Don't get caught by COVID-19
As everyone is aware now, there is a pandemic gripping the world, which caused the American economy to grind to a halt in March 2020. As a response to the confusion and uncertainty surrounding how COVID-19 would affect real estate transactions, the Florida Realtors created an addendum for its members. This addendum extends certain dates on a contract for the Sale and Purchase of property in case COVID-19 issues made it impossible for a party to perform. The form is below:
Unfortunately, this form is being used in circumstances it was not intended for and Sellers and Buyers are suffering the consequences. This form is intended to be used with a contract that has already been signed, it is not intended to be attached to a new contract. The form automatically extends the deadlines without the need of a party to show that COVID-19 caused the delay.
How can this impact a transaction? A Buyer and Seller enter into a new contract and set all of the dates in that contract, including the Closing Date. Then, the COVID-19 addendum gets attached at the same time. In the main contract, the parties set a Closing Date of August 15, 2020 and on the addendum they check the Closing Date box and write in August 31, 2020. They might think this is granting an extension from August 15, 2020 to August 31, 2020 if a party encounters an issue caused by COVID-19 but it does not. In this scenario, when the addendum was signed it automatically pushed the Closing Date to August 31, 2020.
The addendum clearly reads "If not yet passed or expired, the following date(s) and or time period(s) is/are hereby extended:" There is no qualifying condition that must be met before the extension kicks in - it is effective as soon as the addendum is signed. This form has its place in a transaction, but it is not at the beginning and the unintended consequence is either a Seller or Buyer who has made plans to move and is faced with an unexpected extension of their Closing Date with no recourse.
If you have questions about contracts and addenda, give me a call and I can review your contract and give you advice to meet your particular needs. Protect yourself. Hiring an attorney to represent you in a real estate transaction can help prevent something like this from happening to you.