What?

Paragraph 8 FINANCING in both the “AS IS” and the “Standard” FR/BAR Contract* is the section of the Contract dealing with financing of a purchase by a Buyer. The purpose of seeking financing is to obtain approval for a loan, thereby permitting the Buyer to close on the Contract. This is defined under the Contract…

Survey Says…

    So what exactly is a survey? A survey is a drawing made by a surveyor which outlines the boundaries and features of your property, including the house and other improvements. It shows things like where the house sits in relation to the property line, where your driveway starts and ends, if your fence is actually on…

Making a Listing, and Checking it Twice

So you just finalized a listing agreement for an exciting property that you can’t wait to advertise to the world for your customer. Like any good listing, you really want this one to stand out among the other similar listings in the area. After spending time at the property and with the owners it is…

Runaway Buyers: Seller’s Options When Left Alone at the Closing Table

What happens when a buyer leaves a seller at the closing table and it is not related to unforeseeable circumstances? In Florida, the FAR/BAR contracts are the mainstream residential transactional sale agreements and they generally provide the parties with a reasonable expectation of their rights and remedies upon a buyer or seller default. When Johnny…

1 Step Forward, 2 Steps Back…

Florida law allows a residential property owner the ability to pull a permit and serve as an Owner-Contractor so long as the residence is for occupancy of such owner and NOT offered for sale or lease (Note: the owner is also required to sign a disclosure statement confirming the same at the time the permit…

Time (Of The Essence) Is On My Side, Yes It Is…

Contracts are full of language that may seem unimportant, boilerplate, confusing, or just plain useless. Real estate contracts are no different. The standard FAR/Bar forms for sale and purchase of residential property, “AS IS” contracts, and even vacant land contracts all contain provisions that you see all the time, but rarely have to really address.…

When In Doubt, Write It Out…

We have been asked recently whether an agent’s email containing a counteroffer is binding. That’s an interesting question in itself, but it also opens up broader questions: what are the legal implications of acting as someone’s agent, and are there any “best practices” that can help keep an agent out of trouble? Generally, an agent…

When Estates Become Part Of Your Closing

We routinely get the frantic call from a realtor or closing party to address a title issue or incident involving a deceased buyer or seller, or even a prior party further back in the chain of title. Those inquiries come with the urgent questions: Can you fix it? Can it be done before closing? How…

Lending a Hand on Loan Approval

During these uncertain times, providing buyers with the confidence and security to move forward with a transaction is paramount. A well-drafted offer can lead to a smooth closing process while protecting the buyer’s interest in the event of unforeseen issues. Section 8 of the Residential Contract for Sale and Purchase (the “Standard Contract”) and the…

E-Sign Me Up

  Where would we be without technology? The current pandemic has demonstrated how integral technology is to thrive in the real estate business. Such a vast array of tasks can be done electronically: sending wires, signing closing documents, remote online notarization, virtual open houses, signing contracts, etc. When a buyer and/or seller signs a real…

All That Glitters Is Not Gold

The COVID-19 pandemic (a/k/a the “coronavirus”), has hit very close to home when it comes to homeowners being able to make their mortgage payments on time (or at all). Where many Floridians are being furloughed or laid off from their employment, there is increasing anxiety over how that 1st of the month mortgage payment is…

Commercial Leases & the COVID-19 Pandemic

Many of you have asked us about acquaintances, friends, or family members who cannot pay rent due to COVID-19. Some have been forced to shut down, others who remain in business simply cannot pay their bills. What is a tenant supposed to do? Consider the following: Some tenants may want to just stop paying rent.…

Da do Ron Ron Ron, Da do Ron Ron

By now you have probably heard of Remote Online Notarizations, commonly referred to as “RON.” RON is being hailed as a tool that will revolutionize the closing process, and some day it will. But for now, the process of conducting closings using RON is going through some growing pains as we all race to understand…

COVID-19 Closing Conundrum…

The impact of the coronavirus (COVID-19) on business relationships is still a huge unknown, and we are all aware of how much uncertainty it has injected into our daily lives. Fortunately, the good people at the Florida Bar and the Florida Association of Realtors had the foresight to consider an event like this when drafting…

Coronavirus (COVID-19): Is your closing at risk?

The team at Berlin Patten Ebling, PLLC is extremely sensitive to the impacts of the coronavirus (COVID-19). The effects of COVID-19 have prevented or delayed performance across virtually all sectors. Fortunately, we have yet to see very little impact to the local real estate industry and we are still seeing robust market activity, great attendance…

Lien Back…

  Did you know that Florida law allows municipalities to put a lien against property without actually recording the lien until they feel like it? And if these liens are not recorded at the time a buyer purchases the property, they will not show up in a standard title search. That means a buyer may…

Homestead Exemption Revocation: Welcome to Florida, Now Pay the Tax Man!

