Featuring real estate articles and information to help real estate buyers and sellers. The Nest features writings from Georges Benoliel and other real estate professionals. Georges is the Co-Founder of NestApple and has been working as an active real estate investor for over a decade.
When the world saw COVID-19 first take hold in China, no one ever expected life to change so drastically. 2020 marked one of the most uniquely terrible years in world history. The pandemic shut down the majority of businesses. It made many people penniless overnight. This led to most providers and state legislatures passing efforts to alleviate the stress of COVID-19’s impact. Each industry came up with a way to make it easier for people to survive during this time of economic turmoil. One of the most common ways landlords improved their chances was to add a COVID-19 clause. But what is it, and how do you make your clause work for both you and your client?
A COVID-19 clause is a rider, or a waiver added to a purchase or rental agreement in real estate. It’s a rider designed to help people protect themselves from sudden mishaps. It also protects them from delays that could happen due to the COVID-19 crisis. These ensure that either party has an “easy out” or a little leeway during a real estate transaction during the age of COVID.
There are multiple types that you could create. The most popular ones involve stipulations like the ones below.
After the pandemic hit New York City, the state created a boilerplate clause designed to help provide relief and legal protections to buyers and sellers. If you want to add the standard boilerplate clause to your offer or your transaction document, then you can check it out on NYSAR.
New York City loves regulations. But this is not a regulation it has. A COVID-19 clause is optional. Though it is encouraged by most New York housing boards. If you want to add it, by all means, do. However, it’s not mandatory, so you will not be penalized if you decide not to include it.
Now that things are opening up again, one could argue that the widespread vaccinations and better understanding of the disease made the need for all this COVID-19 assistance moot. However, we are still in a pandemic, and it’s becoming pretty clear that it comes and goes in waves. So on that front, you can use your judgment to determine whether or not it makes sense to have a clause in your contract. With that said, it’s an excellent courtesy to offer and can help protect you from incurring losses in some situations. It’s up to you to decide whether you want that additional cushion for COVID-19 risks.
Honestly, a large portion of the COVID-19 crisis has come and gone. Life is a lot more normal than it was a year ago. However, we’re not out of the woods quite yet. This is especially true in New York City. You might have a more significant issue: the freeze on move-ins/move-outs that many condos and co-ops still have in place. Depending on how things go, there’s a good chance that some communities will freeze moves during a fourth or fifth wave. This could make moving in and transitioning difficult. If you want to avoid this issue, it makes sense to add a COVID-19 clause to your real estate transaction.
The rules on this all depend on the situation. New York City has pretty strict and measured eviction laws, especially when it comes to special circumstances. The basic gist of what landlords and renters should know is as follows:
While the COVID-19 clause itself is new, the concept behind it is pretty old. Most people don’t realize this (or forgot about it), but people have used similar event-specific provisions during times of significant economic upheaval in the past. The most recent clause of this type before COVID was a clause that absolved renters and buyers of responsibility during the Great Recession.
Whether you want to have that protection in your contract is up to you at the end of the day. If you aren’t sure whether it’s the right move for you, call up your real estate agent and real estate lawyer, and talk about it.