These are unprecedented times and these issues could not have been anticipated. No one in the real estate industry has experienced a similar event on such a scale. Nevertheless, CRES and our risk management attorneys are analyzing the situation to anticipate legal and practical challenges that face real estate professionals and consumers.
Our legal experts offer the following insights and thoughts:
Brokers/agents should encourage infected sellers to disclose the fact of potential exposure, consistent with current medical knowledge about how the virus is transmitted and current public health policies. Brokers/agents should document such conversations, the seller’s decision, and the basis of the decision
Brokers/agents need to be sensitive to sellers’ concerns about showings, inspections, appraisals, and other strangers entering a seller’s home.
Brokers/agents should discuss early on what precautions a seller may want in place for showings and inspections to feel safe.
The discussion should touch upon the importance of sanitizing all items that regularly come into human contact such as light switches, doorknobs, cabinet handles, toilet seats, climate control devices, and faucets. Brokers/agents are now starting to install hand sanitation stations at the front door with a sign asking people to sanitize their hands before entering the property and to refrain from any unnecessary touching.
Sellers may want to add specific showing instructions, asking buyers’ brokers/agents to refrain from showing the home to anyone exhibiting signs of sickness and to sanitize all hands before entering the home.
Sellers may withhold permission for in-person showings altogether. In that situation, brokers/agents may have to become more creative with technology such as offering virtual tours.
Limiting or excluding in-person tours or inspections poses risks to sellers and sellers’ agents for failing to disclose adverse material conditions. Often times, adverse material conditions go undisclosed because the condition is open and obvious. A walk-through of the property or a home inspection will reveal the problem and cure the non-disclosure. If the buyer is not allowed to do a walk-through or an inspection, and the condition is not included in the video or disclosed in writing, these open and obvious adverse conditions will not be made known to the buyer. For example, rarely are crawlspaces or attics included in virtual tour marketing videos. Yet, crawlspaces and attics are frequently where adverse material conditions exist and are apparent. Examples include building code violations, health and safety issues with electrical wiring, foundation problems, and evidence of water intrusions or leaks.
If the seller does not allow in-person showings or inspections, then the seller’s agent must document the discussion of the risks and the importance of a thorough and complete video virtual tour of all parts of the property.
Sellers may decide to withdraw their listing or take a break. Respect the seller’s choices.
If the seller does decide to withdraw or take a break, brokers/agents must prepare the appropriate amend/extend or termination form to reflect these decisions.
Authors: James M. Meseck | Attorney Rachel E. Ryckman | Attorney E. Catlynne Shadakofsky | Attorney
White and Steele, P.C. 600 17th Street, Suite 600N Denver, Colorado 80202
DISCLAIMER: This article is a brief overview and survey of COVID-19 issues facing real estate professionals in general. The article is designed and its purpose is to serve only as a general discussion of these issues. This article does not constitute legal advice. The reader should consult with a licensed, experienced attorney on any specific or general matter in the reader’s particular jurisdiction. We hope that all real estate practitioners find this article to be a useful and practical tool in identifying COVID-19 issues.
This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.
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