NVAR’s leadership is aware of concerns about the adoption of a new form to address potential COVID-19 impacts on transactions. NVAR attorneys have been actively working with the Standard Forms Committee leadership and the leadership teams, taking a measured approach to creating an appropriate and effective solution that will best support our members and the marketplace. During the March 19, 2020 Board of Directors meeting, the Board approved the new COVID-19 Addendum (the “Addendum”).
When faced with real uncertainty in a real estate transaction, the natural response is to question whether either party will be able to get to settlement and what happens if performance becomes impossible. The situation remains fluid, but lenders, settlement agents and court clerk’s offices are still processing transactions. For this reason, the COVID-19 Addendum encourages parties to keep the deal alive, while at the same time protecting them if performance of their contractual obligations becomes impossible or impractical for reasons beyond their control. Every transaction is unique, so the Addendum provides parties with assurances while avoiding a one-size-fits-all approach.
How can I get the form? The form is available for immediate use (see education version here) and has been provided to all standard forms vendors for immediate release.
Under what circumstances can I use the form? The Addendum is in response to the rapidly evolving COVID-19 pandemic, can be used during or after contract ratification, and can be used to extend deadlines and the Settlement Date as many as times as the parties agree during the transaction (like the Inspection Contingency Removal Addendum).
How does the addendum protect the parties? The Addendum incorporates broad force majeure provisions into the contract which excuse buyer and/or seller performance when the ability to do so is impossible or impracticable due to events beyond their reasonable control. To improve clarity for Realtors® and their clients, the Addendum refers to these force majeure provisions as an “Unforeseeable Event.”
What constitutes an “Unforeseeable Event” in the Addendum? Section 1 defines what constitutes an “Unforeseeable Event”, while Section 2 affirms that neither party is in Default for a failure or delay in Performance caused by an Unforeseeable Event.
What if we only want to extend certain deadlines? Sections 3 and 4 of the Addendum allow the parties to extend the Settlement Date and other Contract deadlines. To provide greater flexibility, the parties are free to extend all deadlines at once (Section 3) or extend only specific deadlines (Section 4).
Can I use this form to extend the right of rescission period after delivery of a resale certificate or packet? No. The right of rescission cannot currently be waived or modified, including extension, by agreement under the Property Owners’ Association Act or Condominium Act.
Can I just use the VAR COVID-19 Addendum? We do not recommend that members use the VAR COVID-19 Addendum in conjunction with the NVAR Residential Sales Contract or other NVAR forms. The VAR Addendum is designed to work with the VAR forms library and contains defined terms that are inconsistent with the definitions in NVAR forms. Furthermore, the VAR forms treat the Settlement Date and Default differently than the NVAR forms.
What if I already have a ratified a contract? The Addendum can be executed after contract ratification. We encourage you to consult your client, Broker, the Realtor® representing the other party, and legal counsel, as appropriate, to determine whether to incorporate the Addendum into your existing contract. As always, the parties may execute a mutual Release at any time.
The most important thing to do right now is keep lines of communication open with your clients, fellow Realtors®, inspectors, appraisers, lenders and settlement agents. Realtors® have the obligations under the Code of Ethics to protect and promote the interests of their client while cooperating with other brokers except when cooperation is not in your client’s best interest. (Read more here).
As always, contact the Legal Hotline
if you any additional questions. “We R Online for Business”.