In light of the Covid 19 crisis, many parties are concerned about whether or not their real estate deals will be able to complete. What happens if the banks close? What happens if the Land Title Office shuts down, or my lawyer’s office has to close? Or what if I’m ordered into quarantine?
Many real estate lawyers and Realtors are considering adding a clause to their contracts to deal with the worst case scenario. It may be worthwhile to discuss adding a clause to your contracts, for example:
In the event the parties are incapable of completing their obligations pursuant to this Contract, as a result of a governmental order, a quarantine order, a land title office closure, or a closure of banking institutions, as a result of the Covid19 crisis (the “Event”), the parties mutually agree, upon written notice to the other side of such Event, to extend the Completion, Possession, and Adjustment dates by 30 days, or the next following business day, and time shall remain of the essence. The parties agree to use all commercially reasonable efforts to complete the transaction on time.
We cannot be certain that this crisis will be resolved within 30 days, however, careful thought should be given before extending indefinitely. It may be that a 60 day extension is more reasonable. However, the longer the Covid19 restrictions are in place, the less likely some parties may be able to afford to complete a home purchase. In the event the restrictions are still in place after 30 days, the parties would then have to negotiate the next steps.
If you have a real estate deal scheduled to close in these uncertain times, don’t hesitate to call us to discuss your options.
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