As the Real Estate industry scrambles to find ways to manage deals that are in the pipeline during these restrictive times, new solutions are introduced in order to assist with crossing the finish line.
Here’s what you need to know:
· E-Notary or Virtual Notarization: Governor Cuomo Authorizes 'Virtual Notarization' Until April 18
· Desktop Appraisal: Eliminating the risk for appraisals and homeowners.
· Zoom Board Interview: The Cooperative "audition" is adopting social distancing.
· Virtual Closing: Closings are now happening remotely, allowing buyers and sellers to stay in the safety of their homes.
· “Corona Rider”: A likely part of every contract from now on, the virus will join other “Force Majeure Events”
· Movers are an essential workforce under the ‘Tri-State Workforce reduction Order’.
· Virtual Showing: Real Estate agents, ordered to halt showings and open houses, are developing new ways to maintain engagement with buyers.
The Details:
E-Notary: In general, Real Estate Finance Bureau (“REF”) requires that any signed or notarized documents submitted to REF contain original “wet ink” signatures. That is, REF typically does not accept photocopies or scanned copies of such documents. During the relief period, REF will deem a photocopy or scanned copy of an original signature to be an original signature and thus will not require an original “wet ink” signature on any signed or notarized documents.
(**However, pursuant to New York State laws the original signed and notarized documents will need to be provided for recording, and thus this may not be the ideal route to take. Rather, the parties are better off pre-signing the original documents and delivering them to each other prior to closing. REF does reserve the right to request an original “wet ink” signature as it deems necessary.)
Desktop appraisal: In time of “business as usual” the appraiser is required to conduct a thorough interior inspection of the apartment or home. Currently some banks allow appraisers to conduct appraisals without leaving their desktop, using the data available to the appraiser via third party resources. In the boroughs, another alternative would be a “drive-by” appraisal where the appraiser only inspects the exterior of the appraised house.
Zoom Board interview: NY Notoriously conservative cooperatives have finally come to a point where they must march with the times if they wish to avoid a complete halt of the closing process. Given the current crisis, coop boards began conducting interviews via video conference such as Zoom.
Virtual closings or multi party closings: Outside of New York, remote closings are the rule, not the exception. In NYC closings are usually conducted face to face at the attorney’s office. For closings on condo sales, documents could be passed along via messengers or scanned and electronically signed using DocuSign.
Around the city, sellers and buyers are granting power of attorney to their real estate lawyers, and closings are being conducted with only the essential people present. Those individuals could sit in separate rooms in the same office, or even, separate cars in the same parking lot where the escrow agent executes the forms while hopping from a car of one party to another. Such was the case in a closing one of our Real Estate attorneys conducted during this past week.
Coops closings are more challenging because they require the assistance of the managing agent and delivery of the Seller's original stock certificate and proprietary lease. Also, coop closings usually take place at the managing agency’s office.
Movers are an essential workforce: however, very few Manhattan buildings are allowing “move ins” or “Move outs” at the moment.
Virtual showing: Ordered by NY governor to halt all showings and open houses, agents and salespeople are using other methods to feature their properties, becoming the ‘eye of the buyer’. These methods include live, pre-recorded and “360” video tours of the apartments that are being offered for sale. Execution of “sight unseen” sales have always been a minor portion of transactions taking place in Manhattan. Under the current circumstances that portion is likely to increase somewhat. However, the broader impact, would be an enhanced ability of buyers to filter down their property of choice to a very short list and be ready to pull the trigger as soon as they are able to physically walk the apartment. Residential Real Estate is an up-close and personal business.
This method is also currently used by the parties for the walk-through inspections prior to closing.
Corona Clause: The rider, not commonly used until now, will likely be an integral part of future contracts, stipulating protections awarded to buyers due to “Force Majeure event” (superior force). Such forces include power failure, riot, insurrection, restrictive governmental laws, war, act of terrorism, and act of God (including but not limited to, earthquake, hurricane, epidemic, pandemic or tornado). The Covid-19 coronavirus and/or its consequences needs to be defined and specifically qualify as a Force Majeure Act.
See such sample paragraph below:
Force Majeure Notwithstanding anything contained in this agreement to the contrary, if Purchaser, in good faith, is delayed or hindered in, or prevented from, the performance of any act required hereunder or is prevented from moving into or out of the Unit and/or the building or is prevented from otherwise enjoying the full benefits of this agreement by reason of a strike, labor trouble, inability to get materials or services, power failure, riot, insurrection, restrictive governmental laws, war, act of terrorism, act of God (including but not limited to, earthquake, hurricane, epidemic, pandemic or tornado) or other reasons of a like nature which are beyond the reasonable control of the Purchaser (a "Force Majeure Event"), then the performance of any such act (including the Closing herein) shall be excused for the period of delay and the period of the performance of any such act shall be extended for a period equivalent to the period of such delay. It is agreed and acknowledged that the Covid-19 coronavirus and/or its consequences constitutes a pandemic and qualifies as a Force Majeure Act under this provision. The provisions of this Paragraph 34 are not intended to forgive Purchasers' performance but only to provide Purchaser's with additional time to perform his contractual duties and obligations hereunder provided however, that if the closing is delayed by more than 90 days due to a Force Majeure Event, Purchaser will be entitled to cancel this contract. In the event of such cancellation, the contract deposit and any interest earned thereon shall be returned to Purchaser, whereupon this Agreement shall be null and void and of no further force and effect and all rights, obligations and liabilities hereunder shall wholly cease and come to an end.
Ariel Tirosh & Team
Licensed Associate Real Estate Broker at Douglas Elliman
917.750.5654 | atirosh@elliman.com