Author Archives: Hallmark Abstract Service

About Hallmark Abstract Service

Hallmark Abstract Service provides title insurance for residential and commercial real estate transactions in New York State and nationwide, underwriting through Chicago Title. HAS opened its doors in 2008 with two primary goals in mind! Number one was to create a title insurance company that would provide our clients with a superior finished product while affording them a seamless and stress-free process. Number two was to make the experience of working with Hallmark Abstract Service as easy and as pleasurable as obtaining title insurance for a real estate transaction could possibly be! From the sheer number of satisfied clients who keep coming back to Hallmark Abstract Service for their title insurance needs, I believe that we have accomplished our goals in the past, and we will continue striving to improve on them in the future! My Background In 1980 I earned an undergraduate degree in economics followed in 1984 by an MBA in finance with a concentration in the tax-exempt market. With this focus on the municipal market I became a municipal bond analyst at Shearson/Lehman Brothers tasked with following both general obligation issuers on the city and state level as well as housing bonds secured by mortgage pools. This experience at Shearson/Lehman Brothers followed by stints at PaineWebber and Citigroup provided a broad framework of understanding concerning the mechanics of mortgage debt in terms of prepayment experience, mortgage quality and the expected duration of a portfolio. Leaving Wall Street I started Exeter Commercial which funded commercial mortgage loans. Title insurance was a critical part of the underwriting and closing process. At the peak of the financial crisis, I recognized both an opportunity and need as many title firms, for a variety of reasons, closed their doors. Out of this, Hallmark Abstract Service was born.

CRITICAL INFORMATION: Small Businesses and The Coronavirus Aid, Relief, and Economic Security (CARES) Act: What’s In It and How It Can Help!

In these extremely difficult times facing small businesses from EVERY industry, the federal government has passed a bill providing assistance in many forms!

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a large piece of legislation, but the benefits it can provide makes it very much worth fully understanding.

The following article from the Small Business and Entrepreneurship Council (SBE Council) summarizes the CARES Act, provides extremely relevant Q&A covering issues critical to small business, explains the various resources provided in the Act, and offers links to the appropriate websites and organizations that can help…

CARES Act: What’s in it for Small Businesses, the Self-Employed and Gig Workers‘ from the SBE Council

The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed the Senate in the early morning hours of March 26 by a vote of 96-0. As I said in a media statement following passage:

“The House must act quickly, as every hour of every day matters to the survival of many small businesses across America that desperately need a financial lifeline during this unprecedented time.”

As of this writing, the House says it will vote on Friday, March 27. I do hope they can do this sooner. According to the Wall Street Journal and The Hill, a record 3.28 million workers applied for unemployment benefits last week.

In this update, we cover key pieces of the CARES Acts and provide links so readers can review the details. (The full text of the legislation is here.)

CARES Act Details

There are a lot of summary documents that have been provided by committees, congressional leadership and others, but let’s start first with a Q&A document provided by GOP Minority Leader Kevin McCarthy. The Q&A provides a broad outline of key features of the CARES Act, including small business provisions. Highlights of this document as it relates to small businesses, entrepreneurs and the self-employed, include:

Q: Unemployment Insurance – are the self-employed, gig workers, and contractors eligible? A: Yes, the bill expands unemployment benefits to cover more workers including self-employed and independent contractors, like gig workers and Uber drivers, who do not usually qualify for unemployment. Overall, the bill provides $250 billion in funding for expansion of unemployment benefits, the largest increase ever.

Q: Can small businesses can hire back previously fired employees and still have the [new SBA 7a Paycheck Protection Program] loans forgiven? If so, what is the hire-back date? A: Yes. There is flexibility in the program to allow businesses to hire new, or returning employees, by June, 30, 2020, and still qualify under the headcount requirements.

Q: How quickly will business be able to access loans? A: We are working with the SBA on capacity issues, including onboarding new lenders. The SBA is assuring the Small Business Committee that they are ready to stand up all of the requirements within the Senate bill as quickly as possible.

Q: Employee retention credit – how will this work? A: The Employee Retention Credit provides a refundable payroll tax credit equal to 50 percent of up to $10,000 in wages per employee (including health benefits) paid by certain employers during the coronavirus crisis.

The credit is available to employers:

● whose operations were fully or partially shut down by government order limiting commerce, travel, or group meetings due to coronavirus, or

● whose quarterly receipts are less than 50% for the same quarter in the prior year.

