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COVID-19 Addendum Available for Use

By: Hank Lerner, Esq. on in  | 

Editor’s Note: As the impact of COVID-19 (coronavirus) is fluid, information in this article was correct at the time of posting and may be out of date at the time you are reading it. For the most up-to-date guidance on coronavirus, please visit PARealtors.org/coronavirus.

On Thursday, March 19, Gov. Wolf issued an order that all “non-life sustaining businesses” in the state should shut down to slow the spread of COVID-19. Per that guidance, all real estate sales and leasing businesses have been ordered to close their physical locations until further notice, although the order “does not apply to virtual or telework operations (e.g., work from home), so long as social distancing and other mitigation measures are followed in such operations.”

As we understand the governor’s order, then, real estate brokers and agents can continue to conduct whatever activities they can remotely, but should not be in an office and should likely avoid going to client homes to conduct business. Keep in mind as well that most other real estate-related activities are under similar restrictions, so almost all third-party providers (lenders, appraisers, inspectors, contractors, title companies and even attorneys) will be affected in some way.

PAR has already been in contact with state legislators and the Governor’s office for further clarifications and will provide additional information as it becomes available.

Given the substantial problems this order will create with ongoing transactions, PAR is releasing a brand new COVID-19 addendum to the agreement of sale (Form COVID) so parties can agree to postpone contractual deadlines while the impacts of this situation can be assessed. This form allows the buyer and seller to agree that in the event performance becomes impossible or impractical either party can unilaterally invoke an automatic extension of all deadlines (the default is 30 days) that have not yet passed, including the settlement date. For example, if the Agreement was signed just a few days ago, pretty much every deadline would have 30 days added. If the parties are just a few days from settlement the addendum extends settlement by 30 days but doesn’t reach back and reset the inspection contingency or other deadlines that have already passed.

This form is basically a pause button. It gives the parties a set time to figure out a backup plan without being under the gun with immediate deadlines, but it doesn’t change anything else in the agreement and – let’s be honest here – may not actually give the parties enough time to restart the transaction and close by the extended date. Once it becomes clearer how things are going, it is likely that the parties will need to make further adjustments and extensions.

Any more specific changes to the terms of a transaction should be negotiated between the parties, and can often be accomplished through the use of PAR’s Change in Terms Addendum (Form CTA). We have amended Form CTA to add more blank space and more deadline changes to accommodate likely issues.

Three important things to remember here:

First, “impossible or impractical” does not mean “difficult or a bit more expensive”. If the parties can close a transaction within the existing terms they may be obligated to do so. A settlement may be next to impossible today, but things can change between now and the closing date. If the parties find that they could close with a different title company, they may be obligated to make that switch in order to perform. This could raise all sorts of thorny legal issues, so parties should definitely consult with a personal attorney if they have any questions.

Second, this addendum (and any addendum) will require both parties to sign off. Once the parties have agreed that either can trigger a unilateral extension either the buyer or seller can make that happen, but don’t think that a buyer could just grab this form and declare a unilateral extension. If you already know that things need to be extended and the parties are willing, the better approach would probably be to go right to the CTA and do the necessary extensions.

Third, if you were to submit an offer in the current market environment, be sure to evaluate the timelines in the sales agreement given the current market and do your best to include realistic dates. This addendum could be included from the beginning of the transaction in case those timelines still can’t be met, but it’s not an excuse to just accept the contract defaults if you know they’re unrealistic from the start.

Many brokerages and private attorneys have also created their own forms to address these issues. You are free to use whichever is available to you and best suits your purposes but in no circumstances should licensees be writing their own addenda and engaging in the unlicensed practice of law. Please remember that changing the terms of the sales agreement can have a ripple effect, the extent of which we can’t know yet. As such, we implore you to send your clients to an attorney if they have questions about this or any addendum that will change the terms of their agreement.

The COVID-19 Addendum is going to be part of the forms library for a limited time and will be removed once the world has returned to normal and toilet paper is on the shelves again.

