Governor’s Restrictions on Real Estate Practitioners Activities Rocks The Industry

The latest challenge to real estate practitioners is the one caused by the Coronavirus (COVID-19), not just with respect to their personal health, but their ability to do business.

Many of the everyday functions performed by real estate agents were prohibited by a mandate issued by Governor Andrew Cuomo intended to protect the public from the Coronavirus. The result was to effectively shut down the normal course of selling, buying, and leasing of real estate, causing much distress among real estate professionals and consumers.

The New York State Association of Realtors posted a bulletin on their website that as of 7:00 P.M. on 4/3/20, the New York State Empire Development agency deemed real estate essential and revised many of the prohibitions incorporated in the Governor’s mandate.

In its bulletin, NYSAR emphasized that updates issued by the NYSDA require that a licensee must continue to follow government recommended health and safety precautions if they are having person to person contact with the general public, and should try to minimize person to person contact by utilizing alternate means such as electronic transmission and signing of documents.

It then went on to address specific issues included in the Governor’s mandate.

In person showings are prohibited. Agents may only show homes virtually. The agent may be present in the home, but the prospective buyer/tenant may not be. It is also recommended that the house be vacant, meaning nobody lives there or the occupants have left.

Holding “open houses” is forbidden because it would result in the grouping of individuals.

Listed properties may be posted as “unaccompanied showings only” with informed consent of the seller/landlord.

Virtual showings are permitted with the informed consent of the seller/ landlord.

Taking photographs of vacant or unimproved listed properties is permitted with the informed consent of the seller/landlord.

Marketing practices such as making unsolicited phone calls (cold calling) are prohibited.

Opening a property for appraisers is permitted as well as for home inspectors.

Real estate agents are prohibited from going to a property with their client/customer for the final walkthrough.

Real estate agents are prohibited from attending closings unless their presence is necessary for the closing to take place.

Penalties for those who violate the Executive Order may include one or more of the following: $2,000 fine, charged with a criminal misdemeanor, suspension or revocation of license, fines or other disciplines as authorized if a Realtor is found to be in violation of one or more articles by a hearing panel under the Code of Ethics and Arbitration Manual.

I discussed the issues with David Dubin, Senior Partner with the law firm, Twomey, Latham, Shea, Kelley, Dubin & Quartararo. I have included his comments below.

“The Governor’s Executive Orders have had a huge impact upon the ability of attorneys and other real estate professionals to conduct real estate transactions. With 35 attorneys our firm handles a lot of real estate transactions throughout Long Island and New York City. Those impacts include purchasers who are seeking to cancel their contracts and seek a return of their deposits due to the virus and fallout, purchasers seeking to adjourn the closing date, purchasers seeking to explore ways in which to obtain a return of their deposits, difficulties of conducting sit down closings due to the virus and instead conducting closings by mail, title companies unwilling to insure clear title because they cannot conduct updates due to the clerk’s offices closure at this time, etc. Banks that have issued commitments seem to be honoring those commitments, but it is unclear how they will proceed if the title companies are unwilling to provide clear title.”

Joan M. McGivern, Counsel to Twomey, Latham, wrote a two-part article that appears on the law firm’s website regarding how the Coronavirus can affect contracts for the transfer of real property. The article explains a very complex issue of contract law known as a “Force Majeure” clause.

Ms. McGivern pointed out that some owners are requiring COVID -19 clauses be included in the contract governing the transfer of title as well as buyer’s requests for clean-out clauses before they take title to the properties.

NYSAR (New York State Association of Realtors) has published a COVID-19 Addendum to Residential Purchase Contract that can be used as part of the original offer by the buyer to the seller. The Addendum states that this is a “legally binding document and must be approved by the attorneys for seller and purchaser.”

An encouraging piece of news for real estate agents who act as independent contractors (approximately 90% nationwide) is that they are eligible to receive unemployment benefits from their respective State Departments of Labor.

New York agents who are interested should go the the New York State Department of Labor website.