Wages paid to employees during which they are furloughed or otherwise not working (due to reduced hours) as a result of their employer’s closure or economic hardship are eligible for the credit.

However, for employers with 100 or fewer employees, all employee wages qualify for the credit, regardless of whether they are furloughed or face reduced hours.

To prevent double dipping, employers that receive SBA 7(a) Paycheck Protection Program loans are not eligible for the credit. Additionally, wages that qualify for the required paid leave credit are not eligible for the credit.

The credit is for wages paid by eligible employers from March 13, 2020 through December 31, 2020.

Read the rest of the article at the SBE Council website by clicking the link below..

CARES Act Section-by-Section Summary

SBA Paycheck Protection and Disaster Loans, SBA Loan Relief

Real Estate Considerations for Effect of COVID-19 on Purchase and Sale Agreements

In the new normal of coronavirus or COVID-19, uncertainties have suddenly arisen concerning personal conduct, personal freedom of movement and financial stability, leading to changes in the conduct and implied responsibilities of the various constituencies that are party to a real estate transaction.

And while contractual customs and mechanics may vary from locale to locale, the following article authored by attorneys at the law firm Schulte Roth & Zabel with offices in New York and Washington, D.C., ‘focuses on material contract provisions in PSAs from a buyer’s and seller’s perspective in light of the current climate and in anticipation of the evolving landscape surrounding these issues in the weeks to come’.

Real Estate Considerations for Effect of COVID-19 on Purchase and Sale Agreements‘ by Michele E. WilliamsMichael K. Berman and Yechezkel (Zak) Rosenbaum (reposted with permission)

The sudden and widespread outbreak of COVID-19 both domestically and abroad has significantly impacted all contracts and, in particular, buyers and sellers alike in their course of dealing with counterparties under real estate purchase and sale agreements (“PSAs”). Additional perspectives and new complexities have arisen as a result of COVID-19 and are significantly impacting the way we are negotiating PSAs in today’s environment. This Alert focuses on material contract provisions in PSAs from a buyer’s and seller’s perspective in light of the current climate and in anticipation of the evolving landscape surrounding these issues in the weeks to come.

Due Diligence Period. Typically, PSAs provide a period of time after the execution, and prior to a deposit “going hard” (i.e., the deposit becoming non-refundable) for buyers to conduct due diligence and determine whether, as a result of its findings, it will allow the deposit to go hard and proceed with closing the transaction (“Due Diligence Period”). During the normal course of a Due Diligence Period, buyers will often engage third parties to perform any relevant due diligence it deems appropriate under the circumstances (such due diligence investigation often includes, but is not limited to, a Phase I environmental site assessment (and, if applicable and permitted under the applicable PSA, a Phase II), an appraisal, a title search and land survey of the Property, a zoning report and a physical site inspection of the property). In addition, buyers will typically request and, if available, sellers will deliver historical financials of the property subject to the terms of the PSA to aid buyers in their underwriting of the asset as well as assist in coordinating with tenants and other relevant third parties to obtain tenant estoppel certificates and any consents or approvals necessary to transfer the property.

The expiration of the Due Diligence Period is a critical juncture in the life of any PSA as the buyer is typically faced with the decision to either terminate the PSA or elect for the deposit to “go hard” and proceed to closing the transaction contemplated by the PSA.

While this is all standard operating procedure during a typical Due Diligence Period, COVID-19 has presented new challenges to parties looking to account for the unavailability of services, delayed response times and rapid changes in criteria that impact property valuation. Buyers are suddenly faced with tremendous uncertainty surrounding the availability of capital sources, third-party consultants, the impacts of domestic and international travel restrictions, delays in obtaining necessary approvals, the issuance of title policies and recording of documents caused by the closure of governmental agencies. Likewise, Sellers are faced with a new reality that it may be difficult, if not impossible, for buyers to conduct the necessary due diligence during the negotiated Due Diligence Period and grapple with market risks which impact the viability of a model based on pro forma operating income. In light of these, amongst numerous other concerns, parties to a PSA should consider the following:

