‘Essential Service’ Battle Is Back

November 16, 2020

Concerns in the real estate industry are mounting as more states move toward tougher coronavirus restrictions—including lockdowns in New Mexico and Oregon. As COVID-19 cases surge to a record high nationwide, at issue is whether states will deem real estate an essential service if they reinstitute mandatory stay-at-home orders. New Mexico, which implemented a stay-at-home order last Friday, did not categorize real estate as essential. But though physical brokerages in the state must close, brokers and agents can continue working remotely and fulfilling transactions as long as they have no in-person contact with clients or other professionals.

Other states, such as Illinois, Michigan, and Washington, have put less aggressive rules in place that do not affect real estate. But governors there have indicated a full lockdown is likely, which could potentially force pros to scale back their business activities dramatically. It’s up to each state to decide whether to categorize real estate as essential. Last spring, state REALTOR® associations asserted a number of important justifications for advocating “real estate brokerage” as an essential service, including:

  1. It’s necessary to help consumers with immediate housing needs, such as pending transactions or housing uncertainty due to job loss, furlough, or other sudden change in consumer circumstances. Shelter-in-place is meaningless without the shelter.
  2. Real estate is essential to the future stability of any city, state, or federal economy. Housing is the backbone of the economy, and letting it lapse now will make it much harder to rebound in the near future.
  3. Financial services, including mortgage, title, and insurance services, have been deemed essential in most states. The driver of all these businesses is real estate, which directly supports and facilitates the essential work of the mortgage, title, and insurance sectors.
  4. Current pending listings and real estate contracts in the jurisdiction at issue will be in limbo. Without designating real estate as an essential service, these citizens will have no clear path or direction on what happens with their pending legal contracts, financial commitments, and where they will be sheltering.
  5. Commercial and residential construction has been included as an essential service in other jurisdictions, and real estate services are the only means by which those commercial and residential construction projects are brought to market.
  6. Where legal and financial services are considered essential, closings could go forward. Not including real estate services as essential is akin to leaving out the one market participant that gets the transaction going in the first place.
  7. Real estate services can be conducted safely and without large gatherings. Showings and closings usually involve fewer than three or four individuals. The real estate industry has implemented aggressive CDC and local health guidelines on social distancing. Other industry practices include adhering to safe practices when interacting with consumers; virtual showings; remote work policies, where all real estate agents are working remotely from home and minimal staff remain in the office to process transactions; policies and procedures to address instances of COVID-19; and electronic signatures for all real estate contracts.
  8. The Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency lists in its Essential Critical Infrastructure Workers Guidance document “residential and commercial real estate services, including settlement services” under the other community- or government-based operations and essential functions.