  Knock, knock, BOOM…this is the sound you hear when opening a notice of tax lien from your local property appraiser. The property appraiser’s letter states that you have 30 days to pay taxes, penalties, and interest, or there will be a tax lien filed on your home. There must be some mistake…how did this…

I Love You…Now Sign This!

  It’s that time of year again. Love is in the air, and spouses all over the state of Florida are scrambling to come up with the perfect way to show their significant other that they love and appreciate them. For far too long, spouses have stuck to the same unimaginative and uninspiring routine of…

It’s Not Over Until It’s Really Over…Selling Real Estate After A Divorce

As you all know, real estate professionals constantly wear an abundance of different “hats.” Working in the real estate world demands that real estate professionals have at least a minimal understanding of a variety of topics including, but not limited to, family law, wills, trusts and estates. Even with divorce rates slightly declining, it is…

When Is It Critical To Review Your Estate Plan, and Why?

Just like other important life tasks, your estate plan deserves your time and attention. It’s important that you work with us to review your estate plan at least once a year. Think of this as your estate plan’s annual physical exam, and remember-prevention is the best cure. An annual exam isn’t necessarily the only time…

Color Of Authority To Sign Listing Agreements & Contracts

A contract (which, for purposes of this Blog shall focus on Listing Agreements and Residential Contracts For Sale and Purchase), is only as good as the authority of the Seller and/or Buyer to sign them. Many times, I receive calls from agents asking who has authority to sign the Listing Agreement, and then the Contract…

“Trim Notices & Property Taxes-What to Expect”

At the end of August every year, while most of us are gearing up for football season, County property appraisers across the state are sending out TRIM notices. The TRIM (Truth in Millage) notice or Notice of Proposed Property Taxes is the document that provides a home owner with the updated assessed value (the taxable…

No Leaks, No Damages, No Problems!

  Congratulations!  Your client entered into a new Standard FARBAR Contract on the purchase of a single family home in Sarasota.  The only contingencies are inspections and marketable title. Your client immediately hires a professional home inspector to conduct their home inspection.  During the Inspection Period the home inspector provides a “clean” report only notating…

The Repair Escrow Agreement: Having Your Cake and Eating It Too

In Florida, more likely than not a buyer will identify his or her requests for repairs early in a real property transaction and prior to closing pursuant to the standard FAR/BAR contractual provisions with little fanfare. Nonetheless, as in life and in realty, there are unforeseen circumstances where a closing extension would be difficult and…

“Options? We All Got ‘Em, We All Want ‘Em, What Do We Do With Them?”

We see option contracts for real estate purchases frequently, and we run into problems with those contracts just as frequently. In this blog we’ll go over what option contracts are, what they require to be effective, and we’ll identify some common pitfalls. An option contract is a promise by the owner of property to sell…

New Construction, Review Before You Execute

  New construction agreements can be extremely complicated and it is important that the buyer have a thorough understanding of the contract and terms prior to executing.  The construction agreements provided by developers are typically one sided and do very little to protect the buyer/owner in the event that an issue should arise.  It is…
Real Estate Firm

Your Condo Purchase-Treat It As An Investment

Condominium purchases by their nature involve property rights that are more complicated than typical single family lots or properties.  We have written several blog articles relating to investigations that buyers and their realtors should undertake prior to their purchase (links are included at the end of this blog). It is said that ownership of real…

Check Out My Title While BPE Resolves It!

One of the most frequent questions we receive from realtors involves the status of title to the property. The answer to the question “how is title” can be a source of great anxiety or a source of great relief. As a result, most people involved in any real estate transaction want the answer to that…

Not Quite Sure When A Contingency Ends? Read This!

We are fortunate to have holidays and weekends to provide us with time for relaxation, fun times with friends and family, and time away from work to recharge. Legal holidays and weekends follow a different rule for contract contingency deadlines. Throughout this week and into the weekend, while most of us will be celebrating the…

Balancing a Closing with Summer Vacation

During the summer when everyone is jet-setting on vacation, and year round as part time residents move in and out of Florida, we experience an increasing amount of closings where one or both parties cannot be physically present on the day of closing.  As this is a common occurrence, there are many ways to accomplish…

Breaking News! “RON” Remote Online Notarization is coming to Florida

  The much-anticipated remote online notarization (“RON”), is set to arrive in Florida as of January 1, 2020. Florida will join the ranks of twenty-three other states that have either passed or have pending bills that allow online notaries to perform notarizations anywhere in the world (Alabama, Florida, Idaho, Illinois, Indiana, Kentucky, Michigan, Minnesota, Mississippi,…

Hurricane Season: The Good, The Bad and Still Closing

Often, parties seeking to buy and sell real property only concern themselves with Florida’s Selling Season and do not take into consideration the other season – Hurricane Season.  Florida’s Hurricane Season is kicking off and now that Hurricane Irma is approximately two-years in the rearview mirror, Berlin Patten Ebling would like to remind our buyers…

Look Before You Leap…Into A New Listing!

