Introduction
Coronavirus has significant health hazards for every professional in every industry. It poses a threat of global collapse, the likes of which have never been seen before. Real estate is one of the worst-hit sectors because of the heavy capital investment involved. The contracts that need to be made are stringent too. Houses are also terrible breeding grounds for the virus. People will naturally be a little apprehensive about property visits or renting places that they are unsure how well they have been sanitized.
Realtors and property owners are doing their best to attract clients and making favorable real estate contract agreements so that their commercial properties will be leased. In the light of everything changing, some questions that buyers should ask and some questions that realtors will have, are
If you’re unsure whether your agreement meets the test of enforceability, you’ll need our agreement templates. They are decided by industry stalwarts so that you can sit back, knowing you have the best agreement.
| If you’re unsure whether your agreement meets the test of enforceability, you’ll need our agreement templates. They are decided by industry stalwarts so that you can sit back, knowing you have the best agreement. |
What Covenants will Apply Here?
The question can also be rephrased as the clauses that every real estate contract should contain going forward. Contracts and insurance will not be the same after the pandemic. Both parties will want some provisions put in that guarantee their interests in case an event like this pandemic occurs again. Now is a good time to check your real estate contracts, see what your contracts say, and change them for renewal. Some clauses that every contract would include are
Force Majeure
Traditional real estate contracts did not include a force majeure. Instead, they discussed events that would construe a default discharge of the contract and how it would be dealt with in a real estate agreement. With the virus, every contract will want to include a force majeure clause to accommodate events like this. Even if the contracts include an Act of God provision right now, it is unlikely that they could get that to stick with everything that’s going on. So, going forward, this clause is something we can expect to be written more comprehensively.
Access and Quiet Possession
Traditionally, there were several restrictions imposed on the landlord’s site visit rights. Similarly, several restrictions were placed on access to common grounds. This includes the maintenance fee that is paid for accessing these areas. Effectively, these clauses decided on the ‘keep open’ and ‘stay shut’ clauses. They determined the boundaries between when the landlord or the tenant can ask for a ‘keep open’ clause or when the landlord can effect the forfeiture clause. All of that is scheduled to change because of how this pandemic has affected daily lives.
Payment Obligations
Payment obligations are generally omitted from the force majeure purview because they don’t come under specific clauses that maintain that time is of the essence, and the obligations must be met irrespective of the conditions anywhere.
Performance Periods
Contracts related to real estate may have performance, contingency, or delivery periods. Those dates (often expressed as the number of “days” or “business days”) should be carefully reviewed to determine whether voluntary or mandatory building closures affect the number of “days” or “business days” allowed for performance. Governmental mandates might offer tolling or temporary waivers of obligations.
Notices
Leases, purchase contracts, and loan documents are often very specific about the required protocols for tendering notices, which then trigger specific cure periods. Failure to give or receive proper notice might impact deadlines for cure or performance and termination rights. Cure periods may be extended as a result of the inability to perform or governmental mandates.
[ Read: Real Estate Broker Agreement ]
Anti-Discrimination Laws
Federal and state fair housing laws remain intact during the COVID-19 pandemic. Those laws make it unlawful to discriminate on several protected bases, including disability and national origin.
To the extent they continue to make services available, the Fair Housing Act applies. Such services should be provided on an equal basis while recognizing that no one is required to engage in any transactions that put their health or safety or the health and safety of others at risk. When an infectious disease, such as COVID-19, is associated with a specific population or nationality, fear, and anxiety may lead to social stigma and discrimination.(1)
Based on the available information, COVID-19 can have severe symptoms for some people and, therefore, may ultimately be interpreted as a disability for fair housing law. Therefore, while it has not been conclusively determined whether COVID-19 constitutes a “disability” under the Fair Housing Act, it is advisable to treat individuals who have COVID-19 as being covered by federal disability protections.
Asking for Further Information
While anti-discrimination laws would generally prohibit certain questions about a person’s disability, because COVID-19 is widespread, highly contagious, and potentially dangerous, some federal agencies have issued guidance relaxing this prohibition. EEOC and CDC, have each issued guidance to employers and homeless shelters, permitting symptom-related questions to be asked upon entry to a facility.
You may request that an individual self-disclose information about their COVID-19 status, either verbally or in writing. A uniform practice in how this information is collected is advisable, and whether to request this information verbally or in writing is a business judgment.
Written documentation may prove useful in litigation should a future plaintiff make an argument about whether they were asked to disclose their illness, or whether the health questions had been asked in a selective or particular manner. On the other hand, collecting and maintaining health data about individuals creates a risk that this sensitive data could be revealed, for example, through a data breach or subpoena.
Conclusion
Choosing to continue providing services during this time means having an obligation to make reasonable accommodations or provide housing to individuals who have COVID-19 when able to do so without posing a threat to the health and safety of themselves or others.