Ohio Stay-at-Home Order: Title Companies and Real Estate Closings are Business as Usual (Almost)
Effective at 11:59 PM EST on Monday March 23, 2020, the Ohio Department of Health issued a stay-at-home order (“Order”) for non-essential work and activities through 11:59 PM on Monday, April 6, 2020. All non-essential businesses must cease operations within Ohio for that 2-week period, except to the extent employees may work from home. Of course, there is a laundry list of business that are deemed “essential,” and such essential businesses may continue operations in accordance with the Order. Financial institutions (which includes banks and life company lenders) were expectedly deemed essential businesses and may continue on-site operations; however, the Order also specifically included professional real estate services within the list of essential businesses, which includes title agents, title insurance underwriters, appraisers, and legal counsel. The complete Order may be found at the following link: https://coronavirus.ohio.gov/static/DirectorsOrderStayAtHome.pdf.
Lenders, buyers, and sellers can breathe a sigh of relief that Ohio real estate closings in late March and April are still possible; however, there are a few steps and protective measures that the parties and their respective counsel should consider as they proceed towards closing.
- Communicate: All parties should communicate with the title company regarding closing logistics as soon as possible in the closing timeline. Although they are not required to close operations, title companies (particularly agent offices) may independently elect to close their doors. Further, closing and escrow officers may choose to work from home, or in the worst case, become ill and unexpectedly lose availability. The parties should seek regular updates from the closing and escrow officers, with daily updates advisable beginning a few days before closing.
- Don’t Forget the County Recorder: In Ohio (and throughout the country), county recorders have adopted a wide range of policies during this pandemic, ranging from (i) operating business as usual, (ii) excluding in-person drop-offs and only permitting mailed recordings, and (iii) complete closures. As noted above, this is an ever-evolving environment, and the parties should seek regular updates on the county recorder’s status. Most importantly, the parties should confirm (independently or through the title company) the status of the county recorder on both the day before closing and immediately prior to breaking escrow on closing day.
- Title Exceptions and Gap Coverage: Lenders, buyers, and sellers are constantly evaluating their internal policies and procedures during this pandemic, and title underwriters are no exception. Underwriters will continue to evaluate the risk of gap and other recording issues, which may result in additional closing documents to be executed by buyers (e.g., indemnification agreements) and/or title exceptions on both loan and owner’s policies. In response, lenders, buyers, sellers, and their respective counsel will need to evaluate such policies, weigh risks, and negotiate with underwriters based on the circumstances of each deal. Counsel should also consider changes to their escrow instructions letters with title companies to backstop these measures.
- Think Ahead: From a practical perspective, parties can take several advance measures to help ensure a smooth closing process, particularly with respect to the execution of closing documents. Examples include signing duplicate originals of loan documents and acquisition documents, scheduling notaries far in advance, and coordinating delivery of signatures multiple days prior to the intended closing date. The parties will have constantly changing schedules and availability, with many individuals working from home; planning ahead for the little things can make a world of difference.
The general theme is to communicate early in the process, think ahead, and seek regular updates.