Arizona REALTORS® is monitoring the latest news and information related to coronavirus (COVID-19) and its impact on our health and the real estate industry. Check back to this site regularly for updates to the evolving situation.
INFORMATION FOR ARIZONA REALTORS®
What Does Governor Ducey’s Shelter Order
Mean for REALTORS®?
Government officials are working hard to prevent the spread of COVID-19. But in so doing, they recognize the importance of continuing to provide essential services and acting to ensure the continuity of operations throughout the State.
On Monday, March 30th, Governor Ducey issued Executive Order 2020-18 in which he instituted a “Stay home, Stay healthy, Stay connected” policy that limits the time Arizona residents can spend away from their place of residence or property with certain identified exceptions. One such exception is “to conduct or participate in Essential Services.” So what activities are “essential” and how does Executive Order 2020-18 impact Arizona’s 50,000+ REALTORS®?
Real Estate Industry FAQ’s
From a fair housing perspective, what unique issues does coronavirus present to the real estate industry?
When an infectious disease, such as COVID-19, is associated with a specific population or nationality, fear and anxiety may lead to social stigma and potential discrimination. REALTORS® must be mindful of their obligations under the Fair Housing Act and Arizona’s own fair housing laws and be sure not to discriminate against any particular segment of the population.
May I ask clients at an open house or others I interact with in my real estate business if they have a respiratory illness or are showing other signs of sickness such as a fever?
Yes. It is allowable to ask if the person has a cold, influenza or other contagious respiratory illness. You may also ask whether the individual has recently traveled abroad. Agents are not required to put themselves at risk. However, such questions must be directed to all clients equally. Otherwise, agents could face claims of discrimination on the basis of ethnicity, national origin or race.
The most important part of any screening policy is to be sure to ask ALL clients the same screening questions.
Should we hold public open houses?
Arizona REALTORS® suggests that public open houses be limited and, if they are to occur, brokerages should take proactive steps to comply with the Governor’s recommendation to avoid mass gatherings of 10 or more people at one time. Suggestions include posting a notice on the door stating that entrance will be limited and visitors should wait outside in a queue that includes enough space for social distancing. As always, consult with the property owner first about their comfort level with allowing public open houses and consider canceling open houses and instead providing private showings. Should you host open houses, be sure to follow the 10-person maximum capacity recommendation, have hand sanitizer available for anyone entering the home and frequently wipe down common surfaces.
NOTE – Government regulations are in flux and there may come a time at which open houses are precluded by government mandate.
I typically drive my clients to showings. May I refuse to drive potential clients to see homes?
Yes. However, be sure that any changes to your typical business practices are applied equally to all clients. You may refuse to drive clients who show signs of illness or reveal recent travel to areas of increased risk of COVID-19, or you may decide to stop driving clients in your car altogether and simply arrange to meet clients at a property.
If you do continue to drive clients in your car, it is a good idea to frequently clean and disinfect surfaces like door handles and seat belt latches, and to ask clients to use hand sanitizer when getting in and out of the car.
What should I do if I have been exposed to the virus but did not find out until after interacting with clients and customers?
You should communicate with those clients and customers with whom you came into close contact and let them know about the potential of a suspected case.
Can either party terminate an existing contract based on something related to COVID-19, such as illness, exposure, quarantine, etc.?
The Residential Resale Real Estate Purchase Contract does not expressly contain a termination provision triggered in the event of a pandemic or something of a similar nature. However, legal arguments may exist separate and apart from the language contained within the Purchase Contract. REALTORS® should not discuss such options with their clients. Rather, the client should be advised in writing to seek independent legal counsel.
Is there a COVID-19 addendum that I can use in my contracts?
Yes. Although the Arizona REALTORS® has not drafted a dedicated addendum, it has drafted sample COVID-19 contract clauses that have been distributed to brokers. Please contact your broker to obtain the verbiage that they recommend.
What if a buyer cannot close escrow due to loss of employment or decrease in income?
Unfortunately, many people have lost their job or experienced a sharp decrease in earnings as a result of COVID-19. Should this occur, it is likely that the buyer will be unable to secure financing, thereby triggering the loan contingency set forth in section 2c of the Residential Purchase Contract. Pursuant to this section, the Purchase Contract can be cancelled, and Buyer shall be entitled to return of the Earnest Money if after diligent and good faith effort, Buyer is unable to obtain loan approval without PTD conditions.
Since there is no financing contingency in the event of an all cash sale, a cash-buyer that has lost their job or experienced loss of income may need to rely on the compassion of the Seller in order to recover their Earnest Money.
What if a client wants to cancel the listing contract due to COVID-19?
If a client expresses a desire to cancel their listing, the agent should determine the reason why and whether the client’s concern can be addressed without the need for cancellation. We encourage listing agents to be patient with reluctant sellers in terms of showings and entering into contracts if they are uncomfortable with the uncertainty.
What if a tenant refuses to allow a showing?
The landlord-tenant relationship is established through the lease, subject to the underlying landlord-tenant act. A.R.S. § 33-1343 provides that a “tenant shall not unreasonably withhold consent to the landlord to enter the dwelling . . . or exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workmen or contractors.”
