Colorado bans real estate showings, 1k fine

I hope everyone is doing well and staying safe and healthy.  Fortunately, our new “employee” Luna continues her hard work unfazed by the Coronavirus 😊  The Colorado Attorney General’s office issued a letter that effectively prohibits real estate property showings.   What does this mean for real estate sales?  What caused the ruling?

 

What happened?

A tenant who was occupying a property that was listed for sale filed a complaint against a realtor after they were asked to leave for a showing.  The Attorney general sent back a letter to the realtor that stated:

“ The Colorado Department of Law has received a complaint that you are requiring

residents to leave their home to facilitate showings of the property. Specifically, the

complaint alleges that you are requiring these residents to leave their dwelling so

that you can market the real property through public showings and open houses.

Engaging in this business activity and requiring residents to leave their dwelling

during the COVID-19 pandemic violates the specific mandates of recently issued

executive and public health orders.

Executive Order D 2020 017 requires all Coloradoans to stay at home and all

businesses to close due to the presence of coronavirus disease in the State unless

the business is designated as a “critical business.” This Order went into effect on

March 26, 2020 and is attached. (Attachment 1) Although this Order provides for

minimal exemptions, such exemptions are not applicable here. Importantly, Second

Updated Public Health Order 20-24 which was issued pursuant to Executive Order

D 2020 017 does not define real estate marketing services such as showings and

open houses to be a critical service, a critical business or a necessary activity that

would be exempted from these Orders’ requirements.”

This letter, and the sentence highlighted above, is effectively a real estate showings ban.  Although many property viewings are in vacant homes, Summit County attorney Jeffrey Huntley called attention to that particular sentence in the letter, which he said is all-encompassing in prohibiting real estate showings and therefore includes the prohibition of showing vacant properties.

What is the impact?

Even though the stay at home order will likely be lifted by month end.  The letter highlights an interesting dilemma that will have far reaching consequences.  Can you have a tenant leave the property during a showing?  Coronavirus creates some interesting questions.  For example, what if the tenant said they have “possible exposure” and are forced to quarantine for 14 days?  I can guarantee this will begin to happen with tenants whether they have had exposure or not!

 

Summary

It’s ironic that motels/hotels, builders, cake stores, and Cannabis dispensaries are critical businesses, yet real estate is not.   You can build a property but not legally show it to a prospective buyer?  How about the company that immediately needs new distribution space as they adapt their business model, or the family that is forced to relocate due to the virus?  Furthermore, you can tour a property to rent, but not one to buy?   None of this seems to make much common sense.

The government once again is arbitrarily picking winners and losers which will have far reaching consequences for the economy and individual finances. Fortunately, I’m doubtful there will be enforcement of the ban on real estate showings unless there is a complaint but there will be long term precedent with tenants.  Although you can’t tour a property, at least you can still buy “critical items” like alcohol, marijuana, or a custom cake to ponder over the arbitrary nature of what is a critical business.

 

Resources/Additional Reading

 

• https://www.summitdaily.com/news/real-estate-home-showings-no-longer-allowed-in-colorado/

 

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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending.  Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine,  The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.

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