Can Coronavirus Get You Out of a House Contract?!
This weekend we had an experienced real estate attorney speak to Your Detective of the Air, Steve Warneke, to explain "force majeure" and whether or not the COVID-19 pandemic qualifies as "an act of God".
Homebuyers Trying to Postpone or Break Deals Without Penalty
As Economic Crisis Looms
"HOW DO I GET OUT OF THIS DEAL?" There isn't a clear answer on whether the COVID-19 pandemic counts as a "force majeure", a provision included in a commonly used contract for real estate agents. However, some homebuyers are trying to utilize the clause anyway, stirring up a huge debate amongst real estate lawyers and professionals.
Enter Attorney Gary Nagle of Nagle Law in Juno Beach, Florida, who has not only practiced law in Palm Beach County since 1977, but has also represented several boards of realtors in Palm Beach County, and currently represents the Jupiter-Tequesta-Hobe Sound Council of the Miami Association of Realtors and the Palm Beach Board of Realtors.
"Shortly after we had the events occur at the end of March, I saw a severe uptick in the number of calls I was getting dealing with real estate transactions looking to be cancelled mostly by buyers."
Mr. Nagle has some sobering advice for panicking homebuyers:
1. Remember, there was a reason you signed in the first place.
You entered into your contract because you liked the house, you liked the price you agreed on, and you liked the terms. Remember what your home was for in the first place.
2. Look at your specific contract.
Each contract is written differently, specifically for your home. Refer to a professional real estate attorney who can review your contract to see if there is language or provisions that would allow you to cancel or postpone thanks to the COVID-19 pandemic. Even if the "force majeure" clause ends up working, you won't know that potentially until after a long legal battle.
3. But be prepared to go to court.
" There is no court decision now that I have been able to find that lists pandemic as a force of an act of God or force of nature," Mr. Nagle explained. It'll most likely be a decision that will have to be made at the court level and that's a costly venture in and of itself, so be prepared.
"There is no silver bullet... Mathematically, your odds of winning in court are 50/50 and that gives people a lot of cause for concern."
So whether you're getting cold feet, or you've taken a huge hit in the stock market and are worried about your finances, or if you're just using the pandemic as a tactic for leverage to get more money off your home purchase, be prepared for the cost.
Steve also had some other helpful reminders and options for consumers to get through these tyring times.
First, with traditional home financing, typically there is no mortgage payment the first month. Be sure to include that into your calculations. Also, there is an option amid the COVID-19 pandemic to withdraw funds, typically up to $100,000 without penalty, from some retirement accounts. Consult your financial advisor to ask about that.
Lastly, consider any and all available options offered by the CARES stimulus plan. The federal government is offering bridge checks, enhanced unemployment insurance, and small business loans, including to sole proprietors, which in many cases if you follow the rules, can be forgiven.
IF YOU HAVE A QUESTION YOU WANT ANSWERED, A PROBLEM YOU WANT US TO INVESTIGATE, OR A COMPLAINT TO SHARE WITH YOUR NEIGHBORS, TELL US HERE AND WE'RE ON THE CASE!
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Until next time...