Industry Experts Barrack, Penner Sound Off on the Coronavirus Crisis

Commercial Observer (March 28, 2020) California, like many other states, has shut down its economy to slow the spread of the coronavirus, causing heightened volatility in every market and uncertainty as to how long it will last. Executive orders and unprecedented measures from state and local officials are mounting almost every day, adding layers of consequences to real estate markets and the rest of the economy. With a rapidly changing landscape, industry leaders and policymakers alike emphasize there is no playbook for such an epidemic, because few if any situations in recent history include both overall shutdown and immediate government intervention into real estate and financing.

Sandy Jacobson, partner at Allen Matkins, said given the uncertainties surrounding the crisis, the natural inclination for sellers or buyers may be to terminate pending transactions. But, she said, in many instances, canceling transactions may not be the best course of action for buyers or sellers. “Buyers and sellers alike should not necessarily look at the COVID-19 tragedy as a stopping point for their real estate transactions, but in the right circumstances, might simply slow down and re-evaluate transactions for new opportunities,” she told CO via email. “Instead of making a knee-jerk decision to terminate a purchase and sale transaction, buyers and sellers should consider hitting the pause button." The “pause button” will at least allow the opportunity for more real estate transactions to be in a position to close when the effects of this pandemic ebb, she explained. The approach can be accomplished by extending due diligence periods, allowing additional underwriting, or extending closing dates. Read More