Last week, the Texas Association of Realtors (TAR) released\na new Covid-19 Addendum for voluntary use by Texas Realtors. The addendum:<\/p>\n\n\n\n\n\n\n\n
- Allows either party to extend the closing date\nby 30 days if, due to voluntary or compulsory quarantine or closure, the\nclosing cannot occur on time. <\/li>
- If the property still has not closed, then it\nallows either party to cancel the contract and earnest money will be released\nto the buyer. <\/li>
- Also allows for termination by either party,\nwith earnest money returned to buyer if buyer cannot get loan due to loss of\nincome, even if financing period has expired.<\/li>
- Can be used with existing or new contracts. <\/li><\/ul>\n\n\n\n
I\u2019m glad that TAR was proactive in providing this addendum.\nHowever, agents should carefully consider if it\u2019s use is in their client\u2019s best\ninterest. Personally, I feel that the addendum is more advantageous for the\nbuyer and would hesitate using it if I represented, or was, the seller. Agents\nmay want to instead consider an amendment to extend closing dates, financing\nperiods or other changes necessitated by the outbreak. <\/p>\n\n\n\n
Busted Contracts<\/strong><\/p>\n\n\n\n
Over the last two weeks I have seen a rash of \u201cbusted\u201d contracts\u2026 where a party of the contract terminates the contract outside of any option to terminate. There are many reasons buyers or sellers may have wanted to get out of contracts due to the outbreak: job loss, lack of job security, inability to secure the loan, moving plans disrupted, general economic uncertainty, quarantine issues. The TREC 1-4 Resale contract does not have force majeure clause. Therefore, terminations due to repercussions of the corona outbreak, when done outside of the contract provisions that allow for a termination, can create quite the conundrum. <\/p>\n\n\n\n
Agents should be careful to advise their clients to consult\nan attorney to determine the potential legal ramifications of terminating\noutside of an option. Furthermore, the canceling party should immediately\nrelease the earnest money to the other party and potentially reimburse for any\nexpenditures made by the other party for prepaid items such as surveys and HOA\ndocuments. <\/p>\n\n\n\n
Agents should also discuss these situations with their Broker and follow their advice. Ultimately, the canceling party is risking litigation and it\u2019s unclear how judges might rule in these unique circumstances. I urge everyone to have patience and understanding. I know that losing a contract days before closing in a very uncertain market is going to make seller\u2019s see red, but I feel we have to weather this storm together and I\u2019m hopeful that we don\u2019t see too much costly and timely litigation as a result of these situations.<\/p>\n\n\n\n
Essential Business<\/strong><\/p>\n\n\n\n
Depending on where you do business you may or may not be\nconsidered essential. It\u2019s been a very confusing situation with cities and\ncounty\u2019s issuing their own Shelter in Place orders with varying definitions of\nessential business. Many Realtors are still showing homes while some buyers,\nsellers and Realtors have hit the pause button. The National Association of\nRealtors and the Texas Association of Realtors have released some very good\nguidelines and information to help us do business during this difficult and\nuncertain time. However, they have left specific rules regarding what you can\nand can\u2019t do to the discretion of Brokers. https:\/\/www.texasrealestate.com\/about-us\/newsroom\/coronavirus-faqs\/<\/a><\/p>\n\n\n\n
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