RECA understands that consumers may be concerned about how COVID-19 might impact their real estate transactions.
Whether you’re looking to buy, sell, rent out, or lease property, it is important to work cooperatively with your real estate licensees to decide what precautions or adjustments you may need to make to keep yourself and others healthy.
RECA expects real estate licensees to remain vigilant in these extraordinary circumstances, attempting to find ways to conduct business without compromise to the health and well-being of consumers, themselves, and their colleagues, and in accordance with whatever government restrictions are put in place. As such, RECA has advised real estate licensees to reach out to their clients to discuss the options available for mitigating the impacts of COVID-19 while continuing to provide high quality service. We have prepared the following information to assist you in working with your real estate licensees. Please note that none of this information should be used in place of information provided by medical professionals and the Government of Alberta.
RECA has prepared the following information to assist you in working with your real estate professional. Please note that none of this information should be used in place of information provided by medical professionals and the Government of Alberta.
Sellers, looking for quick tips? Read the new Ask Charles article on selling your home during the COVID-19 pandemic.
Disclaimer: This information does not constitute legal advice. Consumers should seek legal advice based on their specific facts and circumstances.
With many people losing employment and income during the pandemic, many lenders are modifying their practices to accommodate borrowers.
Below is general information on some of the programs, policy changes, or other services some lenders are offering to borrowers to ensure they can meet the requirements to borrow.
Please note, these are some programs offered by some lenders. Not all lenders offer these services, nor are they required to. Borrowers can speak to their lender or their mortgage broker about what specific lenders are doing to assist their customers.
Please Note: lenders have received a high volume of calls and are recommending people email. They can better manage a backlog of email than phone calls.
Payment deferral programs which allow borrowers to skip up to six payments. These skipped payments should not affect the borrower’s credit score, but some reporting errors may occur, so borrowers are advised to monitor their credit and report any errors to the credit reporting agencies. Mortgage brokers should be able to assist with the reporting process.
Payment deferrals are not debt forgiveness. Depending on their lender and their own circumstances, there are several ways borrowers can repay the missed payments. Some methods may include: deferred payments in the mortgage balance and recalculate payments at renewal, an increase to each monthly payment once a borrower’s income is restored, or even by a lump sum.
Interest will accrue on the deferred payments, so it is best to defer only what is necessary. Possibly deferring for less than six months if your income returns sooner, or making partial payments rather than a complete payment deferral.
If you have a mortgage approval, but your deal has not yet closed (i.e. you haven’t taken possession yet) and your employment is interrupted, contact your mortgage broker/lender to discuss your options immediately.
Lenders have indicated that each situation will be evaluated on a case by case basis. Some lenders are accepting the various government assistance programs as income. You may also have an emergency fund that can bridge the gap until your employment is reinstated.
If your return to work is assured, you may be able to delay the first payment date. If you don’t know if you are going back to work, moving ahead with the mortgage may not be in your best interest. Be open and up front in discussing your situation with the mortgage broker and/or lender.
Also, given the pandemic and lenders modifying their practices to accommodate the massive loss of income across the country, talk to your mortgage broker about the possibility of obtaining new financing based on your new income level prior to your possession day.
Many lenders rely on automated valuation methods to validate the value of the mortgaged property, but there are situations when an appraisal is required. In those cases, lenders may accept a desk review or drive by valuation; however, certain situations require a full appraisal. This type of appraisal involves a physical inspection of the neighbourhood, and the interior and exterior of the home. Many appraisers and lenders have adjusted to the pandemic, and are now using video technology in concert with the occupants of the home in order to carry out the interior inspection. Many are also doing external inspections only. Most lenders will accept this form of modified full appraisal during the Covid-19 measures.
While some lenders have been accepting digital signatures for some time, now most lenders will accept verifiable e-signatures using a recognized digital signature process. This should apply to mortgage commitments and associated documents as well as creditor insurance agreements. Several lenders noted they still need a “wet ink” signature on Pre-Authorized Debit (PAD) forms to allow automatic withdrawal of payments. This will likely happen through the mail. Lawyers are arranging for virtual closing processes as well, so the entire process can happen without face-to-face contact.
Talk to your mortgage broker about your mortgage insurance options:
Before you have a conversation with your real estate licensee, asses your own personal risk tolerance with COVID-19. You should also understand the current measures set in place to keep our communities safe.
Understandably, while some individuals may want to exit the real estate market, others may choose to (or need to) continue buying, selling, leasing, or renting. Knowing your own comfort level with the risk of COVID-19 will inform your discussions with your real estate licensee.
The first option is to stay in the marketplace while adopting strategies to reduce risk. Your real estate licensee will advise you on possible strategies to make transactions safer, depending on if you’re a buyer, seller, landlord, or tenant:
Some real estate boards have listing rules that may impact these strategies. Your real estate licensee will inform you when this is the case.
During the transaction you may be:
COVID-19 related clauses and liability waivers are relatively new. They may not be in your best interests. RECA strongly urges you to speak with your lawyer before agreeing to any such clauses or waivers. Your lawyer will assist you in understanding the implications of these clauses or waivers to your specific situation, and whether they are right for you. They will also be in a position to provide amendments to ensure your rights and interests are protected.
