Kieron Quane’s client signed a contract for a home on Tuesday, March 10. A day later, the stock market plunged — one of many times that has happened recently — and the NBA canceled its entire basketball season. By Friday of that week, President Trump had declared a national emergency due to the coronavirus threat.
Quane’s client met up with her a day after that, on Saturday of last week. And he was worried.
“We had inspection on Saturday and he wasn’t concerned about job insecurity,” Quane, an @properties agent in the Chicago area, told Inman. “But he was concerned about what happens if this gets to the point where the appraiser can’t come, or the repairs can’t be done. He said, ‘I don’t want to be in breach of contract.'”
That client’s concerns highlight just how easily it is for the coronavirus outbreak to derail a sale. From lockdown orders to the prospect of anyone involved in a transaction getting sick, deals are suddenly in a uniquely precarious position.
In response, agents around the country are racing to add coronavirus clauses to their contracts. Such additions have been gradually growing in popularity since at least late February, when agents in California’s Bay Area used them for deals with people stuck in Asia.
But with the number of coronavirus cases rising, addendums are now literally everywhere in U.S.
Quane got her coronavirus clause from her attorney. She described it as a “force majeure” clause that allows a contract to be extended for 30 days due to unforeseen circumstances. And though the market in her part of Chicago continues to move along, the idea is to protect clients in the event that no one is available to do things like inspections.
“If their closing is coming up in the next couple of weeks are they going to be able to get people out?” she wondered.
The question captures a concern that many agents who have recently spoken to Inman share. And the answer remains wholly unclear at this point — a fact that helps explain the rapid proliferation of coronavirus contract provisions.
Linda Fercodini is also now using a coronavirus addendum. Fercodini is the owner of Fercodini Properties in Wolcott, Connecticut, and her company has a number of closings currently lined up. But some of those are already being disrupted by the flailing economy.
“We’ve had a few of our buyers want to extend because of their jobs,” she told Inman. “The companies they work for have asked them not to come in.”
In Fercodini’s case, she received the language for her coronavirus addendum from her title company. It states that a contract can be delayed due to “an act of God, declared state of emergency or public health emergency, pandemic (specifically including COVID-19), government mandated quarantine” and a number of other scenarios.
“Any new contracts that we’re writing, we are putting an addendum in,” she said.
In some cases, brokerages themselves have provided such coronavirus provisions. Redfin, for example, provided Inman a copy of two documents it is currently using. One is titled simply “addendum to extend closing due to COVID-19” and can be used to push out a closing date due to “quarantines, travel restrictions” and various other outbreak-related closures.
Redfin’s other document allows buyers and sellers to extend deadlines if there is disruption to things like title and escrow, courts, insurance companies and other typical services.
In many other cases, real estate boards and trade organizations are providing their members with coronavirus contract policies. In hard-hit Washington, for example, Northwest MLS (NWMLS) has created its own “Force Majeure and Closing Addendum.” The document is currently being promoted by the state’s Realtor organization.
Meanwhile, the Georgia Association of Realtors has created a “COVID-19 Special Stipulation.” Equivalent organizations in Pennsylvania, Florida, Texas and numerous other states have done the same thing.
The takeaway here is that what two weeks ago was a niche thing limited to a few outbreak-afflicted urban areas is now ubiquitous across the entire country. Just about everyone seems to have a coronavirus addendum now.
And that’s probably a good thing.
Isabel Elsesser is an agent at First United Realty Of Atlanta. She told Inman that prior to the spread of the coronavirus, “Everything was selling fantastically.” Since the outbreak, however, the market “just died” and she hasn’t had anyone go under contract.
Still, even with the slowdown she said that at this point every agent “absolutely” ought to be including a coronavirus clause in contracts because they need to be protecting their clients.
“I would definitely put that in there,” she said. “What if somebody gets sick or loses their job while under contract? You’ve got protect people from that.”