Emergency Clauses During COVID-19 Lara Stasiw Real Estate Blog

We’re in unchartered territory. We don’t know what’s ahead. We also don’t know how long this “new normal” will last. No one wants to have to use State of Emergency clauses, but the reality is it’s possible you’ll need their protection. So, whether you’re on the buy or sell side of a deal, there are contract clauses to consider using during COVID-19.

State of Emergency Clauses

The top 4 recommended clauses to use during COVID-19. Keep reading for a quick overview of each!

Clause 1 • Unable To Complete

Buyer and Seller agree that if the Buyer or Seller is unable to complete this transaction due to:

1. the Buyer’s bank and/or mortgage lender temporarily ceasing operations; and/or
2. the Seller’s bank and/or mortgage lender temporarily ceasing operations; and/or
3. the Land Registry Office and/or the electronic land registration systems temporarily ceasing operations;

then the date of completion shall be extended to a date that is two (2) days (excluding Saturdays, Sundays, statutory holidays, civic holidays and any other day the Province of Ontario has elected to close for business) following the date when the operations by the bank and mortgage lender and the Land Registry Office and the electronic land registration systems are available. Provided further that if such delay exceeds page96image3097556800( ) days from the date of completion originally agreed to in this Agreement of Purchase and Sale, or any schedule thereto, either party may terminate this agreement upon notice in writing to the other party or their lawyers, whereupon this agreement shall become null and void and the Deposit shall be returned to the Buyer forthwith without penalty or deduction. For purposes of this clause bank and mortgage lender shall mean any corporation incorporated pursuant to the Trust And Loan Companies Act (Canada), Chartered Bank, Trust Company, Credit Union, Caisse Populaire or Insurance Company.

Clause 2 • Key Drop Devices

Upon completion the Seller shall provide any keys to the property by leaving them in a lockbox or other secured device on the property accessible to the Buyer. Provided further that upon completion the Seller’s lawyer shall provide to the Buyer’s lawyer the device code required to access the said lockbox or other secured device.

Clause 3 • Electronic Signature Consent

The parties hereto consent and agree to the use of electronic signature pursuant to the Electronic Commerce Act 2000, S.O. 2000, c17 as amended from time to time, with respect to this Agreement and any other documents respecting this transaction.

Clause 4 • Video Conference Closing Documentation

The parties hereto consent and agree that any closing documentation may be executed remotely utilizing video conferencing which may include the use of electronic signatures pursuant to the Electronic Commerce Act 2000, S.O. 2000, c17 as amended from time to time.

Clause 1 • Unable To Complete

Clause Protection:
  • Buyers’ bank temporarily ceases operations
  • Sellers’ bank temporarily ceases operations
  • Land Registry Office temporarily ceases operations
Clause Overview:
  • Both parties agree to extend the completion date 2 days (excluding weekend days, holidays etc) after the required service is available again
  • Provision for termination if the time period exceeds a stated number of days

This clause protects the deal and prevents it from falling through if this pandemic progresses to the point of these closures. If it doesn’t reach that point, they hold no weight. But if they do, at least you will be protected if you’ve included this clause in your deal.

Clause 2 • Key Drop Devices

Clause Protection:
  • Brokerage closures
  • Law office closures
  • Eliminates the need for in person key transfers
  • Increased personal protection, therefore allowing all parties to practice social distancing
Clause Overview:
  • Allows alternate means for key exchange, such as lockboxes or other secure means

Every deal is different. This clause creates flexibility for key exchange to make sure it will happen.

For example, the day of my most recent condo closing both brokerages were closed and lawyers were working remotely. There was no lockbox on site, so access was by getting a key from the front desk concierge.

I waited for word from my clients’ lawyer that everything was received on closing day. Then I left both full sets of keys inside the unit, using the front desk key to lock up. I informed property management that the deal was closed and instructed them to release the key to the new owner or her agent.
Unorthodox, but it definitely worked and kept everyone safe!

Clause 3 • Electronic Signature Consent

Clause Protection:
  • Promotes social distancing
  • Prevents the need for in person meetings and signatures
  • Benefits clients, Realtors and lawyers
Clause Overview:
  • Allows the use of electronic signatures for all deal documentation

This is a great clause to include all the time! E-signatures make the process smoother and quicker for people that feel comfortable using them. Also, there’s still the option to sign in person if that’s your preference!

Clause 4 • Video Conference Closing Documentation

Clause Protection:
  • Promotes social distancing
  • Prevents the need for in person meetings and signatures
  • Benefits clients, Realtors and lawyers
Clause Overview:
  • Allows the use of video conferencing for all deal documentation
  • Allows the use of electronic signatures for all deal documentation

Similar to Clause 3, this clause smooths the process and can benefit any deal. It allows them to be completed remotely, therefore promoting social distancing and protecting our health.

What if you already have a firm deal signed without these clauses?

A clause can be added after a deal is firm by signing an Amendment. Both parties need to agree and sign. These clauses to use during COVID-19 protect both parties, so they won’t cause an issue if everyone wants the deal to proceed. However, every transaction is subjective and it’s possible a buyer or seller would rather get out of a deal.

In conclusion, it’s important to include these clauses and best to do so from the beginning.

Most importantly, talk to your Realtor or lawyer for advice and information at the beginning of the process. You need to fully understand the implications of this pandemic. You can change these clauses to reflect your wants, needs or situation. Every deal is subjective, so it’s a good idea to consider other protective clauses as well.

Clauses are only one facet of buying or selling during COVID-19. In short, it’s important to be informed.

Lara Stasiw • Real Estate Agent & Home Design Connoisseur

Lara Stasiw West Toronto Real Estate Blog

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