Navigating Real Estate Purchases, Sales and Refinance Transactions
in a COVID-19 Environment
What Can We Expect?
The real estate market in Connecticut is a particularly reactive market, in large part because of Connecticut’s location within the New York metropolitan area. In decades of practice, I have counseled clients through real estate acquisition, and purchase and refinance closings, while speaking to the practical impact of economic recession, market correction, inflated and depressed real estate values and 911 and its aftermath. Then there was Irene, and Superstorm Sandy. In each case, the practice of law and the advice given to clients in the wake of impactful and painful events has remained consistent.
- Look beyond the crisis. In times of crisis, judgment can become clouded and perspective can shift. Circumstances will change. Think about what is best for the longer term, taking a conservative approach.
- How are you going to pay for/afford a new home? What financing options are practical? Have you explored these options?
- Have you signed a binding contract to purchase a property and, if so, can you still seek legal advice and make sure that your deposit is refundable?
- Have you requested the proper contingencies (terms) in your deal before being held to a contract?
- Sellers, are the terms of the transaction reasonable? Are the buyer’s “asks” reasonable?
- How much due diligence is appropriate for home purchases? As a seller, do you have issues that should be vetted with your closing attorney before the house hits the market? Permits in place? FEMA regulation impact for neighborhoods where flood insurance is commonplace? Underground tank removal/remediation? Probate and title issues?
Many experienced real estate professionals (brokers and agents) will prepare sellers and buyers to address these issues. Some will not.
Mortgage lending practices have been put into a tailspin in recent weeks and will most likely be difficult for everyone to navigate for months to come. We are in uncharted waters because there is no finite answer to “when will this pandemic slow down to a point where we are comfortable as a society to open our doors to commerce and feel reasonably assured that we are acting in a responsible manner”?
With this in mind, I suggest that you use this time as an opportunity to reflect and carefully consider some of the questions that I have raised in this blog. Gather information that will be relevant to your decision to buy, to sell or to refinance your real estate. Lenders are going to be looking for tax returns. If you are able to file for 2019 and you are seeking financing, this would be a great place to start. Even though there may be further extensions to file your taxes, lenders are going to want to see 2019 figures. Many of my clients want to refinance their existing homes and take advantage of lower
interest rates. Now is the time to think about putting in an application to refinance your home. The process is likely to open- up slowly as we adjust to a new normal.
Without doubt, this COVID-19 experience has impacted all of us. To navigate through this pandemic, use common sense. If something is too good to be true, it almost always delivers.
About the author: Attorney Heather Brown has handled Connecticut real estate matters for more than 35 years. She is licensed to practice law in Connecticut, New York and Arizona and serves on the executive committee of the Fairfield County Bar Association and as co-chair of the Residential Real Estate Contract Revisions Committee. She is also a member of the Connecticut Bar Association Real Estate Section. You may contact Heather by email firstname.lastname@example.org or by calling (203) 655-1900.