Protecting your real estate deals during Covid-19
|Protecting your real estate deals during Covid 19 – Real Estate Agents and Real Estate Lawyers deemed an essential service
By Mark Weisleder
Now that the Covid 19 reality is with us, everyone must do what they can to make sure that buyers and sellers can still successfully enter into and complete their real estate contracts. Here are 5 important things to remember
1. Has the government registration system closed down?
The online registration system has not closed down. The government registration system and lawyers have been deemed an essential service by the Province of Ontario. However, law firms must be able to complete every part of a transaction remotely. Our law firm operates on our own IT infrastructure and is set up to deal with this ever evolving situation, including signing clients remotely, digital transfer of funds (so clients do not have to attend the bank) and lock boxes for our sellers to promote social distancing and paying sellers and real estate brokerages directly through EFT (no cheques to pick up) We can also hold the deposit of a real estate agreement in our trust account through a regular bill payment if any listing brokerage is not set up to do this. Please check to make sure your own law firm is also properly prepared to make sure your deal will close in time.
2. Can Buyers or sellers cancel their purchase and sale agreement because of Covid 19.
Some people mistakenly believe that because of the pandemic, anyone can just turn around and cancel their real estate agreement. This is not true. It is similar to the market mini crash in 2017 when prices fell almost 20% overnight. These events do not give anyone the right to cancel an agreement. The only way a deal cannot close is if the government registration system closes down or lenders cannot fund loans, which is not the case right now.
The first clause is to pay all money on closing by wire transfer only. This eliminates having to deliver any certified cheque or money order The second is to permit all documents to be signed and delivered electronically. This will avoid having to deliver any documents by courier.
The third is for sellers to place lockboxes on their home, with the code given to the buyer lawyer at closing. This avoids having to go anywhere to pick up keys.
The final clauses deal with how to handle a delay, specifically if the government registration system goes down, to permit either an extension of the agreement or closing in escrow which will permit buyers to move in, sellers to receive their money and protection by title insurance.
The Buyer shall pay the balance of the purchase price, subject to the usual adjustments by wire transfer.
The parties acknowledge and agree that all closing documentation can be signed electronically and forwarded by email or fax in accordance with the Electronic Commerce Act, 2000, S.O.2000,c.17
The parties agree that the keys to the property shall be left in a lock box at the property and the code to the same is to be provided to the Buyer’s lawyer in escrow pending closing of this transaction.
The parties herein acknowledge and agree that they are required to close this transaction notwithstanding any impacts of COVID-19, save and except the closing of the Land Registry Office(s) and all financial institutions. In the event the closing cannot occur due to a shutdown/disruption of the Land Registry System and/or banking system, then the closing date shall be automatically extended to the fifth (5th) business day following the date upon which said systems have returned to operational status and can clear funds accordingly.
Buyer and Seller acknowledge that due to measures taken by the Provincial Government in response to the current COVID-19 pandemic, there could possibly be a delay at land registration that would affect the actual registration date from the date herein contemplated. In such event, the Buyer and Seller hereby agree to extend the completion date of this transaction until the next possible date following the scheduled date of completion that registration could actually be effected, with no additional charges being made to the Buyer. Notwithstanding the foregoing, in the event the Buyer’s title Insurer has provided “gap coverage” to the Buyer, and all closing funds have been paid to the Seller’s Solicitor in trust, keys may be released (possession transferred) to the Buyer with title transfer and registration to take place at a later date. In such circumstances all expenses and risk related to the property shall be the responsibility of the Buyer from the date of such escrow closing.
The answer is yes. It is recommended, that all existing agreements should also be amended with these clauses to ensure that best practices of social distancing in all aspects of real estate closings is maintained, so that the deal will still close as scheduled.
Buyers, sellers and their agents should work together with their lawyers to try and resolve any issue. Deals can be extended, on terms that are fair to everyone.
If you have any questions about how to deal with your real estate transaction during these times, or wish to schedule a webinar at your brokerage, please contact me toll free at 1-888-876-5529 or at firstname.lastname@example.org
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