  • Due Diligence Period. Given the delays caused by COVID-19 and the unpredictability of the coming months, buyers and sellers alike should strive to negotiate a timeline that is market from a transactional perspective but also realistic under the circumstances to ensure that each party has sufficient time to conduct its bargained for due diligence in accordance with the PSA.
    • From a buyer’s perspective, one might consider seeking automatic rights to extend the Due Diligence Period that may be unilaterally exercisable by the buyer. Including a provision in your PSA that permits a Due Diligence Period to be extended can aid a prospective buyer in preserving the deal the parties bargained for under the PSA without the need for further negotiation or formally documented extensions and/or additional deposits.
    • From a seller’s perspective, the focus needs to be around certainty of execution. Upon expiration of a negotiated Due Diligence Period, a seller might consider permitted extensions only for those items which a buyer was not reasonably able to diligence during the Due Diligence Period. In addition, a seller should consider requiring an increase in the size of the deposit in exchange for allowing a buyer more time to complete its due diligence investigation.
  • Representations, Warranties & Covenants. Another material component of PSAs are representations and warranties (“R&Ws”). R&Ws are provided at the time a PSA is executed and then reconfirmed by each party prior to the consummation of the transaction as of the closing date. The PSA also includes covenants made by other parties with respect to the underlying property. In today’s environment, buyers and sellers alike should consider how the R&Ws and covenants under their PSA may be implicated.
    • Compliance with Laws. Government officials are debating new legislation on a daily basis in an effort to slow the COVID-19 virus and, aside from any regulations that have been passed into law, the CDC is constantly releasing recommendations for maintaining the safety of the population including mandatory closures of “nonessential” business and requirements that those which remain in operation. Sellers should consider this when negotiating applicable R&Ws in PSAs and anticipate how the underlying assets in a PSA may be implicated by any such change.
    • No Defaults. Typically, Sellers will be required to represent that they are not either in default or aware of any default under any leases or other agreements impacting the property. Sellers should consider these provisions in their PSAs to ensure they are not in making misrepresentations with respect to such R&Ws and contemplate any unintended defaults as a result of COVID-19. Likewise, Buyers should be realistic about this uncertainty and consider whether any leniency should be granted in these provisions. Buyers may also want to consider additional notice requirements in their PSAs for any changes to these provisions and a requirement that updates be provided on a real-time, rolling basis.
    • Operating Covenants. PSAs often require the seller to covenant that it will operate the property in the ordinary course during the contract period. Sellers should take care to adjust this covenant so that vacancies caused by COVID-19 do not trigger a seller default or perhaps, trigger a renegotiation right between the parties if any such event occurs. To the extent any applicable operating covenant in a PSA is violated, buyers should provide recourse in the form of a renegotiation right and/or unilateral termination right and, at a minimum, require the seller to provide prompt updates on a real-time, rolling basis.
    • Survival Periods. PSAs often provide that R&Ws survive closing for a specified period of time (“Survival Period”). A Survival Period is intended to protect the parties to a PSA in the event either party discovers a misrepresentation made in an R&W after closing. With the heightened level of uncertainty in the financial markets and global, socio-economic conditions, buyers should seek to negotiate for longer survival periods. In contrast, sellers should seek to maintain the same general market positions on survival periods in PSAs.
  • Conditions to Closing. Purchase and sale agreements often provide for condition precedents that must be satisfied by either party prior to consummating the transaction. In the event such party fails to satisfy a condition precedent to closing, the other party may terminate the agreement and retain the deposit.
    • Title Policies. A standard condition precedent to any buyer’s obligation to consummate a transaction under a PSA is the commitment of a national title company to issue a satisfactory title insurance policy to the buyer subject only to payment of premiums, recording fees and other related charges and the recordation of all conveyance documents/necessary lien releases. This condition is directly implicated by COVID-19 as many county court houses and recording offices are closing on a rolling basis and as such, recordation of lien releases and conveyance documents is not available in many jurisdictions. Many national title companies are taking the position that they will not close or insure any transactions involving property in areas where they are unable to record required lien releases and/or applicable conveyance documents. As such, from a buyer’s perspective, PSAs should expressly provide that any condition precedent to consummating a transaction under a PSA will not be satisfied (or deemed satisfied) if, a title company is unable to record the necessary documents and issue the title insurance policy in the form agreed to at closing. In contrast, sellers consider workable alternatives to this issue including, automatic extensions of the closing date and/or possibilities to close in escrow. Sellers may also consider providing title companies and buyers with reasonable assurance and/or indemnities in an effort to cause them to consummate the transactions under the PSA notwithstanding an inability to satisfy this condition.
    • Material Adverse Changes. Buyers often seek to include a provision in their PSAs which state that the buyer’s obligation to close is conditioned upon the absence of a material adverse change in the property or seller generally measured from the expiration of the Due Diligence Period to the closing date. While these provisions are typically heavily negotiated, buyers and sellers alike should pay additional attention to these provisions in the coming months. From a buyer’s perspective, buyers should try to expand any such condition to include the adverse effects caused by COVID-19 and also include adverse changes to the financial and/or real estate markets generally. In contrast, sellers should seek to narrow this definition to changes to the physical condition of the property and should seek to expressly carve out any changes to general market conditions due to COVID-19.[1]
    • Tenant Estoppels. Tenant estoppel certificates are a valuable tool utilized by buyers to gain information about the state of affairs at a property and performance by the applicable tenant and Seller, as landlord, of its obligations under the respective lease. Delivery of tenant estoppel certificates is typically a condition precedent to consummating any transaction contemplated by a PSA and, more often than not, the parties to a PSA negotiate thresholds for delivery from all tenants as well as solutions in the event the required estoppels are not delivered. In light of COVID-19 impacts on properties and businesses, buyers should consider whether the information delivered in an estoppel continues to accurately reflect the situation on the ground. As such, buyers should consider increasing threshold requirements for estoppel deliveries, removing seller solutions for failure to delivery and requirements to bring down and/or recertify information contained in tenant estoppel certificates by the seller and applicable tenants.
    • Financing Contingencies. Whether a transaction will include a financing contingency is a business point that is typically negotiated in a letter-of-intent. A financing contingency in a PSA stipulates that the buyer’s obligation to consummate the transaction contemplated by the PSA is contingent upon its ability to obtain financing for the acquisition of the Property. Buyers should strongly consider the use of these provisions in the months ahead to provide additional protection.

