Government office closures stop commercial deals in their tracks
Parties can’t get documents necessary to close deals
Broad economic anxiety isn’t all that’s tamping down on commercial real estate deals these days.
States and municipalities across the country are shuttering document recording offices to contain the spread of COVID-19 and that means parties can’t close deals, according to Commercial Observer.
Commercial real estate deals require parties to submit and pull all sorts of property records and documents from city recording offices, including escrow instruction letters, liens, judgments, and deeds.
The American land Title Association reported Wednesday that at least 1,000 of around 3,600 recording offices in the U.S. were entirely or partially closed.
Many jurisdictions still require some documents to be searched or filed physically. New York City allows online recording for some documents, but not mechanic’s liens or building loan agreements. The latter is needed to close a construction loan deal and both are needed for title insurance.
“Everyone is trying to keep things moving the best they can, but getting title insurance is basic to any real estate transaction,” said Rosenberg & Estis attorney Eric Orenstein.
There are concerns within the industry that the pandemic will have a long-lasting impact on the economy and subsequently on demand for commercial real estate. Some parties have put deals on hold or completely walked away from them.
President Donald Trump signed a $2 trillion stimulus package into law on Friday, but some worry that it won’t be enough for some real estate sectors, particularly the multifamily sector. [Commercial Observer] — Dennis Lynch