I received the new coronavirus addendum/amendment, C.A.R. Form CVA, 3/20. Certainly, this form is needed to allow a buyer and seller to agree to postpone escrow to accommodate the unforeseen, and for this we all applaud the creators.
However, we are all familiar with the complex moving parts of real estate transactions, especially in luxury housing. As a board certified mediator on the mediation panel of the C.A.R. mediation panel and a luxury home realtor, I am very concerned with the hazards the parties subject themselves to. The classic examples of misunderstandings and for lack of a better term, “a game of Russian roulette” ring loudly.
Discuss with counsel a second addendum which may more easily lead to a smoother conclusion. In short, with this form, the buyer and seller can cancel after 30 days of unforeseen circumstances and there is no liquidated damage clause. Further, if a loan contingency has been removed, the buyer’s deposit would be returned.
Also ask your attorney if the liquidated damages clause is vanished because this addendum super cedes the original RPA. (I fear what he might tell you). It may be that the court would go by the intent of the parties. Many do not know that the intent of the parties isn’t a defense to a liquidated damages clause.
Most certainly, we all need to be realistic and do our very best to see that people can continue with their pending transactions. Therefore, we must all mastermind additional solutions so both parties can agree to terms which are humanly possible. It is the time to not panic but to be resourceful.
With this, I will be up most of the night creating an addendum which should protect all parties without giving either side a “weasel clause” to cancel or hold the other side up for concessions to not cancel and our in house counsel will concur.
If you have any questions or wish to see future articles on this, please fill out the contact form on my website. We all have to work together during these times.