With the coronavirus pandemic upending just about every facet of life, unfortunately the residential real estate world has been no exception. Whether it is scheduling an inspection or appraisal, or uncertainty about the economy moving forward, the ability to close a pending real estate transaction is an uncertainty for a lot of buyers. Do you back out of your deal or ask to push things out? Are you at risk of losing your earnest money if you push things out? A new MLS form may be here to help.
Many standard real estate contracts contain a clause called a Force Majeure. A Force Majeure provision frees both parties from the obligations of a contract if an extraordinary event prevents one or both parties from performing. The event must be unforeseeable and unavoidable – like a deadly global pandemic. Interestingly enough, the standard MLS Form 21 purchase and sale agreement (“PSA”) that most buyers and sellers use in residential real estate transactions, does not contain a Force Majeure clause. Thus, under the standard terms of the Form 21, even if a hypothetical global pandemic occurred, you would still be required to meet all your deadlines and close on time under the terms of the PSA.
However, there is a new Form 22FM – Force Majeure and Closing Addendum that can help both buyers and sellers extend their real estate transaction without either party breaching the terms of the contract. This new form extends closing, as well as all contingencies and conditions and explicitly states that neither party is in breach in the event of “acts of God, war, riots, strikes, fire, floods, epidemics, or other similar occurrences.” It does not affect the expiration date of offers or counteroffers – only those deadlines and terms contained in fully executed purchase and sale agreements.
If you are a buyer under contract to purchase a house and are concerned about breaching the terms of the purchase and sale agreement this form is a great way to provide protection to both the buyer and seller. If you are represented by a real estate agent they should be able to help you prepare this form. If your agent isn’t familiar or comfortable with this form, a real estate attorney can help you understand what it does and doesn’t do, prepare it for you and represent you as we navigate these uncertain times.
Likewise, if you are looking to purchase a home right now and are considering making an offer, a real estate attorney can draft your offer and represent you during these tough times. Practically all aspects of the residential real estate industry have been deemed essential business by the Governor, including financing, the private showing of homes, inspections, appraisals and legal work. If you were ready to buy a home before the pandemic hit, now may still be a good time to do so – and you might find a property for a little less than you were anticipating.
We work with clients over the phone and through e-mail all the time, so there is no need to meet in person. Give Moultray & McMahon a call at 206-777-1435. We look forward to working with you!