What Does Colorado’s Stay-At-Home Order Mean for Real Estate?

Updated on April 9, 2020

Denver's Order

Denver Mayor Hancock's announcement Monday of a stay-at-home order sent some shock waves through the real estate industry.  My phone was ringing off the hook with questions about whether real estate brokers, lenders, and title companies could continue to operate.

Then the Tri-County Order

Once I was able to read the actual document, I breathed a sigh of relief because it specifically excluded real estate services, title companies, appraisers, etc. as Essential Businesses.  The Tri-County order on Wednesday included similar language. 

Now the State-Wide Order

Then, on Wednesday, the Governor issued the state-wide order but none of us could read it until Thursday morning.  Upon reading it my heart sank.  While title companies were covered as Critical Business, the order made no mention about real estate services.   

And Lastly, the Amended Order

Fast forward a few hours and the state, upon urging by the Colorado Realtors Association, issues an amended order to add one more category of "Critical Businesses" as follows:

"Professional services, such as legal, title companies, or accounting services, real estate appraisals and transactions."

As an attorney, I recognize that particular words matter. 

Real estate brokers working with contracts every day also know this.  Notably, the state-wide order dropped the words “real estate services” and substituted for “real estate appraisals and transactions.”  My email box was full of questions from many brokers asking “is this only for pending transactions” “can we do showings” “can we do a walk-through” “what about inspections” “can buyers and sellers move.”   

Minutes after publication of the amended order, the Colorado Association for Realtors issued guidance to brokers.  You can read it here.   CAR’s guidance cautions that the order does not allow business as usual for brokers. CAR recommends that brokers take the health issues extremely seriously, that businesses adhere to social distancing requirements, and that brokers use the COVID-19 guideline that was created by the Colorado Bar Association.   What CAR’s guidance omits is information about showings, walk-throughs, or buyer-seller moves.  

The purpose of this writing is to examine the language of the actual state-wide order to determine what exactly brokers can and cannot do until April 11th.  (extended now to April 26th)

These are opinions based on the language of the order – and they're my personal opinions – which may be legally incorrect, so don’t take anything as some sort of guarantee. Hire your own attorney to guide your business. Please note that some local authorities may have more restrictive orders in place.

What Does the Order Say?

Can We Close Pending Transactions?

Yes:  Title & Escrow operations fall squarely within the Critical Business exemption.  Section III C. 7 of the Order lists the following in the definition of Critical Business:

“Professional services, such as legal, title companies, or accounting services, real estate appraisals and transactions.”

The amendment to the order specifically states real estate “transactions,” so closing pending deals does not seem to be an issue.

Can We Close New and Pending Refinances?

Yes.  Banks and financial institutions are listed as Critical Businesses so borrowers can still refinance their homes and we can close the transactions.

Buyers and Sellers

Can a buyer/seller/borrower travel outside their home to complete a closing?

Yes. The orders allows buyers and sellers to travel to the tile company to close.  Travel is permitted for purposes of providing access to Critical Businesses. So, offer your sellers/buyers and refi borrowers our no-contact, in-house or curb-side closing services. We’ll get it closed.

Is my buyer/seller allowed to move during stay-at-home?

Yes. The prior orders specifically included language to allow people to “relocate a household from one residence to another.” While the state-wide order doesn’t contain this same language, several arguments support a buyer and seller being able to move.

First, the allowable Necessary Activities allow people to engage in activities or perform tasks essential to their health and safety. Obtaining shelter is important for health and safety.

Another important interpretation piece is the comprehensive language used in the order to expand, not limit, the types of activities. The order does not provide a finite list of permitted activities. Instead it gives a few examples and uses language of “including, but not limited to” and “by way of example only and without limitation.”

It would also be inconsistent for the order to include real estate “transactions” as Critical Business but not allow someone to move. If the Governor contemplated that people should be prohibited from relocating that language should have been qualified. Every real estate transaction culminates in a seller giving possession of the home to the buyer. The order specifically prohibits certain activities and moving your home is not one of them.

Can sellers list and buyers buy?

Yes. This is a more difficult question.  Under the Denver and Tri-County orders one of the Essential Businesses was real estate “services.”   The state-wide order changed this to “transactions.”  I would argue that a real estate transaction starts with a seller wanting to list and then a buyer looking at the home and contracting to buy.  The Governor could have limited the order to “pending real estate transactions.”  He didn’t.

Brokers

Can Brokers Show Homes?

Yes.  As stated above real estate transactions cannot occur without a buyer wanting to buy.  They can’t decide on a home purchase entirely remotely.

