March 18, 2020
These are unprecedented times for consumers and the real estate industry. The Colorado real estate form contracts do not expressly address situations like this. No one in the industry has experienced a similar event on such a scale. Nevertheless, CRES and our Colorado attorneys are analyzing the situation to anticipate legal and practical challenges that face real estate professionals and consumers.
Our legal experts offer the following insights and thoughts:
- Brokers and agents MUST discuss the following risks with their clients NOW. These discussions should be documented in writing with the client acknowledging receipt to avoid future questions about whether the client was provided risk-related information.
- Brokers should start contingency planning in the event of quarantines. There are already mandated quarantines for infected individuals. Quarantines create practical problems such as when a quarantined buyer cannot go to the bank to obtain closing funds.
- Quarantine workarounds should be sought and discussed. One possible solution would be to have the bank allow for wiring instructions to be provided over the phone upon receiving a letter from the health department.
- Transactions done by way of a power of attorney arrangement may also facilitate closings if a party is quarantined.
- If a power of attorney arrangement is necessary, be sure that all formalities are observed, that client instructions are clearly understood, and the necessary forms are properly executed.
- Remote closings may become more common and a frequent workaround. Brokers should discuss with the parties and the title company the possibility of video or audio taping the closings to create a better record of what occurred at closing and avoid problems relating to identity and miscommunications.
- Quarantines of infected sellers within the home that is the subject of the transaction is even more problematic. Such situations are riddled with disclosure, psychologically-impacted property, stigmatization, medical privacy, contract performance, ethical compassion, and public health policy issues. Brokers need to start having these discussions with their clients, as well as receiving feedback from the client’s physician, the client’s attorney, and government authorities.
Be sure your brokerage is protected by Colorado real estate errors and omissions insurance.
Authors:
James M. Meseck | Attorney
Rachel E. Ryckman | Attorney
E. Catlynne Shadakofsky | Attorney
White and Steele, P.C.
600 17th Street, Suite 600N
Denver, Colorado 80202
