Real estate buyers and sellers are still out in the market, as evidenced by the listings and contracts coming into my office every day. At the time of this writing Salt Lake County didn't hadn't yet enforced a "stay home" mandate, meaning properties could still be shown (safely, within CDC recommendations). There's always the option for virtual tours to enable buyers to see a home, as well as Google maps. But what if, during the contract period, the buyer or seller contracts COVID-19?
To have a valid legal contract of any kind, it must have a beginning and ending date. That's Real Estate 101. As an example, you offer to list a home for three months, and once the three months pass, you can renew your contract, find another agent or take it off the market. Or, you make an offer on a home and agree with the seller to close escrow in 30 days. But what happens if one or more of the parties becomes ill with COVID-19? Has either side violated the contract because they can't perform?
The Utah Association of Realtors has come up with an addendum to incorporate into the sales contract only, which states that the virus "may cause unanticipated delays or render the REPC (purchase contract) impossible or commercially unreasonable for buyer or seller to perform their respective contractual obligations under the REPC by the settlement deadline. This may include but are not limited to: 1) a confirmed diagnosis ... 2) a mandatory or self-imposed quarantine of buyer or seller ... 3) hospitalization of buyer or seller ... 4) local or federal imposed travel restrictions ... 5) underwriting or loan processing delays ... 6) delays with escrow or title services ... and/or 7) any other COVID-19 related issues that [are] not within reasonable control of buyer or seller."
The parties, by signing the form, agree that there is an automatic extension of the buyers "due diligence"—inspection deadline, appraisal and financing deadline—if anyone in the deal becomes immediately affected by the virus. It also gives the buyer or seller the right to extend the settlement deadline of the contract for up to 30 days. What happens if one of the parties is sick for more than 30 days? I think they would agree to extend the contract again, or to mutually end the contract.
The use of the form isn't mandatory, just like the state's "Stay Safe, Stay Home" order isn't mandatory ... yet. But why wouldn't you use it to protect your client in a transaction during this extremely unusual time in our country?
Finally, if you're applying to refinance or get a home loan, know that lenders will be taking a closer look at borrowers working in industries that have had huge layoffs: travel, tourism, leisure, hospitality, entertainment, auto sales, personal care, restaurant, retail sales and fitness, to make sure their job is still intact.