If a tenant refuses to allow a showing, the landlord should be contacted and advised to consult independent legal counsel regarding the landlord’s rights.
To ensure health and safety and to reduce property owners’ potential liability, landlords or property managers may want to screen for COVID-19 exposure those wishing to view the property. If implementing a screening process, remember to adhere to fair housing guidelines, which dictate that landlords and property managers may not discriminate against anyone based on race, color, national origin, religion, sex, familial status or disability. Property managers should also encourage property owners to speak to their own risk advisors or attorneys on matters related to COVID-19.
What if someone living in the house has been diagnosed with COVID-19? Does it need to be disclosed?
Yes. The seller should disclose that someone living in the house has been diagnosed with COVID-19 so that any person entering the property may take necessary precautions. If the buyer is concerned, the parties may want to consider postponing Close of Escrow.
What steps can I take to best protect my buyers and sellers who are entering into a Purchase Contract?
First and foremost, check with your broker to see if they have approved language for insertion into an Addendum or the Additional Terms section of the Purchase Contract in the event that either Buyer, Buyer’s lender, Seller, Escrow Company or appropriate county recorder’s office becomes the subject of a voluntary or mandatory COVID-19 virus quarantine or closure prior to or at the time of Close of Escrow.
Second, consider an extended period of time for close of escrow. Third, inquire with third-party affiliates integral to the transaction such as home inspectors as to delays you can expect, and account for those delays in the Purchase Contract or an addendum. For example, an extended inspection period may prove necessary. Finally, stay in close communication with your client to best manage their expectations, answer their questions and assuage their fears.
What if a party is subject to quarantine and a mobile notary cannot be located to obtain the client’s signature on the necessary closing documents prior to Close of Escrow?
Agents should discuss any such scenario with their broker. If the parties are agreeable, an addendum to extend the date for Close of Escrow is an option. Should a party want to cancel the Purchase Contract due to the other party’s failure to close escrow, a Cure Period Notice should be sent, and independent legal counsel should be consulted.
How does COVID-19 affect my brokerage?
NAR has prepared an article titled Coronavirus Resources and Guidance for Employers to help brokerages comply with applicable laws. NAR has also prepared a Sample Preparedness Plan For Circumstances Relating To COVID-19, which is located at the same link.
Primary Committee / Workgroup Meetings
Workgroup meetings will be held remotely until further notice.
Expect numerous changes to Classes, Hearings, Arbitrations and Mediations.
Other Member Services
Legal Hotline, Political Affairs and Business Services Support to continue.
REALTORS® Ready to Help
Print this flyer for your clients to show them the steps Arizona REALTORS® are taking to keep them safe.
Financial Relief for REALTORS®
U.S. Small Business Administration (SBA) Loans
The federal government, through the SBA, is providing significant relief for small businesses suffering from the impact of the COVID-19 pandemic. Most agents are likely to be eligible for loans that are being made available through the SBA. The CARES Act makes the following options available to REALTORS®:
- Paycheck Protection Program Loans (PPP)
- Economic Injury Disaster Loans (EIDL)
- SBA Express Bridge Loans (EBL)
The Paycheck Protection Program (PPP) loans are provided on very favorable terms, and they may be the best option for most agents. Economic Injury Disaster Loans (EIDLs) also remain an excellent option. If you need immediate financial relief, requesting an advance on an EIDL or arranging an SBA Express Bridge Loan (EBLs) with your lender are good options.
Tax Credits for Sick Leave for Independent Contractors
The recently passed Families First Coronavirus Response Act (FFCRA) provides independent contractors with two new key benefits. First, independent contractors who are diagnosed with or must self-isolate due to COVID-19 can now claim a tax credit for sick leave. This credit is also available for independent contractors caring for a child due to school or childcare closures. Independent contractors may also claim a tax credit if they must take leave to care for a seriously ill family member. Both these credits are refundable and creditable against income and self-employment taxes.
Direct Payments to Taxpayers
Additionally, the bill provides tax rebate payments of $1,200 per adult and $500 per child to taxpayers whose adjusted gross income was $75,000 or less for individuals or double that amount for joint return filers. For income levels above those thresholds, the payments would be phased out. Individual taxpayers with annual gross incomes above $99,000 and joint filers with annual gross incomes above $198,000 are not expected to receive any payments.
Relief Programs for Rental Property Owners
Rental property owners in need of emergency financial assistance have access to various federal and state programs.
What type of assistance is available for a rental property owner under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act?
The CARES Act requires servicers of federally owned or backed mortgages to grant forbearances to single- and multifamily rental property owners who suffer economic hardship due to the COVID-19 crisis.
What type of loan must I have to qualify for mortgage forbearance under the CARES Act?
To be eligible for forbearance assistance under the CARES Act, your mortgage loan must be federally owned or backed by one of the federal agencies and entities listed below. If you do not know who owns or backs your mortgage loan, please call your servicer. Your servicer has an obligation to provide you, to the best of its knowledge, the name, address and telephone number of who owns your mortgage loan. (If you do not have a federally owned or backed mortgage loan, you may still qualify for mortgage forbearance under state law, which is detailed in Section II of this document.)