Real estate transactions can often be quite complicated and confusing for even the most savvy of Sellers and their agents. You would think that the most basic and straightforward step in the process would be determining who are the owners and who has the authority to convey the property and sign related paperwork, such as…

LOOK BOTH WAYS BEFORE YOU WALK AWAY FROM A DEAL

While it may not happen often, on occasion we have experienced situations where one of the parties “walks” from the transaction.  In this instance, the buyer or seller is often left in a difficult position and wondering what remedies they may have against the breaching party, if any.  A well drafted contract will typically set-forth…

Foreign Buyers & Sellers-Speaking Their Language

In Florida we are fortunate to have many foreign buyers and sellers of real estate. Sometimes they show up on a realtor’s threshold and are ready to purchase a property to use as an investment, or a vacation home, or a reason to remove their money from their home country, or to house their children…

“Up a Stream without a Paddle-Closing without Title Insurance”

The immense value of title insurance has been well documented. Generally speaking, title insurance provides three somewhat distinct, yet significant coverage’s: Fatal title defects that could cause one to lose their property altogether, such as fraud, forgeries, inheritance issues, or execution/signing issues; Defects that could require the expenditure of significant amounts of money to cure…

Getting Up Close and Personal (Property)

When real estate agents are out and about showing homes, those homes are usually staged, lived in, and/or full of furniture, appliances, etc. So when agents get the property under contract, what exactly is conveyed with it? The “As Is” and Standard Florida Realtors/Florida Bar contracts are useful tools and have been drafted by attorneys…

DON’T BE CAUGHT WITH YOUR PANTS DOWN

Have you ever represented a Buyer that literally waits to the last second to inform you, via email, that they want to terminate a contract?  As a Realtor, what are your obligations?  Generally speaking your obligation (as Selling Agent) is to deliver the written notice of termination (or signed Release and Termination) to the Listing…

Look Out for Double Dipping Closing Agents!

Some closing agents are getting greedy and charging closing fees to both, the buyer and the seller. Unlike title insurance premiums, closing fees are not set by the Florida Department of Insurance, so closing fees vary depending upon the closing agent and the transaction’s complexity. Closing fees are charged by closing agents to cover the…

Is Waiting on the Association Estoppel Delaying Your Closing?

It seems like lately it is more and more the norm that closing agents are waiting for the management company, or homeowner’s association, to issue the estoppel letter for closing. What can you do to ensure the association estoppel doesn’t hold up closing?  Make sure you get the management company or homeowner’s association contact information…

When is a Loan Commitment Not Really a Loan Commitment?

As many of you are aware most borrowers receive a Loan Commitment from their lender setting forth the terms and conditions that have to be met in order for a loan to be granted/funded.  In most borrower’s minds, the Loan Commitment is the lender’s promise (commitment) to grant and fund the loan even though the…

Don’t Forget the Open Permit Search!

For financial reasons most parties do not perform an Open Permit search (which would include expired permits) until after the inspection period has expired.  This is a common mistake that generally leads to the buyers inability to object to an open permit issue at a later date.  The new FARBAR-2 Residential Contract for Purchase and…

Major Differences Between the As Is Contract and the Regular FAR/BAR Form

The As Is Contract and Regular Florida Realtors/Florida Bar Contract forms are essentially the same with the following exceptions: 1. Heading. Of course, the inclusion of “As Is” in the heading sometimes draws concern and can create minor angst for Sellers since they don’t want Buyers to get the impression that the Property is substandard.…

CRSP-12 and CRSP-12 Addendums Debut

Originally Published: 8/10/2012 Effective August 20, 2012, the FAR-9 Contract will be replaced with the Contract for Residential Sale and Purchase (CRSP-12). In addition, the Comprehensive Addendum (FARA-10) will be replaced with the CRSP-12 addenda. Please see the attached link to the summary list of the changes between the FAR-9 Contract and the CRSP-12 Contract.…

IMPORTANCE OF OBTAINING NEW SURVEYS AND HAVING THEM REVIEWED IN ACCORDANCE WITH THE FLORIDA REALTORS/FLORIDA BAR CONTRACT

Originally Published: 6/8/2012 The following are excerpts of a more comprehensive article previously published by Julie A. Horstkamp, Esquire, Berlin Patten, PLLC, Member of Sarasota Association of Realtors/Sarasota County Bar Association Joint Committee, and Chair of the Florida Realtors/Florida Bar Joint Committee. We receive a number of questions regarding the survey provision under the Florida…
Menu