The closure of courts, law firms, brokerages and more has turned Massachusetts’ real estate industry into a logistical nightmare, prompting public officials and industry leaders to introduce a number of proposals and workarounds to help keep business moving.
A bipartisan coalition of state lawmakers has introduced a bill that is moving quickly through the legislature to allow notarizations via video conferencing technology; fire departments throughout the state have temporarily deferred smoke detector inspections needed to close real estate transactions; and so-called curbside closings have become the norm, among many other adjustments.
Evictions and foreclosures
Boston Mayor Martin Walsh – joined by the Greater Boston Real Estate Board, the Massachusetts Apartment Association and the Massachusetts Association of Community Development Corporations – announced a self-imposed moratorium on evictions in Boston. However, neither the city nor the state has moved forward with formal proposals to temporarily halt both evictions and foreclosures.
Rich Vetstein, of the Framingham-based real estate law firm Vetstein Law Group, told Boston Agent that a bill calling for a statewide moratorium on evictions is likely dead on arrival because Gov. Charlie Baker has indicated his opposition to the proposal. “The only way for [a moratorium on evictions] to work is to suspend mortgage payments, otherwise the burden is shifted from the tenant to the landlord, and that’s not fair,” Vetstein said, adding that roughly 80% of landlords in the state are mom-and-pop outfits with only a few units.
The need for legislation could be moot, though, due to a de facto moratorium resulting from the Housing Court’s announcement that it is not considering eviction cases until at least April 22. “Emergency cases” that involve lockouts, condemnations and those where landlords are not providing basic services such as heat, running water and other utilities, are the only cases the court will hear for at least the next three weeks, Vetstein said. And once the court does resume, it will be backed up for months with cases that have been on hold.
“With COVID-19, my sense is judges are going to be sympathetic to those who have been laid off; I think it’s going to be tough on both sides for sure,” he said. “We’ll see if the next COVID Relief Act will address this stuff.” Many landlords are going to need a few months of liquidity to get by while the nation works to flatten the curve, he said, adding that a potential solution could entail allowing borrowers to add missed mortgage payments to the end of the loan.
Direction on foreclosures
The Massachusetts Division of Banks’ Office of Consumer Affairs and Business Regulation gave some clarity on the issue of foreclosures on March 25 with a press release calling on industry players to assist homeowners who face foreclosure.
“In anticipation of significant disruption and financial hardship related to the COVID-19 pandemic, the division fully expects all regulated financial institutions, including Massachusetts chartered banks, credit unions, lenders and servicers, to alleviate the adverse impact of COVID-19 on those mortgage borrowers who demonstrate that they are not able to make timely payments due to financial hardship resulting from the effects of COVID-19,” the letter stated.
More specifically, that advisory calls on institutions to postpone foreclosures; forbear mortgage payments; waive late and online payment fees; and refrain from reporting late payments to credit rating agencies for the next 60 days.
The agency also wants financial institutions to offer borrowers a 60-day grace period to complete trial loan modifications and ensure that late payments during the pandemic do not affect borrowers’ ability to obtain permanent loan modifications. They also called on banks to ensure that borrowers do not experience a disruption of service if the mortgage servicer closes its office and to contact borrowers to explain the assistance available to them.
Vetstein said he believes the Remote Notarization Bill that allows video conferencing-assisted notarizations will be approved by the legislature and signed into law by April 1. That bill proposes to allow law firms to use videoconferencing to notarize documents such as property transfers, home loans and refinancings. Such remote notarizations are already allowed in at least 23 states, several of which — including New York, Vermont, Connecticut, Florida, Virginia, Texas and Nevada — have only recently begun allowing them in response to the coronavirus outbreak.
Vetstein said remote notarizations are completed in a two-step process wherein a notary witnesses the signature via videoconference. The document is then mailed or delivered to the real estate law firm and notarized. “With COVID-19 no one wants to be traveling to an attorney’s office, and [law firms] have been getting a lot of pushback, especially from elderly folks,” Vetstein said in a telephone interview.
He said most law firms have been doing “drive-up closings,” also known as curbside closings, where real estate lawyers come out and clients sign the requisite documents while staying in their vehicles. “It’s hard to explain everything when you’re doing it that way,” Vetstein said. With the use of videoconferencing technology, clients and lawyers can see each other and the documents on a screen, he said. Vetstein noted in a post on his blog that a number of companies offer “end-to-end remote notarization systems and are approved by national title insurance companies and lenders,” including DocVerify, Notarize, NotaryCam, Pavaso, Safedocs and SIGNiX.
Vetstein said he believes the crisis now unfolding will result in a tsunami of lawsuits throughout the real estate industry and is encouraging clients to take steps now to cover themselves. He advises those engaged in real estate transactions to consider provisions to extend the life of various commitments if deals get put on hold. Such a provision could help cover a buyer who gets sick and is hospitalized for a period of time, he said.
He also is advising those showing rental properties to do so using virtual showing technology or video conference tools such as Zoom and FaceTime. “Holding in-person showings could lead to someone getting infected with COVID-19, then a big lawsuit against the rental agent,” Vetstein noted in his blog.