The impact and destruction of COVID-19 is an ever-changing landscape, but in the current climate one thing is certain — you should expect the unexpected and plan accordingly. As such, it is essential that parties privy to any PSA negotiations not only consider but anticipate these additional risks and the evolving constraints posed by COVID-19 and take reasonable steps to mitigate any exposure they may have under a PSA as a result.

 

 

In New York Virtual Notarizations Lead To Virtual Closings in the Age of Coronavirus!

Critical Update March 24, 2020: While virtual closings including virtual notarizations are imminent in New York State, several critical issues still need to be resolved before the bottomline interests of all parties to a transaction are 100% confirmed!

These issues include, but are not necessarily limited to, the following:

The acceptable and timely acquiring of wet signatures by those parties getting notarizations, acceptability of these digital documents for recording by county clerks, the notary having a physical presence in New York State, the acceptable form of the Certificate of Conformity (in NYC) and the appropriate acknowledgement of the notary conforming to Governor Cuomo’s Executive Order, to name just a few.

Stay tuned!

_____________________________________-

By the time that you read this, the situation surrounding coronavirus, quarantine and social distancing will have hopefully already been resolved, but likely not!

If coronavirus and quarantine still represents business as usual, then the following information concerning virtual notarizations and closings, conducted with all parties in separate locations communicating through Zoom or some other meeting service, is critical.

Critical for homebuyers, home sellers, real estate agents, real estate attorneys, bank attorneys, mortgage lenders, title companies and, well, you get the idea.

Virtual Notarizations in New York

Not historically permitted in New York, on Friday, March 20th and through an Executive Order signed by New York Governor Andrew Cuomo, virtual notarizations are now allowed (see excerpt below).

Of course for mortgages, whether or not this method for notarizing is acceptable, will be determined on a bank by bank basis (i.e. as of publication Wells Fargo is a no).

On March 19, 2020, Governor Andrew Cuomo released an executive order to allow virtual notarization of documents. This temporary order goes into effect March 20, 2020 to April 18, 2020, and it specifies the following: 
  • Any notarial act that is required under New York State law is authorized to be performed utilizing audio-video technology provided that the following conditions are met:
  • The person seeking the Notary’s services, if not personally known to the Notary, must present valid photo ID to the Notary during the video conference, not merely transmit it prior to or after;
  • The video conference must allow for direct interaction between the person and the Notary (e.g. no pre-recorded videos of the person signing);
  • The person must affirmatively represent that he or she is physically situated in the State of New York;
  • The person must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed;
  • The Notary may notarize the transmitted copy of the document and transmit the same back to the person; and,
  • The Notary may repeat the notarization of the original signed document as of the date of execution provided the Notary receives such original signed document together with the electronically notarized copy within thirty days after the date of execution.
While having the ability to utilize escrow or virtual closings is very helpful in significantly reducing the number of people that must attend a closing, there are still challenges in creating an environment free of physical interactions. For example, most government recording offices in New York State do not currently accept e-documents. Therefore, paper documents must still be signed and delivered to the government recording offices.

