| In these difficult times, the Real Estate Board of New York (REBNY) is committed to protecting the health and safety of all New Yorkers. With that in mind, there are many aspects of the real estate business that have traditionally required person-to-person contact that need to be adjusted to account for the Coronavirus (COVID-19) crisis.
To help with that process, REBNY has developed the following recommendations to provide the boards of directors of cooperative housing corporations (“co-ops”), the boards of managers of condominium associations (“condos”), managing agents, brokers and attorneys with best practices to help facilitate remote real estate transactions using technology. |
It is important, even during the Coronavirus crisis, that apartment owners can sell or lease their apartments. The halt of sales and leasing: - could lead to an increase in defaults,
- will reduce the transfer fee revenue that certain co-ops and condos collect to cover increased expenses, and as a result of lower values,
- diminish an owners’ ability to refinance at current low interest rates.
All of these scenarios threaten to create considerable hardship for owners, buyers and tenants. |
Board packages used to screen potential purchasers or tenants should be distributed to Board members without person-to-person contact. Several options exist to do this through electronic Document exchange services that ensure security and efficiency (for example, Board Packager). The same principle of using technology should be utilized for the purchaser’s review of the Board minutes, which can also be done under confidentiality agreements. |
Board interviews can occur using alternative and reliable communications systems such as FaceTime, Skype, Zoom or Google Hangout, among others without the interview being recorded. Please coordinate the tool of choice with all Parties involved and schedule Board interviews accordingly. |
To eliminate the exposure of parties at a closing, all parties should take steps to implement “escrow” or “virtual” closings.
In “escrow closings,” the participants utilize the services of a third party (i.e. an attorney, title insurance company, escrow company or settlement company) that acts as “escrow agent” for the parties so they do not have to attend a physical closing. Under this type of closing, each party to the transaction signs and has notarized their respective documents when convenient for them. The escrow agent then collects all the documents and monies on behalf of the parties and holds them in escrow. Once all the signed documents and funds are delivered to the escrow agent, and all closing conditions are met, the transaction “closes.”
“Virtual closings” are similar to “escrow” closings in that the parties do not physically gather to close a transaction. In virtual closings, however, the parties do not utilize a third-party escrow agent. Rather, the parties utilize various electronic means to sign documents and exchange funds. A major impediment to virtual closings in New York State is the requirement that notaries be physically present when a person signs a document. However, this has changed as a result of a temporary executive order during the COVID-19 crisis.
At a time of unprecedented uncertainty, it is our civic responsibility to ensure that the industry take every measure possible to protect the health of our community by conducting business using technology.
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