BEWARE OF COVID 19 HOLD HARMLESS AND RELEASE

Typically a prospective homebuyer is asked to sign many forms in addition to the contract of sale when presenting an offer to buy a house through a realtor.  If the offer is accepted (by the seller signing the contract), and the buyer or seller retains an attorney to represent him or her in the transaction, then they have the protection of attorney review.  If not, the parties are on their own.

In a recent pending transaction, approximately two weeks from the closing date and well after attorney review, my selling client was asked by the buyer’s mortgage lender to sign a realtor  form.  This form came to the lender from the buyer’s realtor.  The lender claimed that the seller needed to sign the form in order to clear the file for closing.  Fortunately my client forwarded it to me to review.

The form is entitled “New Jersey Realtors Sellers’ and Buyers’ Hold Harmless and Release Regarding COVID 19′.  It first states that the seller has listed his property for sale and
wishes to have the home shown to prospective buyers.  It then states that the buyer wishes to visit the property and to have it inspected.  The form then goes on to say that the buyer, her realtor, her inspector and others could be exposed to the COVID 19 virus as a result of visiting the house.

The parties then represent to each other in the form that neither they nor their realtor nor their inspector has tested positive or shown signs of COVID 19, have not been in contact with anyone in the past 14 days who has tested positive for COVID 19 or is waiting for a COVID 19 test, and have not within the past 14 days arrived from or been in contact with anyone who has travelled from abroad.

I do not see how any party can represent as an absolute that they were not in contact with
a person infected with COVID 19.  Rather, this should be only to the best of the party’s knowledge, information and belief.  The same is true as to any contact with someone who has travelled from abroad.  It should be noted that the word “abroad” is not even defined.

The bigger problem is with the last paragraph of the form.  In it, the parties not only release and hold the realtors harmless from any COVID 19 related claim based on a visit to or inspection of the home, but also agree to indemnify the broker or the other party from any COVID 19 claim or lawsuit.  First, it is highly questionable whether anyone could prove to the satisfaction of a judge that a visit to a home gave a person the virus.  But more importantly,
the buyer and seller are being asked to indemnify, which is defined by Merriam-Webster as “to compensate or reimburse for incurred hurt, loss, or damage.”.  So for example,  if a realtor comes down with the COVID 19 and does not have health insurance, she could sue the buyer and seller for her hospital bills.  This is clearly not something that an informed buyer or seller would agree to, and in our transaction, we crossed out and initialled the last paragraph before signing it.

Having an experienced real estate attorney with his eyes on your documents is the best protection in these uncertain times.  This is all in a day’s work for us.

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Charles D. Whelan III has been committed to excellence for over 30 years. With offices located centrally in New Jersey, he is able to provide businesses and individuals with excellent legal services.

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