The Residential and Commercial Real Estate and Mortgage Refinance Closing Process in New York!

Because the Executive Order surrounding virtual notarizations was issued only on Friday, March 20th, the guidelines proposed by Hallmark Abstract Service for our clients could potentially be tweaked down the road, but at the present time this is how we visualize it.

ImportantALL remote participants to a real estate closing including, but not necessarily limited to, borrowers, buyers, sellers and/or attorneys MUST have the ability to be seen and participate via camera whether on a computer or on a phone!

For anyone with questions on any aspect of closing a deal, initiating a new deal or any other issue, please reach out to HAS CEO Mike Haltman at (516) 741-4723 or info@hallmarkabstractllc.com.

We shared the email below with the title closers that the firm works with, and it will give an accurate overview of the process as we see it.

As a closer for Hallmark Abstract Service we wanted to bring you up to date on the current status of closing a refinance or a purchase.

Governor Cuomo hours ago signed an Executive Order (see photo) authorizing virtual notarizations, pending individual bank acceptance.

Zoom and DocuSign

Closings will occur through a virtual hookup utilizing Zoom, where all transaction participants will be able to see each other and the closer will be able to witness signatures being executed through DocuSign, along with the signatories ID.

All participants in the closing will have a copy of the entire closing package beforehand and, Hallmark Abstract will receive all of the appropriate closing documents from all transaction participants prior to the closing as well, to be uploaded into DocuSign.

The borrower/purchaser will hold their ID up through Zoom for verification and sign whatever documents that are necessary**.

**Notarized SignaturesFor those signatures that need to be notarized, the appropriate page(s) requiring notarization will be removed from the hardcopy file that the participants received, and those signatures will be hand-signed and witnessed by the notary.

The signer of only those notarized documents will then either scan and email that signature page to the closer or take a picture of the document with a phone and email it, at that time.

The closer will notarize the pdf received from the signer during or directly after the closing, and the borrower/purchaser will have 30-days to get the original signature to Hallmark Abstract Service.

Payoff monies will have to be wired to the appropriate lending institutions and any other checks written and packages will be Fedex’ed/mailed to Hallmark at 23 Orchard Drive, Woodbury New York 11797 if the quarantine is still in effect.

Hallmark Abstract Service utilizes ERecording for documents and, for any County Clerks offices that are closed, the documents being ERecorded will be placed in a dated queue.

For those counties not utilizing online recording (i.e. Richmond County), those closing mechanics will have to be explored on a case by case basis.

Please let us know if you have any questions.

Mike

Michael Haltman, CEO

Hallmark Abstract Service

(Main Office)

101 Sunnyside Blvd., Suite 103

Plainview, New York 11803

(New York City Office)

276 Fifth Avenue, Suite 704

New York, New York 10001

Office: (646) 741-6101

Mobile: (516) 521-3499

Hallmark Abstract Orders: orders@hallmarkabstractllc.com

Questions: info@hallmarkabstractllc.com

Agents for Chicago Title, Fidelity National Title, Commonwealth Land Title and AmTrust

 

U.S. Economic Statistic Estimates and Coronavirus Impact: Week of March 23, 2020

This coming week we will likely begin to see some of the economic impact that the coronavirus is inflicting on the U.S. economy.

The forecasts below were generated by Peter Morici, a professor at the University of Maryland Smith School of Business, former Chief Economist at the U.S. International Trade Commission, and seven-time winner of the MarketWatch best forecaster award.

