Adam Leitman Bailey, P.C. Finds Creative Ways To Close Real Estate Transactions During Covid-19
Adam Leitman Bailey, P.C. recently closed two real estate transactions simultaneously for properties located over 100 miles apart by utilizing new closing procedures authorized by Governor Andrew Cuomo to fight the novel Covid-19 virus which facilitate “virtual” and “mail” real estate closings. The closings for both properties, which have an aggregate value of approximately $2,000,000.00, were seamless despite ongoing challenges that the New York real estate industry is facing caused by restrictions on non-essential, in-person gatherings.
The first property, a lake house located in Rock Hill, NY, went into contract on March 10, 2020, only a few days before the United States began to understand the imminent crisis caused by the Covid-19 pandemic. The transaction faced numerous roadblocks that required creative lawyering by attorneys at Adam Leitman Bailey, P.C.. Specifically, because the buyers were unable to inspect the air-conditioning system at the premises due to restrictions on travel, Adam Leitman Bailey, P.C. negotiated a post-closing agreement whereby funds were held in escrow pending buyer’s confirmation that the air-conditioning system is in working order within 60 days of closing.
The second property, a multi-family property located in Upper Manhattan that went into contract in January 2020, required Adam Leitman Bailey, P.C. to negotiate and memorialize a $50,000.00 purchase price reduction on behalf of their client-buyers because the pandemic lowered the fair-market-value of the subject premises prior to closing.
Both transactions were made possible by Executive Order 202.7 which was signed on March 7, 2020 by Governor Andrew Cuomo. The Executive Order permits virtual notarization to help facilitate, among other things, real estate closings to be conducted virtually and by mail. The Executive Order permits notaries to utilize 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.
Andrew C. Jorges, Esq., of the Transactional Department at Adam Leitman Bailey, P.C. handled both transactions. We look forward to developing creative new ways to keep real estate transactions moving forward while adhering to social distancing measures implemented by state and local government officials.
Over the course of three days, various experts were called forth, by both sides, in order to substantiate whether the use of space actually complied with the lease agreement or not. Acknowledging the volatile nature of the case, the new landlord presented the client with a settlement offer of $1.7 million in order to vacate the space.
Although both sides urged the client to accept the offer, the client, desiring more money, decided to hold out, citing the judge’s statement that a decision would be reached in a month’s time. The team at Adam Leitman Bailey, P.C. advised the client that the judge’s statement was not binding, and due to the fact the judge was new, the actual time of which the decision would be met was unpredictable. The client, however, disregarded the attorneys’ counsel and refused to accept the settlement offer.
Unfortunately, as eight months passed and no decision was forthcoming, the client had no choice but to vacate the premises. The client had gone bankrupt because of their rent obligation, as they were unable to conduct business while under a lawsuit. Ultimately, the client walked away with only their security deposit. Had they been able to hold out longer, both parties’ attorneys believed our client would have won.
This case illuminates how important it is to listen to your attorneys and remember that they have your best interests in mind. The team at Adam Leitman Bailey, P.C. was aggressive in it’s advocacy for the client, however, the client refrained from taking their seasoned counsel; and as a result, walked away with essentially nothing.
Christopher Halligan and Israel Katz of Adam Leitman Bailey represented the business owner in this matter.