[WSBARP] New wrinkle on closings

Tue Nov 3 16:39:59 PST 2020

This addendum language came out of our office. It came about in response to
a recent notice from King County (a number of weeks back) that recordings
may be delayed by several days or more. We had word that other counties
were experiencing similar issues as well. Given our understanding
that title and casualty insurers are generally willing to insure the gap
period, we came up with this addendum to address the concern of the parties
becoming out of contract if the transaction did not "close" on time.

I appreciate the thoughtful commentary offered by Craig and Kary. Here
would be my thoughts in response:

What if the county rejects the recording and requires one of the parties to
re-sign something and that party now refuses?
I don't think either party would have a basis to refuse, and both parties
would be bound by the duty of good faith and fair dealing to complete the
act of recording. As between Buyer and Seller, the transaction would be
closed as of the "Submission Date" (which is defined earlier in form to be
the date on which the closing docs are submitted to the county for
recording, regardless of whether they are actually recorded that day). As
such the parties would not be out of contract or free to walk away, but
rather would be closed as between the two of them, but with the surviving
need/obligation to record the documents, which essentially would be a
ministerial act at that point, but not one which either party would be
entitled to avoid. I suppose if the seller just disappeared then a court
could be petitioned for an order to complete the recording.

I am concerned about an insurable interest in the event of a casualty.
The Buyer would have an insurable interest due to the change in definition
of "closing", and as paragraph 3 says, both parties should ensure that they
have adequate coverage from the point of closing to the point of recording.

I believe (but do not know for sure) that NWMLS will be addressing this
issue in an upcoming round of forms revisions.

*David C. Daniel*, Attorney

*____________________________________*
* DEMCO LAW FIRM, P.S.*

*____________________________________ **Office |* (206) 203-6000
*Email |* *ddaniel at demcolaw.com <ddaniel at demcolaw.com>*

5224 Wilson Ave. S., Suite 200

Seattle, WA 98118

On Tue, Nov 3, 2020 at 3:13 PM Kary Krismer <Krismer at comcast.net> wrote:

> The state-wide forms people are apparently working on this issue and
> apparently finding a number of different issues necessary to resolve. So
> caution is probably indicated.
>
> I've heard they've discounted the casualty insurance issue, which I
> consider to be the major issue.  I think paragraph 3 should probably
> provide that both parties should maintain insurance until recorded if
> you're willing to take the risk on that issue.  But with that paragraph 1
> language changing the definition of closing seemingly the buyer would have
> an insurable interest, unlike the standard state-wide forms.
>
> I'd not have thought too much about the county rejecting documents
> prepared by a professional escrow in a normal purchase-sale transaction.
> Has anyone seen that?  There is typically limited power of attorney
> language to correct mistakes as part of the escrow instructions, so maybe
> that would deal with it where the document didn't need to be completely
> redrawn.  But what about a valuation issue holding things up?
>
> Kary L. Krismer
> 206 723-2148
>
> On 11/3/2020 3:02 PM, Craig Gourley wrote:
>
> Listmates,  I just received an addendum on a Purchase and Sale we are
> closing and it has my antenna’s up.
>
>
>
> I have seen gap insurance in limited cases when something unusual happens
> and title will insure as of a specific date even though a deed has not
> recorded but it is typically with the consent of the lender.  Given the
> propensity of the County recording office to play Jr lawyer and reject
> recordings for any number of stupid reasons I am reluctant to follow this
> addendum.   What if the county rejects the recording and requires one of
> the parties to re-sign something and that party now refuses?  I am
> concerned about an insurable interest in the event of a casualty.  I am
> sure given a minute I can come up with additional participants in the
> potential parade of horrors.   Thoughts? Comments? Am I being overly
> concerned about nothing? The addendum is below.
>
>
>
>
>
> *Gourley Law Group*
>
> *Snohomish Escrow*
>
> *The Exchange Connection*
>
>
>
> 1002 10th Street / PO Box 1091
>
> Snohomish, WA 98291
>
>
>
> 360.568.5065
>
> 360.568.8092  fax
>
> *Craig at glgmail.com <Craig at glgmail.com>*
>
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