Silicon Valley Realtors are learning the courts, which have now reopened, are experiencing a backlog of real estate-related cases, many of which have resulted from the pandemic. According to Simon Offord, a real estate attorney with Brewer Offord & Pedersen, the backlog is substantial and extremely worse in larger places, like Santa Clara County.
Speaking to members of the Silicon Valley Association of Realtors, Offord said as courts resume live hearings, they face a mountain of work. Cases were already backlogged before the pandemic with a stall of one to two years.
"Now, many cases could be delayed for as long as two to three years," said Offord.
Mediation is booming as parties are choosing this option to get matters resolved fairly quickly. It is also the least expensive option.
In addition to the usual cases involving non-disclosure, agent insurance, easements, and neighbor disputes, Offord said in the last year there has been a huge uptick in deposit disputes due to the hot market and scarce inventory. One type of deposit issue is when the deposit is made, contingencies released, the buyer backs out. Another type occurs when buyer and seller sign a contract, but the buyer does not make the deposit, then backs out.
The first type is more common, often caused by buyer's remorse and situations changing. Offord noted in a hot market there is the need to consider that other than costs to re-sell the property or have it re-staged, damages to the seller could be much less than the buyer's deposit.
There is also the issue of money and time wasted. Rather than wait and see the price the seller receives when they re-sell the property, many buyers would rather settle the dispute via mediation and avoid arbitration or going to court. Offord said if buyers are contemplating backing out from a transaction, they should seek the advice of a qualified California real estate attorney before taking any action.
In cases pertaining to the deposit never made by the buyer, Offord said it is a gray area as there is no legal precedent and lawyers can argue both sides of the issue. Buyers should get their earnest money in as soon as possible to avoid the issue.
In cases of seller remorse, the buyer is entitled to force the seller to sell the property, though the seller has theoretical leverage. The case will have to be settled via mediation or arbitration, or even in court, which again would cause much delay. The buyer will need to decide if they have time to wait for a decision. Also, the buyer may win but may be burdened with litigation fees.
Along with deposit issues, other legal issues that have surfaced more than in the past because of the pandemic are fence/lot line disputes and a whole range of tree disputes, from trees causing damage to a neighbor's property, dropping leaves, blocking their view, dying or deceased, etc., especially in Palo Alto where many trees have outgrown some neighborhoods.
"Since people have been home more than they are used to, these irritations with neighbors are amplified," said Offord.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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