As a final note, PAR is also releasing a Wire Fraud Notice (Form WFN) that had been scheduled for release later this year. This is a fairly straightforward notice to clients that they should beware of various scams and wire fraud issues. Given the high anxiety at the moment and the glut of both real estate and COVID-19 fraud emails, we’re bumping up the publication date to help remind clients to be extra careful with their electronic hygiene too.

Vendors will have the forms available in the next day or two, but in the meantime, PAR members can access them for download from the Standard Forms page.

More detail on what you can do during the pandemic can be found on PARealtors.org/coronavirus and will be updated with more information as we get it. In the meantime, wash your hands.

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Comments (36)

Comments

  • Weik, Thomas   March 19, 2020 at 9:07 pm

    Thank you for your quick response to the multitude of questions arising from COVID-19.

    Reply to Weik, Thomas
  • Garrett Smith   March 19, 2020 at 9:16 pm

    Thank you!

    Reply to Garrett Smith
  • Bowlin, Elizabeth   March 19, 2020 at 9:44 pm

    I can’t download the form. Is it actually available at this time?

    Reply to Bowlin, Elizabeth
    • Kevin Juliano   March 19, 2020 at 9:49 pm

      Hi Elizabeth – Yes it is available here on PARealtors.org. It has been shared with vendors and we are working with them to expedite uploads to their systems.

      If you’re having issues with downloading even if you’re logged in, please send me a note and I’ll be able to help.

      Reply to Kevin Juliano
  • Kathryn Tramontana, Broker   March 19, 2020 at 9:46 pm

    Your timely an helpful response with information to function during these extraordinary times and conditions makes me proud to be a member of PAR.

    Reply to Kathryn Tramontana, Broker
  • Montana, Dianne   March 19, 2020 at 10:13 pm

    Will the guidelines for the form be published as well so we may share them with our agents? Thank you.

    Reply to Montana, Dianne
  • DeStefano, Donna   March 19, 2020 at 10:25 pm

    Thank you for the swift action. I am thinking title companies can use resources such as FaceTime or Google Duo to witness signatures and send out packages for original documents to be returned.

    Reply to DeStefano, Donna
  • Jan Livingston   March 19, 2020 at 10:31 pm

    Your prompt and diligent efforts are sincerely appreciated. I second Kathryn T’s statement. I am proud to be a member of PAR.

    Reply to Jan Livingston
  • Dot Rhone   March 19, 2020 at 11:02 pm

    Great job! I may have missed them, but I’d love to have the Guidelines available as I can see where there could be some confusion as to when to have the Notice of Deadline Extension on the bottom completed by either the buyer or the seller. Thanks for the quick response with a form we will all unfortunately need.

    Reply to Dot Rhone
  • Sereni, Ayisha   March 20, 2020 at 5:44 am

    Thanks, Hank and PAR!

    Reply to Sereni, Ayisha
  • Brenda Crosby   March 20, 2020 at 7:36 am

    Thank you!

    Reply to Brenda Crosby
  • Gary Steinberg   March 20, 2020 at 7:38 am

    Great post, Hank. Appreciate the timely summary, practical perspective, and who can’t use a little of the levity you’ve added?!

    Reply to Gary Steinberg
  • Lisa Tidwell   March 20, 2020 at 7:39 am

    PAR & Hank…. Thank you for your help in getting this to all of us so quickly.

    Reply to Lisa Tidwell
  • Knorr, Wendy   March 20, 2020 at 7:39 am

    My question is concerning the listing contract with the seller. Do we have to get anything in writing from the seller, since we will not be able to meet with clients for showings, etc.

    Reply to Knorr, Wendy
  • Desiree Brougher, Esq.   March 20, 2020 at 8:52 am

    I’m working on it, Dot!

    Reply to Desiree Brougher, Esq.
  • Cathy Graver   March 20, 2020 at 9:08 am

    Thank You!

