Given the ongoing global pandemic relating to COVID-19, and the related public and private closures, scheduled contract closings may experience delays. When determining what such delays mean for your pending real estate contract, it is essential that you refer to the terms of the contract form itself.
Specifically, the standard FAR BAR “As Is” Contract, which is the most predominant contract form being utilized locally, contains Force Majeure provisions that may excuse a party’s non-performance of contract obligations under certain circumstances. Please note that the definition of Force Majeure in the FAR BAR “As Is” Contract does not expressly include pandemics or epidemics, such as the Coronavirus (COVID-19). The Force Majeure clause does, however, address limitations on a party’s ability to perform its obligations under the contract due to a hurricane, flood, or fire, or other acts of God, unusual transportation delays, or wars, insurrections, or acts of terrorism. If either party is unable to perform their obligations under the contract due to a qualified Force Majeure, the non-performing party will not be held in default, or liable for damages. Furthermore, all contract deadlines, including the closing date, will be extended up to seven days after the Force Majeure no longer prevents the performance under the contract. Such extensions would occur for up to 30 days beyond the contract closing date. If, however, the delay is more than 30 days beyond the contract closing date, either party may terminate the contract by giving written notice and, in such circumstances, the deposit shall be returned to the buyer and both parties would be released from all further obligations under the contract.
In an effort to provide additional guidance, the Florida Association of Realtors has also circulated a COVID-19 Extension Addendum to Contract. Same can be useful to clarify any mutually agreed extensions of time given the uncertainty of whether or not the force majeure provisions will apply.
Should you have any questions regarding a new or pending contract, or require assistance with drafting COVID-19 addendum, please contact us.