List of federal agencies and entities:
- Fannie Mae
- Freddie Mac
- Federal Housing Administration
- U. S. Department of Agriculture
- U.S. Department of Housing and Urban Development
- U.S. Department of Veterans Affairs
- USDA Direct
- USDA Guaranteed
What qualifies as a “single-family” property for purposes of the foreclosure moratorium and the borrower’s right to request forbearance?
For these purposes, “single-family” means homes designed for one to four families.
How do I request mortgage forbearance as a single-family rental housing property owner?
A single-family rental property owner with a federally owned or backed mortgage loan may request forbearance directly through their loan servicer. Upon making the request, the rental property owner must affirm they are experiencing an economic hardship due to the COVID-19 crisis. Aside from this affirmation, the loan servicer may not require the rental property owner to provide any additional documentation to facilitate the forbearance request.
How do I request mortgage forbearance as a multifamily (five or more dwelling units) rental housing property owner?
The same requirements apply to multifamily rental property owners as specified in A3 above, with a few caveats. As a condition of any mortgage-payment forbearance request, a multifamily property owner must have been current on mortgage payments as of February 1, 2020. A multifamily property owner also has the option of making an oral or written forbearance request.
Please note: Multi-family rental property owners who receive forbearance assistance under the CARES Act may not evict — or even initiate an eviction of — a tenant solely for nonpayment of rent or other fees or charges. Even without the forbearance, the CARES Act provides a 120-day moratorium on evicting a tenant for nonpayment of rent (see Q11 below); additionally, you may have stricter standards in your local area. (For more guidance on state and local eviction and rent moratoria, please read C.A.R.’s Legal Q&A on COVID-19 Landlord Issues.)
For what period of time may I request forbearance on my single-family rental property?
The length of the forbearance is dictated by your request. An initial forbearance may not last longer than 180 days, but you may request to extend the period by an additional 180 days. You may also request a shorter forbearance period.
For what period of time may I request forbearance on my multifamily rental property?
The forbearance period is shorter for multifamily rental property owners. A forbearance may not initially last longer than 30 days. However, you may request to extend this period twice, each time for an additional 30 days. Any extension request must be made during the “Covered Period” (see below) and at least 15 days prior to the end of the current forbearance period. Please note that multifamily property owners may discontinue a forbearance at any time.
* The term “Covered Period” means the period between the enactment of the CARES Act and whichever of the following occurs earlier: (1) the end of the national COVID-19 emergency, or (2) December 31, 2020.
Will I accrue interest, fees and/or penalties during forbearance?
During a forbearance under the CARES Act, the accrual of interest and the imposition of fees and penalties are permitted, but only if they are consistent with the existing loan documents. However, no additional interest, fees and/or penalties are permitted.
Will forbearance negatively impact my credit score?
No. If you are granted forbearance during this temporary period, you will not have derogatory information related to those deferred mortgage payments reported to credit reporting companies.
Is there anything in the CARES Act regarding foreclosures?
Foreclosures are prohibited from March 18, 2020, through May 17, 2020. Specifically, a servicer may not initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or sale. However, a servicer may foreclose on a vacant or abandoned property.
Is there anything in the CARES Act regarding evictions?
Yes. Regardless of whether a rental property owner has requested a forbearance, the CARES Act imposes a 120-day moratorium on tenant eviction filings and charging late fees for any property secured by a “federally backed” loan for both “single-family” and “multifamily” properties. Between March 27, 2020, and July 24, 2020, (the 120-day period), owners of properties with covered loans may not make any filing to recover possession of the above properties from a tenant for nonpayment of rent or other fees or charges, and may not charge fees, penalties or other charges to the tenant related to nonpayment of rent. Notice that this nonpayment of rent is not necessarily related to nonpayment due to a COVID-19-related circumstance.
Additionally, rental property owners may not require tenants to vacate sooner than 30 days after providing notice to vacate, and they may not issue a notice to vacate until after July 24, 2020. This last provision makes no reference to nonpayment of rent or any other violation of the lease. Its meaning is unclear, but it likely means that a rental property owner is not entitled to evict without cause during the 120-day period.
Content provided by California Association of REALTORS®
Resources & Guidance from
the National Association of REALTORS®
- NAR Offers Members TeleHealth to Realtors® at No Cost in Response to COVID-19 Crisis
- Coronavirus: A Guide for REALTORS®
- Coronavirus: Resources for Property Owners
- Coronavirus: Resources and Guidance for Employers
- Transaction Guidance After Natural Disaster
- Open House Guidance During COVID-19
- Coronavirus Resources for Property Owners
- NAR Cybersecurity Member Benefit
- Transaction Guidance During COVID-19
Have questions about the resources available to help you navigate the challenges of COVID-19? Call the new member hotline at 800-874-6500 for tools and ideas to operate your business safely and smartly.
Taking Care of Business During the Coronavirus Pandemic
Did you miss the COVID-19/Coronavirus live-streamed webinar featuring speakers representing Arizona REALTORS®, Escrow/Title industry & Mortgage Lending communities? They discussed issues clients may be experiencing with their transactions and shared their experiences.