Realtors Beware.../Covid Clause

The importance of using COVID Clause in your Agreements of Purchase and Sale...


Working as a Real Estate Lawyer gives me the opportunity to deal with unique situations which if Realtors were better prepared, could have saved lots of time, money and hassle for them and their clients.


On the other hand, since I have worked as a Realtor for over 15 years, I am in a  position to understand the hardship of this career and the situations my fellow realtors have to deal with, in their day to day business.


Considering all the facts, I have decided to spread my experience and knowledge with Realtors  from time to time in order to help them protect themselves and their clients in a better and more efficient way.

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Covid era requires innovation and preparation in order for all of us to be able to cope up with this unique situation.


The agreement of purchase and sale is the stepping stone of each real estate transaction and it can put both the realtor and the purchaser in a great danger if not prepared properly and with great caution.


I have seen so many poor written APSs which in case the deal goes sideways could have created irreparable damages to the clients and realtors.


fortunately, most of the real estate transactions are finalized without hassle but few ones that go out of the ordinary course, create huge impact on the buyer or buyer`s future life and also the life and career of the realtor who did not do a good job.


Recently a real estate transaction could be easily falling apart because the financial advisor who was working on the mortgage contracted Covid, just cople of days before the closing date and as a result, the whole branch was shut down and no one was allowed to enter the branch and do the rest of the work until further notice.


I could hardly convince the other side's lawyer to acquire extension from the sellers, but it might not happen in all cases because proving the three elements of Force Majeure in such a situation is definitely not an easy job at all.


 Some might think that the buyer is not liable and the deal can be extended easily but the fact suggests otherwise.


as a matter of fact in such situation, the seller might not accept to extend the deal because they bought another property and they need the money from the sale in order to close another transaction and this chain might go on and on and if the buyer cannot close the deal on the specific closing date, then the buyer will be considered to have breached the agreement and the first impact would be that the deposit can be forfeited.


But is it the whole story? Of course not.

if the seller can not close the deal, he/she might get sued as well and this chain continues and will become a disaster such as a snowball which turns into an avalanche.


Sometimes being cautious and prepared, can give you the advantage of saving lots of monetary and reputational hassles for you and your clients.


The COVID clause can be one of these simple adjustments that, if professionally and correctly done, can make a significant difference.

unfortunately, webforms do not offer a standard clause in this regard.


I am providing some general Covid clauses which might need to be tailored based on any different situation and as such, I strongly recommend using the clause in all your future offers as standard but be cautious that it might need to be tweaked in order to fit any specific situation. (seeking legal advice in unusual situations is strongly advised before the offer gets firm)


Remember, even if the seller does not accept the clause and cross it, still you are showing your utmost professionalism and have protected yourself and also can get advice from your client on how to proceed if the clause is not accepted.


Proposed Covid Clauses:


" The parties agree that if the buyer`s bank or lender or the applicable Land Registry Office temporarily ceases operations, such that either party is frustrated from completing this transaction for reasons wholly outside the control of and unforeseeable by that party, then closing is extended to the date that is 3 business days after the resumption of the bank or land registry services."


It is also recommended to include the following clause which covers the situation where parties to the transaction get infected.


"The Buyer and Seller agree and acknowledge that in the event that the buyer or seller to the Agreement becomes the subject of a mandatory COVID-19 virus quarantine OR (is hospitalized for COVID-19 or received a letter from doctor to self to isolate for 14 days because they have COVID-19) at the time of performance hereunder that results in the parties’ inability to complete the transaction as scheduled, the closing shall be automatically extended at the request of either affected party for a period of up to thirty (30) days (calendar days), unless the parties otherwise mutually agree to extend the completion date further. If this clause is invoked the buyer and seller shall continue to act in good faith and use their reasonable best efforts to ensure the completion of the transaction occurs on a timely basis as possible and will not use this as a measure to delay closing in anticipation of any such quarantine or closures, or for reasons unrelated to COVID-19. Time shall remain of the essence for any extended closing date as a result of this clause".

Masoud Zangeneh

Barrister & Solicitor











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