What is a Corona Clause and do I need one in my California Real Estate Contract

Since the outbreak of COVID-19, Californians have sheltered in place, adapted to social distancing, and learned to respond to new conditions. While many of the state’s industries have had to endure sudden and dramatic changes, the California real estate market has continued to operate by adopting new practices. Through virtual technology and by using safety precautions, homes are going up for sale and attracting considerable interest. Under these unusual circumstances, some parties to California purchase contracts have started adding “corona clauses” to mitigate risk. If you are considering buying or selling California real estate, you will want to know: What is a “Corona Clause,” and do I need one in my California real estate Contract?

California Real Estate

In California, real estate contracts ordinarily have clauses and provisions that allow the buyer and seller to extend deadlines if there is an unexpected delay. This could be for emergency or non-emergency reasons. In March, the California Association of Realtors (CAR) developed a CORONAVIRUS ADDENDUM/AMENDMENT that can be used in real estate purchase contracts for COVID-19 related-reasons. The document gives the parties multiple options to specifically consider how COVID-19 could impact their real estate transaction and plan accordingly. For example, one provision allows the buyer and seller to agree to postpone closing for 30, or another number of days, “to accommodate Unforeseen Circumstances,” after which either party could cancel the agreement. The parties can also agree to release one another from the contract without consequences. The idea behind the addendum/amendment document is to give the buyer and seller options if COVID-19 impacts their transaction.

Do I Need a Corona Clause?

Your California, real estate contract, is likely to have a “force majeure” clause or clause for unforeseen circumstances. Further, you are not legally required to sign a corona clause addendum when you enter into your contract. Nor do you have to sign a corona clause amendment at any point during the transaction. However, as the pandemic has demonstrated, nothing is certain when it comes to COVID-19, and conditions can change quickly. When drafted correctly, having a document with language that specifically discusses coronavirus-related issues may protect the interests of both a seller and a buyer.

Consult with an Experienced California Real Estate Attorney

Depending on your circumstances, adding a corona clause to your California real estate contract may be in your best interest. However, it’s critical that you work with an experienced California real estate attorney when reviewing and drafting any documents related to your transaction.

Contact the Law Office of Raffy Boulgourjian

Attorney Raffy Boulgourjian is a California real estate attorney with over twenty years of experience representing clients in residential and commercial real estate matters. He has the knowledge and expertise to protect your interests during your California real estate matter. Contact Mr. Boulgourjian today to schedule a free legal consultation to discuss your California real estate legal needs.

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