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Closing on a house isn't so easy in the Covid-19 world

Even with the local housing market slowing to a crawl, it takes some creativity to close the deals that remain in the works.

With social distancing and rules restricting gatherings in place, local attorneys, brokers and even title insurers are scrambling to overcome unexpected new hurdles to real estate closings.

It's been tough enough on home buyers and sellers because showings, open houses and even inspections were initially barred by the governor's executive orders against nonessential business. That was reversed by the state on Wednesday, to allow showings and inspections, although still not open houses.

But the ban also hinders the kind of in-person meetings that have long been standard to completing real estate purchases. That's thrown all sorts of monkey wrenches into the closing process. Most of the hurdles are being overcome, but in some cases, it's holding up deals entirely.

"Fortunately all of our deals that are in the pipeline are closing as planned, with maybe a few days delay here and there," said Dana David, an agent with Howard Hanna Real Estate Services.

Home closings remains a very traditional process in New York and most other states, typically requiring several steps that must be done in person, even in a more technological world.

That's even more so in Buffalo, the county seat, where closings have typically been done in a vast assembly room at Erie County Hall, adjacent to the County Clerk's Office. They're usually attended by the buyer and attorneys for both sides, plus the lender's attorney.

That can't happen now. While some employees are working inside the building, County Hall is closed to the public, and "social distancing" rules would prohibit such gatherings anyway.

“That’s created a huge disruption in the way we do transactions in Western New York,” said Nancy Saia, a local real estate attorney. “We can’t do that anymore.”

So local real estate attorneys have come up with creative solutions to ensure papers get signed and notarized, and then delivered to the county for recording.

For example, Saia said, attorneys have had clients sit in their cars and sign the papers, with a notary watching through the window to observe. The documents are then passed through the window for the wet-ink stamp.

"If we have to sign anyone from our office, we try to do it at a distance," she said.

The attorney stands in the doorway to explain the documents, and then steps away to allow the clients to sign. Then the attorney signs, wearing gloves and a mask.

But the documents still have to be delivered to the clerk's office, after three attorneys and the buyer sign. And if a mortgage is involved, lenders require the signatures and notarization to be completed within the same day.

So lawyers are either using delivery services like FedEx or UPS, or they're using one of several companies that will e-file the documents to the clerk for processing. Even then, it won't be recorded right away as before.

"Imagine the logistics," Saia said. "There's lots of FedEx going on in our world."

Without immediate recording of deeds, attorneys are also now recommending title insurance for buyers, because it includes a "gap coverage" in case someone filed a claim against the house between the document signing and the recording.

Finally, Gov. Andrew Cuomo signed legislation authorizing virtual or electronic notarizations, but title insurers are questioning if that would stand up to legal challenge.

Even then, other things can go wrong.

Saia had one deal where the attorney on the other side "shut down their office and they will not communicate with us." In another case, the seller's attorney can't get a payoff amount from a creditor. And in yet another, the bank insists on an electrical repair prior to closing, but no contractor will come out to the house.

Additionally, the chief administrative judge of the state court system issued an order on March 22 that no papers should be accepted by a county clerk or court for filing except for essential mattes. However, Saia and Erie County Deputy Clerk John J. Fenz confirmed that does not apply to the clerk's role as Registrar to record deeds.

"It’s just a cavalcade of competing factors and complicating factors that make this very difficult for us," Saia said. "There are so many things that can collapse this house of cards. We are working together feverishly to find solutions, but there are some things you just can’t solve."

After soaring for years, Buffalo's housing market comes to screeching halt

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