Your second option is to eliminate risk and exit the real estate marketplace. The options you real estate licensee will discuss with you are:
Real estate licensees will suggest these decisions be documented in writing to ensure follow-through by both parties. Any amendments to representation agreements, including suspending agreements and intentions to enter new agreements need to be in writing.
Real estate transactions have multiple components which involve interactions with many regulated professionals. You may have a relationship with a real estate licensee, a property manager, and a mortgage broker. It is important to note what to discuss with every professional about any concerns, existing options, and preventative safety measures.
For instance, when working with your mortgage broker, you can mostly complete the mortgage application remotely. You can speak with your mortgage broker by phone or electronically, and you can organize a courier to drop off and pick up original contracts to minimize exposure.
Also, you should discuss any cleaning and precautionary measures or viewing conditions with home inspectors and real estate appraisers as you would for a viewing. You should also explore alternatives to the appraisal. Some lenders will allow appraisals based on virtual tours or drive-by appraisals.
Real estate lawyers have amended their rules and you will no longer need to attend in person to sign documents to demonstrate your identity. Individuals should speak to their lawyer to address any concerns before meeting with them.
Government of Alberta – Residential Tenancy Dispute Resolution Service
The Centre for Public Legal Education in Alberta – Landlords and Tenants
NEW Information Regarding Entering Rented Premises April 21, 2020:
As per Ministerial Order 009/2020, the following modifications have been made to the Residential Tenancies Act:
The CMBA created a bulletin containing more information about how appraisals are conducted during the COVID-19 pandemic.
Q A | I am the buyer/seller in a real estate transaction. My real estate professional (or another party) is proposing COVID-19 related clauses and liability waivers. Should I agree to them? COVID-19 related clauses and liability waivers are relatively new. RECA strongly urges you to speak with your lawyer before agreeing to any such clauses or waivers. Your lawyer will assist you in understanding the implications of these clauses or waivers on your specific situation, and whether they are right for you. They will also be in a position to provide amendments to ensure your rights and interests are protected. |
Q A | What can I do if I want to view a property, but the owner won’t let anybody in? The government has encouraged everyone to take part in social distancing to slow the spread of COVID-19. |
Q A | What can I do if I want to a view a property, but my real estate professional is concerned about the risks of COVID-19? It is important to understand that real estate professionals must also self-assess their own risk tolerances when it comes to COVID-19. |
Q A | How do I sanitize my home to protect my family from potential contamination? Various health organizations have compiled key information sources for up-to-date information about COVID-19 and how to protect yourself:
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Q A | I’ve just returned from a vacation outside the country. Can I still have showings at my home? The government has issued very clear and unequivocal instructions to self-quarantine for 14 days once you return. This means no physical interaction, period. This means you cannot even leave your home the day of a showing. Talk to your real estate professional about your options, including video showings, and possibly suspending your listing until the pandemic ends. |
Q A | I am in one of the most-at-risk groups for complications from COVID-19. Should I allow viewings? The government has recommended that it is better for people aged 70 and over, or with pre-existing conditions, to stay at home and avoid contact. This would include strangers coming into your home for showings. Talk to your real estate professional about your options, including video showings, and possibly suspending your listing until the pandemic ends. |
Q A | Do I have the right to ask buyers or sellers questions about COVID-19 and their health condition prior to visits? Yes. However, they are not required to answer. Ask your real estate professional to talk to the buyer/seller’s real estate professional about this. You should also carefully consider the implications a buyer/seller who refuses to respond to the question. |
Q A | I have a fully accepted offer but I no longer want to sell because of COVID-19: do I have the right to do this? Most likely you do not have the right, as it would break a legally binding contract. The parties are bound by the terms of the contract. If you no longer wish to sell after signing the offer and acceptance, you could potentially be exposed to legal action by the buyer. You may also be required to pay commissions. Speak to your lawyer about the possible repercussions for your actions. Your lawyer may also be able to negotiate a termination to the purchase and sale contract with the buyer. |
Q A | I don’t want someone in my property to measure using the RMS during the COVID-19 Pandemic. What can I do? RECA does not require professionals to advertise the size of your property. If you’re uncomfortable with someone coming to measure your property, you can ask your real estate professional to not make a size representation. If their local board requires them to advertise a size, have them contact their local board to discuss if there are any size relaxations during the COVID-19 pandemic. |
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| I have accepted an offer for the sale of my property. The buyer lost their job due to the COVID-19 crisis and his lender is now refusing to grant financing: what can I do? Most lender commitments remain conditional on the borrower's (buyer’s) financial position remaining unchanged. In the case of a layoff, even a temporary one, there have been instances in the past where the lending institution has refused to finance the mortgage. |
Q A | My home is listed but I am self-isolating. What can I do if I don’t want people viewing my property? To list your home for sale with a real estate professional you will have entered into a seller representation agreement, (most often called a listing agreement) with your professional’s brokerage. This agreement is a contract that outlines what you and your real estate professional agree to do to facilitate the sale of your home, including any provisions for showings. Speak to your real estate professional about the different options. |