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Legal issues at the intersection of real estate and COVID-19

by Meg White

Legal issues at the intersection of real estate and COVID-19

The coronavirus pandemic is creating a variety of problems for the real estate community, and some of those fall in the legal realm. That’s why the Chicago Association of Realtors turned a regular legal update webinar today into a forum to discuss the many issues facing a real estate community trying to carry on with business in a time that’s nothing like business as usual.

Just because you’re essential doesn’t mean your clients are

One question that came up multiple times is the place of buyers and sellers under the “remain at home” order signed by Governor J.B. Pritzker. While Illinois Realtors fought hard to make sure real estate professionals were included in the list of essential businesses, that doesn’t mean buyers get a “hall pass” when they’re with you, according to Mabel Guzman, a broker with @properties and former president of CAR.

“You are an essential worker but your client is not,” she said, adding that even if your client is an essential worker because of what they do for a living, “It’s only limited to the work they do themselves.”

Illinois Realtors Deputy Chief Executive Officer Jeff Baker underscored this fact and noted that real estate professionals who defy these orders could put the entire industry’s freedom of movement at risk. “Just because the executive order authorizes real estate to continue … does not mean it’s business as usual,” he said, noting that local officials could put restrictions on brokers at any time. “Use this time to think differently [about your business]. That will go a long way with government officials who are watching this.”

And even if you’re doing virtual showings, it’s important to make sure that sellers are OK with your solo presence. “You have to discuss this with your client and make sure that they are comfortable with you entering the property,” said Guzman.

Proceeding with caution — and fairness

Illinois Realtors General Counsel Betsy Urbance noted that with the necessary action of keeping people from accessing properties in many instances, “fair housing could quite easily become a problem.” She advised real estate professionals who are screening rental applicants or potential buyers to make sure they ask the same questions and require the same documentation of everyone they screen.

Urbance added that the Centers for Disease Control and Prevention have specific queries on their website that help people understand a person’s individual risk level (for example, if they are experiencing symptoms and whether or not they have traveled recently), and that agents should “stick to the questions that are proposed.”

Prepare for delays

The original purpose of the webinar was to address legal issues facing large brokerages, and one big looming item is when the new license laws will be finalized. But that could be further delayed due to the novel coronavirus outbreak. “We were looking at possibly June,” Urbance said. “But everybody’s calendars have been hijacked by this invisible bug.”

Another timing question that remains up in the air is how long the governor’s executive order will remain in effect. Technically, the status quo should be in place until April 7, but that’s only because the disaster declaration that allowed the executive order to be put in place only lasts for a month. So while there’s a “moratorium on evictions until April 7,” for example, Urbance said, “I think we can expect to see that April 7 deadline extended.”

Understand the legal tools at your disposal

The Chicago Association of Realtors recently released a COVID-19 addendum for use in transactions, and Rebecca Jensen, CEO of Midwest Real Estate Data LLC, told webinar participants that it should be available on connectMLS by tomorrow.

Lesley Muchow, senior counsel with the National Association of Realtors, said she’s been seeing agents use waivers of liability when they show a listing to ask sellers to agree that they won’t sue if they are exposed to COVID-19 when their house is shown. She noted that it may seem like a bit of overkill in a world where it’s hard to find someone who doesn’t understand the risks of the novel coronavirus. Still, “anyone can sue for anything,” she said, adding that agents should clear such forms with a higher-up at their firm. “Please talk with your broker. Use forms that have been reviewed and approved by your broker.”

Muchow noted that, while Illinois is not one of the 23 states that permit online notarization, NAR is working on changing that through the Secure Notarization Act. While it’s been in the works for a while, the current crisis is speeding up the process, and the association hopes to have rules to this effect as part of the next round of stimulus. UPDATE: Shortly after this story was published, Gov. Pritzker authorized notarial acts to be performed remotely via “two-way audio-video communication technology” as long as the current disaster proclamation regarding the spread of COVID-19 is in effect.

Default to human terms

While the situation is fluid and rules are changing constantly, one clear piece of advice came through from multiple webinar contributors: Stay human.

Urbance noted that, while you might have the legal standing to enter an apartment you own or ask a seller to leave their home before a showing, it’s best to avoid these uncomfortable situations and assume the best of people. “I’m saying that less legally and more just as a human person,” she said.If a tenant says they’re sick, you should just believe them.”

CAR President Maurice Hampton urged members to take an especially “humanistic approach” when going about their business. “We have to be as flexible as possible right now,” he said. “We’re going to make it through this, folks. We have to be resilient. We have to slow down.”

Guzman agreed, noting that even though most real estate professionals are healthy, they must put the needs of the community first at this moment. “I have a mother who is going through a bone marrow transplant, so I am very careful about who I come into contact with,” she said. “It’s not about you; it’s not about the individual. … We’re all in this together.”

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