OK, so we are now (as of 23 March 2020) looking at mass business closings. Non essential business are being asked to close. Some people can, and will, work from home. Others may not be able to or wish to. This will include things like municipalities, banks, lenders, insurance agents, lawyers and closing agents. So, the question is: Will something, we’ll call it “it” caused by COVID-19 (Corona Virus) delay or stop a Closing?
First, if you can work it out, then I say give that a try, before giving the lawyers a whole bunch of money to litigate what may or may not be a Force Majeur event covered by the Contract. The Florida Association of Realtors just released THIS ADDENDUM in an effort to allow for negotiation of the the time lines and provide for certainty as to what happens and when. But what about contracts without this addendum in place? One would look to, amongst other places, the FORCE MAJEURE or acts of God section of the Contract.
Here is the FORCE MAJEURE section of the Far Bar As Is Contract…
So, first is the issue (the performance or non-performance of “it”) that is delaying or stopping the Closing from taking place occurring through no fault of the Buyer nor the Seller? It’s not that they do not want to do, or not to do, “it” but that they can not.
Second, is “it” essential to the Closing? The performance or non performance of an obligation of, or for the benefit of, either party, the availability of services, (like title and closing agent) insurance or required approvals such as Condominium or HOA? Is the court house open to receive recorded documents like lien releases, deeds and mortgages? Is the local municipality issuing municipal lien certificates? How about the land surveyor, are they working? But does the “it” HAVE to happen in order to Close the sale? A survey or instance (so as to NOT have a title policy exception for encroachments) and insurance are a requirement of loan underwriting. If it’s a cash sale then these are not strictly required. If there is a loan then, if they have delivered loan approval or otherwise gone past the cancellation time, the Contract only allows for very specific circumstances where the inability of the Buyer to close their loan and thus the sale would NOT forfeit any deposits.
Third, is “it” caused by the Force Majeure event?
If the answers are “yes” to whatever one party or the other is pointing to as the reason (the performance or non-performance of ‘it’) for seeking to invoke this clause then yes, it would appear to little old me that this section of the Contract would be applicable and would allow an extension of the Closing Date for 7 days AFTER the event that is stopping the performance or non performance of “it” impeding the Closing has ceased to occur. If the event occurs for more than 30 days (like a war or say a pandemic) then either party may cancel the Contract and the Buyer is entitled to a return of deposits.