Here are my forecasts for upcoming economic data.
Forecast
Prior Observation
Consensus
Week of March 23
March 23
Chicago Fed National Activity Index – February
-0.60
-0.25
March 24
PMI Manufacturing Flash Index
45.0
50.7
43.0
PMI Services Flash Index
45.0
49.4
42.0
New Home Sales – February
740K
764
750.0
Richmond Fed Manufacturing Index
-4
-2
March 25
Durable Goods Orders – February
-1.0%
-0.2
-0.7
FHFA Housing Price Index – January
0.5%
0.6
March 26
Initial Unemployment Claims
1000K
281
775
International Trade in Goods – February
-$62.0B
-65.5
Wholesale Inventories (a) – February
-0.5%
-0.4
GDP – Q4 (f)
2.1%
2.1
2.1
March 27
Personal Income – February
0.4%
0.6
0.4
Personal Spending – February
0.2
0.2
0.2
Michigan Consumer Sentiment – March (f)
91.0
95.9
90.0
Week of March 30
March 30
Pending Home Sale Index – February
108.8
108.8
Dallas Fed Manufacturing Index
-7.0
1.2
March 31
S&P Case/Shiller Index – January
Ten City M/M
Ten City Y/Y
Twenty City M/M
0.1%
0.0
Twenty City M/M – SA
0.4
0.4
Twenty City Y/Y
3.1
2.9
Third Quarter Twenty City Q/Q – SA
Chicago PMI – March
40.0
49.0
Consumer Confidence Index – March
120.0
130.7
April 1
ADP Employment Report – March
-360
183
ISM (Mfg) – March
43.5
50.1
Construction Spending – February
0.5%
1.8
Auto Sales* – March
15.2K
16.8
Car Sales
3.6
4.3
Truck Sales
11.6
12.6
*SAAR, as published by Motor Intelligence
April 2
Initial Unemployment Claims
International Trade – February
-$43.3B
-45.3
April 3
Nonfarm Payrolls – March
-350K
273
Private
-360
228
Unemployment
3.9%
3.5
Average Workweek
33.0HR
34.4
Average Hourly Earnings
0.2%
0.3
ISM Services – March
48.0
57.3

The Coronavirus Pandemic and the Crisis in Real Estate, Guest Author

Coronavirus pandemic impact on real estate

The Potential Impact of the Coronavirus Pandemic on Landlords, Agents, Lenders, Tenants, Owners, Borrowers and Prospective Buyers in Both the Residential and Commercial Real Estate Markets is Discussed Below!

Appearing in the Connecticut Law Tribune, this article written by attorney Dwight Merriam, insightfully explores potential impacts that the coronavirus pandemic will have on various individuals and sectors in the real estate market!

While it was written from the perspective of an attorney practicing in Connecticut, the real estate issues discussed transcend state borders!

The Pandemic and the Crisis in Real Estate written by Dwight Merriam, Esq.

The pandemic has created a crisis in real estate of unknown dimensions and with few clear answers.  Following the many networks of real estate lawyers nationwide, the issues that have surfaced thus far are many.

As with other calamities, there is often a cascading series of events and conditions, as with the Chernobyl disaster in 1986, and the “perfect storm” of 1991 that led to the loss of the Andrea Gale.

The people least able to pay their rent and their mortgages are likely to be the ones let go and left without incomes as businesses shut down.  Evictions and foreclosures will increase.  Will landlords and lenders extend the time to cure and avoid having to take action?  The Mayor of San Jose has called for a moratorium for 30 days on evictions of residents who can demonstrate that they cannot pay their rent because of a substantial loss of income related to the virus.  The council vote is expected in the next week or two. Italy is suspending mortgage payments throughout the country.

As businesses slow down, close, and fail, rents will evaporate, and the properties will become less valuable, altering the loan-to-value ratios, triggering default clauses, and making refinancings impossible.

Seeing what lies ahead, lenders are reducing their lending.

Potential homebuyers, skittish about the future, will withdraw from the market, decreasing demand, and driving down the value of homes.

And how does one market real estate in this environment?  “Open houses” are going to be problematic.  Does a seller want strangers coming into their home, possibly contaminating it?  Will they wait to market their homes until the pandemic is over?

The effect has already been felt.  The National Association of Realtors® surveyed its members on March 9th and its Realtors® reported an 11% drop in buyer traffic and 7% lower seller traffic. The NAR predicts a 10% reduction in sales, at least in the short-term, as a consequence of the coronavirus. The NAR also issued a guide for its members about what questions they can ask of those they are dealing with as to their exposure to the virus and warning them to avoid discrimination.

The market has already reacted strongly, with REITs in mall properties and hospitality hammered. Ryman Hospitality Properties was $90.30 a share on February 18th. On Monday, March 17th, it closed at $24.09.

