When I drafted our last DR Legal News, I could not have anticipated the changes that have occurred in all of our lives due to the COVID–19 pandemic. 

Anneliese Fierstos
Illinois REALTORS® Legal Hotline Attorney

As everyone may imagine, the Legal Hotline has been swamped with COVID related calls from every angle impacting the industry from open houses to unemployment for independent contractors. Illinois REALTORS® has worked very hard as an organization to keep everyone as up to date as possible by updating our web page frequently as any information is obtained that may help our membership.

Many of the hotline issues has been drafted into FAQ’s that may help REALTORS® address issues as they occur in their own practice. This article is meant to give an overview of the most frequently asked question currently occurring on the legal hotline.

I truly hope that during the time between this drafting, and the final editing and production of the newsletter, we all have more answers and many of these issues have settled down and we are putting some distance between ourselves and the pandemic.

A few weeks ago (although it seems like a lifetime ago now) Governor Pritzker issued an Executive Order dated March 20, 2020, which stated that professional services, including real estate related services, were deemed essential, and were included in quite a long list of others considered critical to health of citizens, both physically, and to the extent possible, economically. The designation of the real estate industry as essential recognized that the real estate industry is a very important cog in the local, state and national economy; and is one that is so important it warrants some protection to allow for some operation to continue during a time of crisis. However, the Order also makes it clear that even those businesses designated essential are not to be conducted in a “business as usual” way.

1. Is it accurate that REALTORS® cannot conduct open houses and are limited on showings of property during the time period covered by the Governor’s Executive Order?

As of  Saturday, March 21, 2020, Illinois has been operating under a  “Stay at Home” Order, and more specific guidelines interpreting the Order were published by the Illinois Department of Commerce and Economic Opportunity (“DCEO”) on April 1, 2020.

Under the Order and the Guidelines: 

• Open houses are not permitted.
• Showings of tenant occupied rental properties are not permitted.
• Showings of vacant or owner-occupied units are permitted if necessary and scheduled in advance (virtual showings are preferred) but limited to no more than 4 people.
• Please refer to the DCEO Essential Business & Operations Guidance for more details.

The language in both the Order and DCEO guidelines make it clear that, even with permission from a tenant, a showing of tenant occupied property is not allowed. REALTORS® are encouraged to explore other avenues of marketing property outside of physical showings. For example, they can develop seller-assisted videos, photos or virtual tours. In some cases, a seller could take a video of their property on their smart phone and share it with their broker for editing.

Even if a REALTOR® is doing a physical showing under one of the exceptions (vacant or owner-occupied property) they must follow the guidelines issued by DCEO and limit the showing to no more than 4 people as well as abide by the social distancing/cleansing guidelines.

In some cases, a showing of an unoccupied property requires access through a common area. This does not appear to be strictly prohibited by either the Order or the DCEO guidelines. However, if this does occur REALTORS® should take all social distancing precautions necessary to protect other tenants in the building, including using masks and gloves and sanitizing as necessary.

Brokerages can make the decision to suspend physical showings altogether during this pandemic in order to protect themselves and their brokers. REALTORS® can make business decisions to avoid in-person contact with clients. The sponsoring broker should consider amending office policies to include directives on how the brokerage will handle personal client contact. However, it is imperative that any policy put into place be applied equally to all clientele.

2. Are property inspections prior to occupancy or closing prohibited by the Executive Order or the DCEO Guidelines?

Neither the Executive Order addressing essential services, nor the DCEO guidance speak directly to inspections of owner or tenant occupied property prior to either a closing or taking occupancy.

In the case of a tenant refusing entry for an inspection at this time, DCEO guidance clearly states no “showings” of tenant occupied property are allowed. Therefore, it is reasonable to infer that an inspection should not be allowed if a tenant refuses entry while the Order is in place. Otherwise, if a tenant allowed an inspector into their property to perform an inspection, the inspector would need to have solid legal advice that the inspection is necessary under the facts of the situation and is permissible under the Order. IF this inspection takes place, all safety and social distancing measures would need to be observed.

The case of a seller refusing access to their property prior to closing due to fears of exposure is slightly more complicated because it can impact the terms of the contract for sale. If this situation occurs, the best solution may be for both buyer and seller to consult with their own attorneys about renegotiating terms of the sales contract that are relevant to the inspection.

There might be a clause in the sales contract related to natural disasters, sometimes known as “force majeure”. Clients and their attorneys should consider whether these clauses apply. Typically, these clauses apply to things like storms and earthquakes, however there may be a valid argument that a global declared pandemic is a natural disaster. This could allow for some leniency and prevent breach conditions. This will, of course, still depend on the facts of each situation. In the absence of such a provision, parties may need to work towards responsible solutions.

3. Should property managers change office policies in order to ensure that their employees are safe during this time?

Property managers are in a difficult position during this time because many of their duties include maintenance of occupied properties. Just as with showings, although access for maintenance is not specifically addressed by DCEO guidelines or the Executive Order, it can be inferred that if a tenant refuses access that should be respected at this time. There may be some exception if there is an event in a tenant occupied property (e.g. plumbing or gas leak) that may impact the health or well-being of other tenants or the public.

Even more difficult is assessing when you can refuse requested service for a problem in a property for the protection of your employees. In these cases, it may be necessary to consult legal counsel for a legal opinion of when you can refuse service. If a tenant says they are sick, stay away in the absence of an immediate emergency such as a fire or flood. If they invite you or a staff person in for a repair, the sick person must be isolated, and you should take all of the precautions listed above.

If one of your employees expresses concern about their own health or safety, or that of their families, you should not require them to do any work that they believe puts their health in danger. It may be necessary to consult with your company attorney to address employment issues related to required labor and access to tenants’ space under these circumstances.

To protect staff, it is a good idea to implement office policies and publicize the policies to your employees regarding the best ways to prevent both infection and spread of the disease. At this time, the information that we have on the virus and how to avoid infection is constantly evolving. Keep abreast of new information from the CDC on the coronavirus and publicize the information to your employees and tenants.