In response to the Coronavirus/Covid-19 pandemic, New Jersey Realtors has adopted an Addendum Regarding Coronavirus which they recommend for inclusion in all broker form contracts. The form addendum addresses the unique and unprecedented impact of COVID-19 pandemic on New Jersey real estate contracts and transactions.
THE NEW JERSEY REALTORS ADDENDUM REGARDING CORONAVIRUS
The Addendum regarding Coronavirus includes adjustments to the residential real estate transaction process to account for the potential delays in various stages of the process.
Section 1 of the Addendum allows the buyer and seller to agree to a postponement of the closing due to COVID-19 delays. The Addendum leaves a blank for the length of the proposed agreement but notes that the “default” period would be 30 days.
Section 2 of the Addendum allows the parties to agree to cancel the contract if the Buyer in a transaction loses his or her job (or income) due to COVID-19
Instructions for Real Estate Agents
If you are a real estate agent, we would recommend you include this addendum in any contracts you are submitting for either a buyer or a seller during this pandemic.
If you represent the Buyer, we also recommend you affirmatively check the box in Section 2 to trigger the protections of Section 2. In fact the protections of Section 2 of this Coronavirus Addendum are something our firm has been including in our buyer side review letters for many years now.
We believe inclusion of the Coronavirus Addendum (with box 2 checked on behalf of Buyer) is the appropriate standard of care for a real estate agent representing a client during this pandemic.
Attorney Review and Beyond
Once a contract with the Addendum Regarding Coronavirus is signed and attorney review of the contract begins, the Addendum Regarding Coronavirus should be explored by each party and their counsel. Depending on the specific details of the transaction, deletion or modification of the addendum may be appropriate.
One modification we would strongly consider is one to reflect that if the delays relate to performance of Buyer obligations or Buyer contingencies (such as completing the home inspection, appraisal or mortgage contingencies), then only allow the Buyer to only request extensions for performance but not the right to cancel based on the delay (and reserve the right to cancel only for the Seller if Seller does not want to extend additional time).
Likewise, if the delays are affecting performance by the Seller (such as inability to obtain a Certificate of Occupancy or a payoff or to vacate the home), then only allow the Seller to request extensions for performance but not the right to cancel based on the delay (and reserve the right to cancel only for the Buyer if Buyer does not want to extend additional time). Such a provision protects each party against potentially breaching the contract for matters outside their control while at the same time avoiding giving a party an easy out from the contract by simply stalling on their own performance obligations.
This is but one of several examples of a modification to the Coronavirus Addendum that may better suit your needs and interests.
We strongly recommend hiring an attorney for any real estate transactions. It is often the largest transaction an individual will ever do in their lifetime. Real estate agents are not attorneys and they cannot render legal advice to you. The standard contract your agent is required to use has limitations and is often not well suited to protect your specific interests. Please consider engaging us as your counsel on your real estate transactions. Our real estate attorneys have a combined 45 years of experience representing parties in sophisticated commercial and residential real estate transactions. We take the time to consider your specific needs. We are here to provide legal advice and to protect and serve your interests in these important matters. Give us a call. Thank you.