If the Governor wanted to restrict the beginning part of a real estate transaction the order could have stated that only pending transactions are allowed.   Notably, CAR also provided no position about prohibition of showings.  CAR pushed for and successfully obtained the amendment allowing real estate transactions.  If CAR thought showings were prohibited, then wouldn’t CAR advise brokers against showings?  This interpretation also squares with the position of the Division of Real Estate.  So far, the Division has only issued cautions about open houses. 

Showing homes is also a material function of a broker.  A buyer cannot view a home without a broker accompanying the buyer.

The words “real estate transactions” are listed in the order as examples of “professional services.”  The order states “Professional services such as…”    Again, this language of “such as” contemplates a broader list than the one provided.  By specifically stating “professional services, such as” and then listing some of the licensed professionals engaged in real estate (like appraiser and title companies) the order surely contemplates professional services of the nature described, including real estate.  A real estate ‘transaction’ is a professional service by a licensed professional.   The order specifically used the term “professional services” which is widely accepted as services that require a licensed professional.

The professional services of a broker involve the full spectrum of services as governed by the license.  Those services include every part of the real estate transaction, including showings. 

Obviously showings should not take place as usual.  Listing agents should prohibit overlapping showings and buyers agents should be adhering to safety precautions and social distancing restrictions.  This is not the time to bring an entire family through the seller’s home.

UPDATE APRIL 9, 2020:  The new answer on showings  is NO, you can’t do showings.  DORA’s 4/9/2020 Guidance states that buyers cannot attend an in-person showing.  DORA reasons that the showing process is before going under contract, so that activity is not part of a real estate “transaction.”  Buyers desperate to find a home may decide to go under contract and then view the property during the inspection.

What about Open Houses?

Don’t do them unless you’re an idiot. It would be hard to manage the less than 10 person limit on group activities. Moreover, the broker conducting the open house is going to be perceived by neighbors as the idiot that’s ignoring safety concerns. The Colorado Division of Real Estate has issued some guidance on this. My opinion: see “idiot” above.

UPDATE APRIL 9, 2020: DORA’s 4/9/2020 Guidance confirms that you can’t conduct open houses.

Real Estate-Related Professionals

Can Appraisers and Inspectors continue to do business?

Yes, appraisers are specifically included in the definition of Professional Services that are Critical Businesses:     “…appraisers.”

Inspectors fall under the Critical Business of “Construction, including but not limited to: Other related firms and professionals who provide services necessary to maintain the safety, sanitation, and critical operation of residences and other Critical Businesses… and essential  services.”

UPDATE APRIL 9, 2020:  DORA’s 4/9/2020 Guidance confirms that appraisals and inspections are permissible as essential activities to a real estate transaction.

What about repairs to homes, like roof replacements?

Yes, contractors doing home building, renovation and repair, fall within the definitions of Critical Businesses and Critical Infrastructure.

I’ve heard about recording delays with Clerk and Recorder. Is that a problem?

No, not right now. Many clerk and recorders initially shut their doors or had limited staffing. The fear was that documents would not be recorded, causing potential issues with title.

The good news is that the recent orders identify county operations as essential. Our clerk and recorder’s offices remain in business. Some of the counties have some catching up to do but they are all allowing e-recordings of documents.

Where Do We go from here?

It’s time to get on with your real estate business – but very safely. The COVID-19 outbreak has hit everyone with numerous health and economic challenges, but none of them are insurmountable. We just have to adapt and keep on keeping on.

The day Trump implemented a National Emergency for COVID-19, I was in Virginia running a 34-mile race (very slowly). When you’re running an ultramarathon you’re constantly battling with that voice that’s saying things like “are you feeling ok” “maybe you should stop” this “really hurts” “I’m afraid I might not make it to the finish.” At the same time, you know you have to just keep digging in and looking ahead by taking another step and then another. Those steps are the action that you need to get to the finish.

Your real estate business is no different. Now is not the time to get distracted by all those little voices in your head full of fear and doubt. Dig in and keep taking action to move forward.

Many Ultra runners also have their crew. These are the friends and family who encourage you along the way, help you dispel your fears, and feed you. Frankly, they’re the ones who sometimes keep you from dropping out. If you need a crew for your real estate business, we’re here for you. Let us know how we can help.

At First Alliance we also need our support crew. 

We rely upon consumers and professionals in the industry, like you, who select us as their title company of choice.

If the information that we’ve provided over the last few weeks has helped you with your business decisions, please think of us for your next real estate transaction.

We’re in this together!

Greg

Greg Parham
Co-Founder and Attorney
First Alliance Title

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