    Reply to Cathy Graver
  • Brady, Connie   March 20, 2020 at 9:11 am

    Thank you for the quick turnaround and all your hard work, it’s appreciated. I cannot get the addendum to download. Is there a trick? Thanks again!

    Reply to Brady, Connie
  • Steve Franco   March 20, 2020 at 9:28 am

    Are we PROHIBITED from showing properties to clients?

    Reply to Steve Franco
    • Kelly Leighton   March 20, 2020 at 10:54 am

      At this point the governor’s order indicates that most or all real estate-related activities should be shutting down their physical locations and working remotely, but there is a lot of confusion as to exactly how that affects various aspects of the transaction and, of course, there is nothing specifically dealing with things like open houses/property showings that occur outside of an office environment. The main thrust of the governor’s order is to minimize physical interactions as much as possible. In-person property showings involve several people gathering together in an off-site location, which is exactly the sort of behavior currently being discouraged.

      The best practice at the moment would likely be to explore offering virtual services as much as possible so as to avoid that personal contact. If the parties still want to meet in person, you should consult brokerage counsel to discuss what steps you can take to conduct business while staying in compliance with the shutdown order.

      Reply to Kelly Leighton
  • Justin Cummings   March 20, 2020 at 9:43 am

    Thank you. when will the addendum be in zip forms?

    Reply to Justin Cummings
    • Kelly Leighton   March 20, 2020 at 10:46 am

      We are anticipating it will be available in Zip sometime this morning.

      Reply to Kelly Leighton
  • aggie schoenberger   March 20, 2020 at 10:21 am

    seems like the new addendum should have the top portion signed by all parties before the bottom is elected…since the top part is what gives the bottom part the right to be signed…is this correct?

    Reply to aggie schoenberger
  • Rehling, Eric   March 20, 2020 at 10:24 am

    You are all doing an admirable job. I appreciate the late nights and swift action. Your summaries and creation of critical forms/tools to help us has been great. Thank you!

    Reply to Rehling, Eric
  • Nancy Werner   March 20, 2020 at 11:38 am

    Thank you for your diligence and clear communication during this unsettled time. Stay safe and healthy!

    Reply to Nancy Werner
  • Nicole Roman   March 20, 2020 at 11:43 am

    Thank you!!!! Wonderful job!

    Reply to Nicole Roman
  • Megan   March 20, 2020 at 12:49 pm

    If I was supposed to close on a home next week, would the Governors order cancel that?

    Reply to Megan
  • Keith Chennault   March 20, 2020 at 1:26 pm

    Great Job! a lot of the questions that were created during the governors order. I was pleasantly surprised to find answers on the PAR website. Thanks

    Reply to Keith Chennault
  • Premuto, Maria Elena   March 20, 2020 at 3:20 pm

    Who signs the bottom? Notifying parties? Seller & Buyer again? Agents? Attorney-title co’s? Very unclear.

    Reply to Premuto, Maria Elena
  • Dominic J. Cardone   March 20, 2020 at 4:07 pm

    Good Work PAR !!! Thank you.

    Reply to Dominic J. Cardone
  • Amin, Dhruvkumar   March 21, 2020 at 5:52 pm

    The transactions which are nearly to be settled in this last week of March, but the title companies have offices closed, what is the options to settle?

    Reply to Amin, Dhruvkumar
  • Amin, Dhruvkumar   March 21, 2020 at 9:33 pm

    Thanks Kevin for the response

    Reply to Amin, Dhruvkumar
  • Hugh Henry Jr   March 22, 2020 at 12:11 pm

    Wondering why the Covid Addendum is not available thru Docusign? Thanks!

    Reply to Hugh Henry Jr
    • Kevin Juliano   March 22, 2020 at 12:45 pm

      Hi Hugh – Are you using DocuSign forms? It is available through that specific product, not just DocuSign for electronic signatures.

      Reply to Kevin Juliano
  • Martin Lockhart   March 23, 2020 at 1:44 pm

    What if the other parties expenses would increase such as interest rate lock expiration etc?

    Reply to Martin Lockhart

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