To mitigate the overwhelming uncertainty, some homebuyers are now adding clauses that allow them to postpone closings or even back out of deals without penalty should Covid-19 derail the process, Barron's reports.
“The general concern is that buyers would like to adjourn the closings to a later date,” says Ilyse Dolgenas, special counsel of the real estate team at Withers Worldwide, who works primarily with high-net-worth clients in New York. In the city, many co-op and condo boards have put in place sweeping “no-move-in, no-move-out” rules to limit importing the virus to buildings, where it could spread rapidly among residents. And that presents a dilemma for someone who buys a home they cannot move into.
“You don’t want to be in a position where you have to pay the carrying costs on a new home, but you can’t move in until this is all sorted,” Dolgenas says – especially in Manhattan, where monthly building fees can amount to tens of thousands of dollars in the borough’s affluent neighborhoods. The language in Dolgenas’s clause pushes the closing to some number of days after the coronavirus is no longer deemed a public emergency.
Inspections are also a concern for Leslie Hirsch, an agent with Compass, since Gov. Andrew Cuomo banned all non-essential business starting Sunday, including appraisers and inspectors from going on site visits. “My buyers were also planning on having a home inspection done before signing, but now we have to write an inspection contingency clause into the contract,” Hirsch says, adding that another clause also “says if the buyers contract Covid-19 within 24 days of signing, they can back out.”
As New York City assumes the unenviable role as the epicenter of the pandemic in the U.S., expect more changes to the way co-ops and condos are run – and bought and sold.
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.
A free digital resource for co-op/condo board directors. Published twice a month. Read now on all digital devices.