Forget handshakes — home closings are going virtual in New York City.
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On Monday, as New York City grappled with school and restaurant shutdowns in response to the COVID-19 pandemic, real estate attorney Steven Matz embarked on uncharted territory for real estate professionals in the five boroughs—a remote closing.
“Outside of New York, remote closings are the rule, not the exception,” said Matz, a founding and senior partner at Katz and Matz, PC, in Manhattan, explaining that transactions elsewhere are carried out through money wires rather than paper checks.
For the condo sale that Matz closed, documents were passed along via messengers or scanned and electronically signed using Docusign.
Around the city, sellers and buyers are granting power of attorney to their real estate lawyers, and closings are being conducted with only the essential people present.
The biggest challenge comes with the sale of co-op apartments, which outnumber condos in New York City by about 75% and require board interviews and the transfer of paper stock certificates. Co-op closings also generally take place at the office of the managing agencies, rather than at an attorney’s office, Matz said.
An additional challenge comes with documents that require notarization. Online notary services, while available, have yet to be universally recognized.
“Whether or not (online notarization) is acceptable to either a managing agent, co-op board or the city of New York remains to be seen,” Matz said. “For us it’s the wave of the future. As of right now, the New York City Clerk’s office is not accepting it.”
Matz has a closing for clients who are selling their co-op scheduled for March 19.
“I have power of attorney for the sellers, and the purchasers have pre-signed all the documents,” Matz said. “The management company is still open. I will walk over there, put on my mask and do the closing. Our firm is working to the extent possible to get business done.”
Some co-op boards have been successfully using technology to move purchases along.
Gerard Splendore, a broker with Warburg Realty said his buyers were recently interviewed by a New York City co-op board via the Zoom videoconferencing service.
“As far as I can tell, the board will interview these buyers … and we can proceed to close,” Splendore. “The same building has suspended all open houses indefinitely.”
With buyers seeing stock market losses and looking to lock into historically low interest rates, real estate professionals are doing what they can to keep deals from falling apart.
“The biggest key is people need to be flexible,” Matz said. “If there was ever time for people to think outside the box, it’s right now.”
Additional uncertainty remains after the closing, however.
“More and more buildings are now taking further steps to stop moving in or moving out, all renovations and capital repairs and all but essential maintenance work,” said Steven Goldschmidt, senior vice president, chief information officer and director of sales at Warburg Realty. “Changes to how business is conducted are being made daily, often hourly. As local and state governments tighten rules and recommendations, we can expect continuing changes as well.”