I think we can all agree that the real estate industry was not spared from the devastating impact of the coronavirus (COVID-19) pandemic.
Buyers, sellers, developers, brokers, lenders, title companies are all effected by the current and constantly evolving health, social and economic turn of events.
Since New York State has mandated that all non-essential businesses reduce in-person work forces by 100%, conducting a real estate transaction became a challenge to everyone involved.
We see that all industry participants try to react to these changed circumstances in a variety of ways. Some decided that waiting is the best policy and it is more reasonable not to conduct any transactions at this time, others try to find responses to the current situation in order to be able to move transactions forward and eventually conduct a closing.
Not sure who is right or wrong here. I think both arguments are fair and understandable, but the question remains. Can we and should we conduct loan and real estate closings and if so, how?
Maybe this is the best time to revitalize the entire industry and move towards remote, digital and online closings? Should brokers use online walking tours for showings? Is this the future? Not sure, but some industry participants provide ways to remain active and find solutions to these questions to be able to conduct the closings even during the pandemic.
How? Here are some of the solutions that may aid in conducting loan and real estate closings remotely, eliminating the risk of exposure that would be posed by a traditional in-person closing.
Escrow closings are not foreign to the industry and they have been widely used for years, if all parties agree, an escrow closing may be a viable option, with funds being sent via wire transfer, however if originals are needed, delivery may be an issue. An escrow closing may also be accompanied with using online attendance via a secure video/audio conference channel.
The recently announced NY Executive Order 202.7 may also aid in conducting online, remote and digital closings as the order temporarily suspended the rule requiring physical appearance before a notary public and authorizes notarization via audio/video technology, which makes it easier to conduct closings in escrow. Multiple title insurance underwriters have issued new, temporary underwriting guidance related to the use of Remote Online Notaries in an effort to facilitate the closings of real estate and mortgage transactions during the COVID-19 pandemic.
Due to the nationwide pause, recording can also be challenging. Title companies have been monitoring clerk office closures and relaxed regulations across New York. Many county clerk offices are now authorized to accept electronic copies of deeds and other recordable documents and are continuing to accept documents transmitted electronically for recording at this time.
In counties where county clerks are accepting documents transmitted electronically for recording, title insurance companies are continuing to issue title policies. A Policy Authentication endorsement is available, which provides that title insurance coverage will not be denied on the grounds that the policy and endorsements were issued electronically. However, title insurers are taking varying approaches when it comes to conducting a closing in areas where county clerk offices remain closed and do not accept electronic recording.
I am not sure who is right or wrong, maybe we must adapt to new circumstances as we do not know how long the social distancing protocols will be applicable.
One thing is certain, in my opinion, in person closings should not continue. For those closings that absolutely must occur in person, please be sure to follow the CDC and NYS Health Department guidelines to ensure health and safety during this time. Stay safe!
This alert does not purport to be a substitute for advice of counsel on specific matters. Should you have any questions or concerns, please feel free to contact us, we are here to assist!
