|THOUGHTS FROM A REAL ESTATE ATTORNEY|
|WE HAVE A PANDEMIC, MORE IMPORTANT – WHERE DO WE GO FROM HERE?|
Let’s Be Positive in Thought and Make Lemonade
|By Barton S. Strock, Esq.Strock & Cohen Zipper Law Group P.A. dba SCZ Real Estate LawSafeKey Title & Closings LLCFormer President of the Weston Bar Association|
I have been practicing real estate law in Broward County for almost 40 years. I have experienced four or five recessions (who counts anymore) in that time, including the great recession of 2008. Oh, and a couple of global pandemics known as SARS and Swine Flu. The 9/11 terrorist attack and a multitude of worldwide attacks. I have lived through Hurricane Andrew’s destruction of the economy and real estate of South Florida. There have been more than just a few wars in between and what some people see as a couple of cataclysmic presidential elections.
The government and populations reaction to this pandemic is unprecedented. Yes, many people will get sick and many will die. We really cannot change that. No one could have anticipated the magnitude of this crisis even a month ago with the distorted (or total lack of) facts coming out of its place of origin. There will be those who seek to place blame here, but I don’t do politics and have not for a long time. It is senseless. Or maybe there is a lesson here also.
My firm has been inundated with questions from Realtors®, buyers, sellers, loan originators, landlords, tenants, and everyone else with a connection to the real estate industry. Here are just a few common questions and answers as an example:
Q. My tenant (residential and commercial) has not paid monthly rent. What can I do?
A. Post a 3-day notice, but it cannot be enforced right now as the courts are closed, the governor has suspended the eviction and foreclosure statutes, and the sheriff will not serve a writ of possession. Try to negotiate a workable solution with tenant that takes into account the realities of the situation. Contact me for a consult to see how we can structure such a solution taking into the realities of your and your tenant’s situation. Each situation is different.
Q. I have a closing scheduled but I cannot get to the closing because (a) I cannot get here from Colombia, or (2) I am under quarantine in New York due to exposure to the virus, or (3) I am scared to come to your office.
A. We are just as scared as you are to come to the office. We have remote online notarizations available. We now conduct drive-through closings (“McClosings”) where we email you the documents, you print them out and review them, drive up to our office and one of our attorneys will stand 6 feet from the car window (all in facemask) and explain the documents and tell you where to sign. By the way, the pen has been sanitized and please keep it.
Q. I have a real estate listing in a multi-story condominium, and they will not let me show the property?
A. They can do that under the emergency powers of an association pursuant to the Condominium Act. You need to learn to live with certain obstacles that appear in our path. Most importantly, because there is nothing you can do about it right now. For the most part, the courts are closed, and no judge is going to give you a temporary injunction.
Q. I am due to close in 15 days on the property I am selling. The tenant has advised me that he cannot move into the property he rented because the association won’t allow movers in the condominium. The Buyer wants to cancel if I cannot deliver a clean title with no tenant.
A. We cannot evict the tenant as referenced above. Negotiate with the tenant. Offer cash for keys if he gets out timely. But if the tenant really has no place to go then what is money going to do. Maybe negotiate with the Buyer to extend the closing date? It depends on Buyer’s circumstances where they are now.
This is all new to us as attorneys. We think about what we have learned from earlier situations and try to apply it to the current set of facts, sometimes with amazing creativity. But there are some major differences here. The courts have never been closed or restricted at any time I can recall. In three weeks, we have gone from what has been the best economy the United States may have ever seen to a recession and what may soon be the worst unemployment statistics in history. In past events, no one suffered the anxiety and other effects of quarantine for who knows how long. The leisure and hospitality and the transportation sectors of our economy have basically been shut down. I could keep going but no sense bemoaning our fate. We must accept the reality and play the cards that have been dealt us.
So, where do we go from here? Let’s dwell on the positives. We have seen a bipartisan stimulus law get through the partisan Congress. Suddenly, everything old is new again. Let’s make a deal. Let’s compromise. Say anything outside the room but you get in here let’s make it happen. It works. Can we apply that to our lives and relationships with friends who have different views (if we still have any after the last presidential election when the country split down the center).? It’s not “I want to win at all costs”. It should be “How to we make it a win-win”. Perhaps, that is the Florida Supreme Court Certified Civil Mediator coming out in me.
I have seen my clients back off from the “I want all” and be willing to compromise on disputes with full knowledge that the courts will not be back to normal any time soon. And with people out of work maybe I cannot get all that I want. I have been telling my clients for years the value of a settlement, but they seem a little more willing to listen when there is no Court to turn to.
In our firm, we have found we don’t need as much leased space as we have now. With a few minor adjustments, we can have a significant portion of our staff work remotely from home. This will cut our overhead significantly. Phone consultations have become the norm. I cannot wait until we add video – as long as I don’t stand up, I will be professional. A lot of companies will realize this so that the demand for office space will go down. I think we will see the implementation of paperless closings and remote online notarization (RON) expedited – not only for closings but for estate planning documents and more.
While I don’t have a crystal ball, I suspect the length of this recession will be very short-lived, unlike the previous ones we experienced. Why? The economy was strong when we started and is still growing. Interest rates are at record lows so that businesses can invest in expansion. Unlike the 2008 recession, banks are strong and do not have liquidity issues. New investment will come in the field of manufacturing – not service jobs. The government is going to encourage domestic production of what we found we did not have – medical supplies, medicine, oil, and gas – maybe even an iPhone. Hopefully, we have learned that in strategic areas we need to be self-sufficient and produce our own. Do not be reliant on those we cannot count on. That is how business works. Commercial realtors should get ready to ride the wave increased demand for warehouse and industrial property. Maybe we can even have a national toilet paper strategic reserve built underground somewhere in this country.
The economists I listen to (Dr. Ted Jones of Stewart Title, in particular) suggest this will be a sharp and quick recession that we will come out of just as quickly. Not a U shape but a V shape on the charts. The hospitality and leisure sector may suffer more long-term effects, especially our favorite local restaurants. Try to help them now before it is too late – TAKE OUT A MEAL. REGULARLY.
Why will this recession (or downturn) be so quick? First, the massive government stimulus is so far beyond anything that has ever been done before that it is our hope and intention that it will work and work well. Yes, there will be some rough spots until it gets out there. But the payroll loans program will allow our firm to keep the entire staff working at no cut in pay – if we can only get the bank to process it sometime soon. Second, we are Americans. We don’t always listen to facts. We believe that it how this country was founded. If we checked the facts, we still would be handing out stimulus funds in pound-sterling notes and singing God Bless the Queen.
So, let’s stay safe out there and make lemonade out of the lemons that have been delivered to our door. Our attorneys, Julie Gonzalez Cohen, Adam Zipper, Kari Struble, and I, Bart Strock, are available for free consultations with realtors, other attorneys, and anyone involved in the real estate industry.
All consultations are by phone. Call (954) 634-1769 to set up an appointment.