Current contracts for sales and for leasing do not have provisions addressing the problems raised by the pandemic, particularly those relating to the time within which to perform.  Suggestions have been made for an addendum to contracts.  CATIC recently offered this advice, along with some suggested language regarding “excused delay”: “Given the uncertainty caused by increasing reports of quarantines, closures and other efforts to mitigate the effects of the coronavirus (COVID-19), it is also recommended that attorneys consider adding language to their real estate contracts that will address a situation where any party is under quarantine, prevented from travelling or meeting or otherwise cannot perform.”

Some have advocated for remote and on-line notarization and closings, and others disagree, fearing fraud. One suggestion is that the parties to any transaction grant powers of attorney to others to step in if they are sick or quarantined.

If city and town halls are closed or are short-staffed because people are working at home or sick, how does one record a deed or other document on the land records in a timely manner?  Is this a problem, as Connecticut is a “notice” state: “No conveyance shall be effectual to hold any land against any other person but the grantor and his heirs, unless recorded on the records of the town in which the land lies”?  Sec. 47-10(a) C.G.S.  What happens if it takes days to record?  An argument is that one has a “reasonable” time to record.  Will that be enough?  Is the solution a gap endorsement on the owner’s title insurance policy, if it is not already covered, as it apparently is as Risk 10 on the ALTA Owner’s Policy and in First American Title’s Eagle Owner’s Policy and probably others?  That endorsement, by the way is not used for a loan policy, which covers it as Risk 14 on the ALTA Loan Policy. Of course, as a practical matter, if no one else can get in to record either, it is unlikely an encumbrance will get ahead of the recording.

What is a landlord to do if they discover an outbreak of coronavirus in their building? Do they have an obligation to shut down the building and decontaminate the space? Will they be liable for business interruption?  Will the tenant be required to pay the cost of the decontamination? What if they don’t close the building, decontaminate, and prevent infected persons from reentering? Is notice to the other tenants sufficient, letting them make their own decisions?

Read the rest of the article at Connecticut Law Tribune here.

Attorney Dwight Merriam, www.dwightmerriam.com, who practices in Simsbury, is a Fellow of the American College of Real Estate Lawyers and member of the Connecticut Law Tribune’s editorial board.

Closing A New York State Real Estate Transaction in the Age of Coronavirus!

Today, and rightfully so, parties to a New York real estate transaction are loath to sit in close proximity to each other regardless of the degree of social distancing being used!

In certain instances they may also be unavailable for a sit-down as they are quarantining themselves voluntarily or, because they feel ill, have been exposed to the virus and are mandatorily quarantining.

Coronavirus makes arranging and holding an in-person real estate closing, somewhat difficult at best.

Further compounding the issue of an absentee closing in New York State is the fact that ‘remote’ notarization, or allowing ‘documents to be signed and notarized digitally and without the requirement of being in the same room, building, state, or in some cases the same country’ (source), is not allowed.

As Hallmark Abstract Service continues its efforts to serve the needs of our clients both ethically and legally, we are working closely with our primary underwriter Fidelity National Title Group to determine how best business can continue to get done.

Stay tuned for important updates as they become available!

If you have any thoughts or questions, please don’t hesitate to ask.

Mike Haltman, CEO
Hallmark Abstract Service
mhaltman@hallmarkabstractllc.com
(646) 741-6101

Closing A New York State Real Estate Transaction in the Age of Coronavirus!

Today, and rightfully so, parties to a real estate transaction are loath to sit in close proximity to each other regardless of the degree of social distancing being used!

In certain instances they may also be unavailable for a sit-down as they are quarantining themselves voluntarily or, because they feel ill, have been exposed to the virus and are mandatorily quarantining.

Coronavirus makes arranging and holding an in-person real estate closing, somewhat difficult at best.

Further compounding the issue of an absentee closing in New York State is the fact that ‘remote’ notarization, or allowing ‘documents to be signed and notarized digitally and without the requirement of being in the same room, building, state, or in some cases the same country’ (source), is not allowed.

As Hallmark Abstract Service continues its efforts to serve the needs of our clients both ethically and legally, we are working closely with our primary underwriter Fidelity National Title Group to determine how best business can continue to get done.

Stay tuned for important updates as they become available!

If you have any thoughts or questions, please don’t hesitate to ask.

Mike Haltman, CEO
Hallmark Abstract Service
mhaltman@hallmarkabstractllc.com, (646) 741-6101

Hallmark Abstract Service: Title Insurance Warrior!

Hallmark Abstract Service!

