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FR/BAR Contracts and Corona: How to Survive your COVID-Closing

By: Jared Gaylord, Esq., of Marc. R. Gaylord, P.A., Hobe Sound, FL and a Member of The Fund

Unfortunately, COVID-19 is here to stay. The global pandemic has touched every aspect of American life. Real estate closings have not been spared. It is imperative to understand how the coronavirus can impact a real estate transaction to adequately protect yourself and your clients.

I have been inundated with the question “will the Force Majeure provision in the FR/BAR ‘AS IS’ Contract apply to COVID-19 to delay or excuse performance?” Since this question has not (yet) been decided in court, we do not know the exact answer. However, it is highly unlikely COVID-19 would trigger force majeure protections, especially for contracts formed after the virus’s impact was well-known.

Florida courts only grant relief for an “Act of God” if the event was unforeseeable and outside the control of the party seeking relief.[1] Since we know COVID-19 will be a continuing issue, the law places the onus on the contracting parties to draft contractual solutions around potential problems resulting from the pandemic. Additionally, it’s questionable whether the FR/Bar’s Force Majeure provision in paragraph 18(G) even applies to coronavirus – epidemics, pandemics, and even states of emergency are not mentioned. Finally, while COVID-19 makes closings inconvenient, it does not prevent performance. Governor Ron DeSantis’s executive orders deemed the services necessary to close a real estate transaction as “essential” and immune from forced closure.

The best advice? Do not let your client be a test case in court. Careful planning and consultation can avoid losing a deposit or litigation. These simple tips can help:

  • Lean on Tech: Fortunately, it’s 2020 and we can access an array of technology that facilitates social distancing for health-conscious sellers and buyers. Rely on electronic signature services when possible. Make use of a Remote Online Notary. Old fashioned “mail away” closings and mobile notaries are great options for those of us who are not techies.
  • Inspection Period: The surefire way to protect a buyer and a buyer’s deposit is the powerful language in Paragraph 12 that permits the buyer, in his or her “sole discretion,” to terminate a real estate contract. Educating buyers (and sellers!) about this provision and clearly communicating the end of the Inspection Period is key.
  • Financing Contingency: Paragraph 8’s Financing and Loan Approval Period are provisions that can protect buyers in the unfortunate event of a COVID-19 related layoff, furlough, or loss of employment. The lender will likely deny the buyer’s mortgage and, if this occurs within the Loan Approval Period, the buyer is entitled to terminate the contract by delivering written notice to seller, without risking the buyer’s deposit.
  • COVID-19 Addendum: Florida Realtors® (“FR”) released a COVID-19 Extension Addendum to Contract in March. The addendum’s main function is to extend the contract’s critical dates – not excuse performance. However, the addendum permits the Buyer to cancel the contract by providing seller written notice by “the earlier of Closing Date or within two days of expiration/notice of refusal” if buyer’s “loan approval expires” or the “lender refuses to fund the loan due to COVID Restrictions.” It is important to note that the FR’s addendum only extends contractual time periods that have not yet “passed or expired.” Other custom coronavirus addenda I have reviewed automatically extend the contract’s critical dates in the event of quarantine, hospitalization of either buyer or seller, or inability of a required vendor to perform a necessary closing function. I recommend discussing the FR addendum or a custom coronavirus addendum with your clients, your broker, and a real estate attorney at the onset of a transaction before problems arise.
  • Consult with a Local Real Estate Lawyer: This is an evolving crisis. Unanticipated hurdles and challenges will undoubtedly arise. The best advice is to seek out expert advice – make use of local real estate lawyers. They will be able to assist you and your clients with interpreting the contract, drafting protective contingencies, and closing the transaction. Their knowledge and experience are invaluable to you and your clients during this difficult time.

Be safe and stay healthy!

Jared Gaylord

Marc R. Gaylord, P.A.

PH: 772-545-7740

Email: jared@marcgaylordlaw.com

This publication does not establish an attorney client relationship and you are advised to consult with an attorney before relying upon this publication.


[1] See Florida Power Corp. v. City of Tallahassee, 18 So.2d 671, 675 (Fla. 1944); see also Bloom v. Home Devco/Tivoli Isles, LLC, 2009 WL 36594, at *4 (S.D. Fla. Jan. 6, 2009).

The opinions of any particular author are not necessarily the opinions of Attorneys' Real Estate Councils of Florida any of the local Real Estate Councils or Attorneys’ Title Fund Services, LLC.