Will COVID-19 impact residential Real Estate closings?
As the disruption caused by coronavirus (COVID-19) continues to spread, it may become increasingly essential to quarantine a large portion of the population to counter the spread of the virus as we’ve already seen happen in China, Italy, Iran and other countries.
Given that we are in the midst of a very busy spring market, closing residential real estate transactions may face unexpected challenges that may cause ripple effects for buyers and sellers.
These challenges can range from not being able to attend a lawyer’s office to sign documents to disruption for professionals such as appraisers, lawyers and lenders.
Am I Still Obligated To Close?
Most residential real estate transactions in Ontario require the buyer or seller to close the transaction by a specific date. Contrary to some commercial real estate contracts, residential transactions do not usually include a force majeure clause that could potentially excuse a party from performance if the failure to perform is due to an event beyond the party’s control.
Therefore, in most cases, you will still be obligated to close your transaction despite any circumstances.
If you are considering buying or selling a home in the near future, a specific COVID-19 clause can be included in your agreement to allow for potential delays cause by potential disruption to lenders or the land registry.
Can Closing Be Delayed As a Result of Quarantine?
Closing can be delayed if an amendment to the agreement of purchase and sale (APS) is signed and agreed upon by all parties. If you foresee the need to postpone or change your closing date, the sooner amendments can be signed by both parties, the better.
What If I Cannot Make It To Sign Documents?
To close your transaction, you will have to attend a lawyer’s office to sign your closing documents. Some lawyers may offer at-home signing, which may not work in the case of a full quarantine.
At Deeded, we have implemented advanced video signing technology to allow you to sign closing documents from home. We will make this option available for free for qualified clients. Please contact us at firstname.lastname@example.org if we can help.
What If The Land Registry Closes Down?
Most title insurance policies include Gap Coverage that insures both purchasers and lenders against losses due to intervening registrations on title between the date of closing and the date of registration.
This means that in the event that online registration is no longer available, or land registry offices experience delays or closures due to COVID-19, transactions can close on time and funds and keys can be released to the respective parties.
What Else Should I Know About COVID-19 Impact Residential Real Estate Closings?
The escalating situation with the spread of COVID-19 may impact other parts of your transaction such as your movers, utility companies or your condo property management.
It is best to be proactive in planning your closing and contacting the various parties involved to ensure contingency plans are in place should the closing be impacted by the COVID-19 disruption.