COVID-19 and Real Estate - How it impacts in Washington state?

From the beginning of the March 2020 we faced a new virus we have never faced before - #COVID19, a type of coronavirus family. It is very easily spreadable and therefore exploding very quickly in number of infected people at a time. In order to stop spreading it some measures are needed, usually very restrictive to be effective. As of today, Washington reported to have 3,207 infected people, from which 147 died.

To help prevent the spread of COVID-19 (#Coronavirus), effective midnight on Wednesday, March 25th, Governor Inslee issued a statewide "Stay Home, Stay Healthy" order. The Order will initially last for two weeks and requires the closure of all "non-essential critical infrastructure businesses." Workers that are considered non-essential and who do not have in-person contact with others, can continue to work remotely from home only. The #Order may be extended and may be modified.

Are real estate brokerage services considered “essential”? No, not at this time. Real estate brokerage services are not on the list of essential services. Real estate brokers may: 

  • Provide services to their clients remotely from their house; and 

  • Use technology services that enable remote business, including online forms, electronic signatures, virtual tours, videos, and similar tools that can be used from home.

Real estate brokers may not:

  • Conduct any business outside of their home, including physically showing or previewing properties, conducting in-person listing presentations, taking property photos, staging homes, etc. Any #broker who violates the Governor's order not only puts himself/herself and his/her family at great personal risk, but also puts the broker’s real estate firm and his/her clients at risk.

Real estate firms can continue to process payroll and benefits, preserve equipment, ensure security, and support brokers’ ability to work from home. Social distancing guidelines must be followed. This exception is to continue only basic, minimum business functions for identified essential workers. This is not an exception to the prohibition against a broker leaving home to provide real estate brokerage services.

The “Financial Services Sector" has been deemed essential, though. This includes workers who are needed to process and maintain systems for processing financing transactions and services and insurance companies including mortgage lenders, escrow and title insurers. Because the Financial Services Sector is considered essential, real estate transactions that are under contract may be able to proceed to closing. Of course, there could be delays, which is why the parties should use the new Force Majeure and Closing Addendum.

What is Force Majeure Addendum?

"Force Majeure" is a French term that translates as "superior force" and a "force majeure event" is an event or effect that can be neither anticipated nor controlled. Many contracts contain a "force majeure clause" allocating risk between the parties if performance of the contract becomes impossible or impracticable in the event of force majeure. Common examples of force majeure events include acts of nature (floods, earthquakes, hurricanes), acts of people (war, riots, strikes), and epidemics (a widespread occurrence of an infectious disease). Events and occurrences associated with the recent COVID-19 (coronavirus) epidemic may qualify as a force majeure event that may excuse or delay performance of a contractual obligation.

Currently, the most common example of a force majeure event related to COVID-19 (coronavirus) is a delay in recording the closing of a sale due to staffing limitations of a county recording office. This is an event that is beyond the control of the parties and could not have been avoided, making performance of a timely closing impossible.