In response to the COVID 19 pandemic, the New Jersey Association of Realtors has promulgated an “addendum regarding coronavirus” which its members are now including in the preparation of contracts for the sale and purchase of real estate.
The addendum begins by acknowledging that the pandemic has had “unprecedented impacts on real estate transactions, including but not limited to travel restrictions, self imposed and governmentally required isolation, and closures of both governmental and private offices required to fund, close and record real estate transactions”.
It then permits a buyer or seller to postpone a closing for a time period to accommodate “Unforeseen Circumstances”, after which either party may cancel the contract and the buyer’s deposit refunded to the buyer. The default time period is 30 days but the parties can choose a longer or shorter time period. The closing can only be postponed if it is not possible or practical due to the virus, such as a party’s inability to travel to sign documents, closings of or delays in related government and business services, including for example delays by or closing of lenders, title/escrow, county recording offices, municipal inspections or otherwise.
The addendum also gives the parties the option to permit a party to cancel the transaction if the buyer is unable to close on a loan and proceed to closing because of the buyer’s loss of income from COVID-19 related issues, notwithstanding that the buyer may have removed the loan contingency from the contract. In such case, the buyer would be entitled to a refund of any deposit paid.
Either party can reject or modify this addendum in attorney review. If I am representing the seller, and my client is agreeable to it, I am limiting the postponement period to no more than 14 days. A buyer should consider that mortgage lenders may require loans to close within 60 days of application and therefore may not wish to give the seller too much of a delay period.