April 28, 2020
COVID-19 Impacts on Real Estate
It is no surprise that the novel coronavirus is impacting all assets of life–including real estate transactions and agreements. Right now, home sales have dropped by 15.4%. While many Americas are questioning what they should be doing to protect their equity, others have concerns about their rights in real estate transactions and construction. The real estate attorneys of Mazzoni Karam Petorak & Valvano are here to guide you through this uneasy time.
Construction Issues During COVID-19
Given state mandates on social distancing, many construction projects have been put on hold, including home building–unless it is deemed essential. Right now, this has many contractors and property owners reviewing their contracts and agreements for delays in development.
There is one thing that both parties need to be aware of: force majeure, unavoidable delay clauses in contracts.
Force majeure or unavoidable delay clauses are provisions within contracts that extend times of production as a result of extraordinary or unforeseeable events. For those entwined in a real estate contract at the moment, this type of clause may address issues such as:
- The inability of a construction contractor to complete construction within the required time frame because of emergency mandates
- Construction loan agreements to address the same issues as a result of the inability to complete the project
- Lease agreements which may include time frames of landlords completing repairs for tenants
Real Estate Borrowing/Lending: Material Adverse Effect Clause
When you first borrowed money for your home or new commercial property, you did not expect a global pandemic to arise. However, now that it has, you may be reviewing your finances and ability to complete real estate transactions in the time you had hoped.
Right now, many borrows and lenders are reviewing their contracts for the material adverse effect clause or MAC clause, which works to:
- Close a loan
- Provide additional funds
- Extend the term of a loan under an existing credit
To see if you qualify for the provisions under the MAC clause, you’ll need to work with an experienced real estate attorney to see the total picture of your hardships to ensure no other extenuating circumstances existed prior to the COVID-19 outbreak.
Safety Practices for COVID-19 Outbreaks in Apartments & Rent Payments
Community spread is a very real concern for landlords who own rental properties and apartment complexes. Right now, many are faced with the challenge of knowing how to conduct best practices for their tenants if someone has contracted COVID-19 in the building.
We know educating tenants on safety measures as well as properly sanitizing shared areas is critical, but when it comes to tenant privacy, landlords must tread cautiously to ensure they do not infringe upon tenants’ rights.
In addition to safety and health measures, the landlord must also be mindful of mandates regarding rent payments during COVID-19 as they cannot evict tenants in many regions. But landlords must also make their payments and ensure the facilities they own are up to standard for everyone’s safety.
Mazzoni Karam Petorak & Valvano Is Here For Your COVID-19 Real Estate Concerns
Every day, the economic impacts of COVID-19 alter our ability to live in the ways we had been accustomed to. We know these are trying times. Our staff is working remotely to provide you legal assistance over the phone, email, or through our advanced technology for all of your real estate needs.
Contact the Scranton real estate attorneys at Mazzoni Karam Petorak & Valvano today for a free consultation. Serving clients in Lackawanna and Luzerne counties, Wayne County, Monroe County, and Pike County.