COVID-19 has impacted every industry in one way or another. However, it seems the real estate industry has been flipped upside down.
Health and safety concerns, protocols and requirements regarding the pandemic have had significant effect within real estate operations.
Take showings or viewings for example. All parties involved – the seller, the agent, and the buyer – must come prepared with protective gear such as masks, hand sanitizer, and maybe even gloves.
There should be some sort of screening process or questionnaires for guests to fill out in order to prevent the spread of coronavirus and reduce any potential risk of exposure. A party may be denied a right to enter if they are experiencing or have experienced symptoms relative to COVID-19. In response to the changes in procedures, social media platforms are now being used more than ever before to show properties to prospective and current clients. Facebook Live, Zoom meetings, Skype, and FaceTime are now being used by agents to show listing to clients without having the risk of potential exposure or spread. The buyer and seller can log onto the virtual meeting while the agent(s) walks through the listing and facilitates conversations between parties.
Just as COVID-19 has impacted open house and showing strategies, the pandemic has also limited parties’ abilities to get together to start and execute the closing process.
Reviewing, recording, and signing documents usually occurred in a physical, face-to-face setting. However, sellers and buyers are now turning to other options to close transactions virtually. Electronic procedures such as electronic signatures, remote online notarizations, and electronic recordings are quickly becoming the new norm. There are several issues and key factors to look at when considering electronic/virtual processed for closings. The Uniform Electronic Act and the federal E-SIGN Act both provide states with standards and procedures regarding the use of electronic signatures during transactions.
While each state may have their own requirements and/or exceptions regarding electronic transactions, the basic requirements under these acts include authentication and consent.
Regarding authentication, evidence of communications between parties is used to confirm a party has executed a document or agreed upon certain terms and conditions. This makes the importance of saving, recording, and documenting all communications between parties more critical than ever, to avoid risks of a party claiming they did not actually execute a document.
Additionally, there must be clear consent from all parties regarding an electronic transaction process. All parties must consent to this type of process for electronic signatures to be considered valid and binding in the first place. To show clear intent of a person signing electronically, there are different processes that may be used, such as DocuSign or PandaDoc. These processes involve more than just checking a box, as there are certain steps required and documents that need to be reviewed and executed in order to demonstrate the intent behind the individual signing.
Similarly, most states, including Pennsylvania, have adopted a system to electronically record mortgages or deeds. Properly executed and notarized documents may now be recorded electronically, and parties may also want to consider their available options for virtual notarizations.
We are continuing to carry out procedures and protocols in mitigation efforts to stop the spread of COVID-19.
All parties involved in a real estate transaction– buyers, sellers, lenders, borrowers, agents, etc. – may now want to start to consider different methods of electronic implementations.
Before even starting the process consider:
- Making sure all parties are aware of certain requirements, restrictions, or exceptions to ensure compliance with any electronic signature, notarization, or recording statutes and laws.
- Recording and documenting all communications and interactions between parties, in-person or virtual, as evidence in the event a dispute regarding documents or procedures arises.
- Hiring a lawyer for representation to help facilitate the transaction, to ensure all parties are represented fairly, and to cause closing requirements and procedures to be complied with to the full legal extent.
The alternative methods of electronic transactions are extremely new and ever evolving, making compliance with all relevant laws potentially overwhelming. For matters relating to the sale, purchase, title insurance and closing of real estate transactions, or if you have any questions, you should contact one of the Real Estate attorneys at KingSpry.