We are able to protect supertall buildings in a single transaction across New York State!

And, we are expert in protecting single-family homebuyers, commercial property buyers and mortgage refinancers in every real estate transaction that they enter into!

Hallmark Abstract Service Is Open For Business And Stands Ready To Serve The New York Real Estate Buying Public And The Real Estate Attorneys That They Work With!

Do you have questions about the way in which Hallmark Abstract conducts business?

Please read ‘Buying a Property in New York? Remember You Have the RIGHT to Choose Your Title Insurance Provider!’ here, https://lnkd.in/gCjRZ93

Mike Haltman, CEO
Hallmark Abstract Service

Question: For a Commercial Landlord, What is The Coronavirus Disclosure/Action Plan Obligation?

The owners of office buildings, office parks, multifamily apartment buildings and other types of commercial property, find themselves facing decisions that they didn’t know existed two months ago!

With the spread of coronavirus, in the event that a management company and/or building owner is put on notice that a tenant or visitor is exhibiting symptoms or has tested positive for the illness, how should they respond?

On some level it’s a Solomon-like decision that requires balancing the health and wellbeing of building tenants, employees, visitors and building staff against the continuity of the businesses involved that occupy the building.

At the same time, how to address a coronavirus contamination is a significant decision that, if made wrong, could open-up an owner/management company to time consuming and expensive lawsuits.

The question below was posed on a real estate Listserv soliciting thoughts and opinions from other members.

Consider: ‘Should the landlord immediately direct that all activities in the building cease and that the building be evacuated for a period of quarantine and treatment?

A landlord who takes that action could be exposed to claims for loss caused by the inevitable business interruption. But a landlord who does not take that action could be exposed to even more serious claims, because they would sound in tort, if a building occupant does contract the virus.’

He goes on to ‘recognize that there are countless factors (e.g., the exact language of the lease, the availability of the business-interruption insurance, and the ability of the tenants’ personnel to work remotely) that could affect the legal analysis or the landlords’ risk-benefit calculus.’

Finally, ‘we’re in largely uncharted territory; before the events of the last several days, few if any of us had ever thought about, much less thought through, the issues presented by the choice that many landlords are now suddenly forced to make.‘ (William Maffucci)

One of the attorney’s on the Listserv provided a response from an actual owner/management company from an office complex that experienced a positive coronavirus diagnosis. This is the excerpt below:

REMEDIATION PLAN 

—, the building’s cleaning contractor, immediately responded to the situation on March 9, 2020, by disinfecting the affected area of the tenant space. 

The tenant stated the ———- Department of Health has been notified about the visit. 

As a precautionary step, building management has requested the janitorial provider to disinfect common area touchpoints since March 3, 2020 including door handles, elevator call and interior buttons, restroom fixtures, on a more frequent basis.

COMMUNICATION PLAN GOING FORWARD 

Building management will continue to monitor this emerging, rapidly evolving situation and provide additional updates as needed. 

Does the remediation and communication plan described above adequately address, from a legal standpoint, both the health, well-being and safety concerns of building occupants, staff and future visitors WITH the business continuity concerns of the companies occupying the building.

Derivatives: Financial Dynamite Operating in the Shadows…

With unprecedented volatility in the financial markets that’s been brought on by the international spread of coronavirus, and the economic backlash associated with it, is potential systemic risk to the global financial system lurking ‘out there’ in an obscure and often little understood investing vehicle (even for its buyers)…

DERIVATIVES!

Back in 2015, then reposted in 2019, Hallmark Abstract Service wrote an article on the derivatives market and the unknown risks that these incredibly complex contracts could pose to stocks, bonds, real estate, commodities, banks, hedge funds, etc. And yes, even to title insurance companies and every other type of company in the economy were triggers to mandate payment to one side of a contract. These payers on the losing side of a bet are known as the counterparty to the contract. The associated risk that they cannot pay for one reason or another is known as counterparty risk.

Examining the charts below, consider the speed and violence of the one month moves made by just these products, likely catching most if not all participants flatfooted. Then, extrapolate similar moves to most every financial market…

(Charts courtesy of CNBC)

For a deeper discussion of the derivatives market, one that operates largely in the shadows, please read further at the Hallmark Abstract Service article below…

Derivatives 101: Great Financial Tool Or Sinister Financial Time Bomb? – Update

Mike Haltman, CEO
Hallmark Abstract Service LLC