As 2020 is about to come to a close, COVID-19 continues to impact almost all aspects of the nation’s economy. This has been particularly true regarding real estate in both the residential and commercial sectors, since buyers and sellers are having to adjust to vastly different ways of doing business during a pandemic. In addition to this, a variety of changes are also in the works regarding real estate law in 2021. If you will be involved in real estate in any way in 2021, here are some changes that may be coming your way in the coming months.
Stricter Lending Requirements
If you are planning on buying real estate in 2021, you need to know lenders are introducing much stricter lending requirements due to the pandemic. For example, while the law certainly allows you to defer payments on certain bills, credit cards, or even your mortgage, doing so will likely now work against you when applying for a loan. As a result, you may find yourself getting turned down for a loan that only a year or two ago would have been no problem whatsoever. Therefore, you should work closely with a real estate attorney to go over the requirements for any loans you are seeking.
Government Protections
During the pandemic, the federal government stepped in to create moratoriums on evictions and foreclosures for those who had lost jobs or closed their businesses. Because of this, landlords and banks have been in a holding pattern when it comes to taking legal action against those who owe rent or mortgage payments. However, as more of these protections are set to expire within weeks, there is expected to be a flood of evictions and foreclosures for both residential and commercial properties. If you are a person who has months of unpaid rent or mortgage payments, it is recommended you hire an experienced real estate lawyer to assist you once these protections expire. Since the foreclosure process can take months under normal circumstances, you will need an attorney representing you who is up to speed on how the COVID-19 situation will affect this already complex process.
Capital Gains Taxes
If you own real estate and are in the midst of estate planning for 2021, you may want to work with a well-trained real estate lawyer who has an in-depth knowledge of capital gains taxes, since changes are expected to arrive shortly. With a new presidential administration preparing to take office in January, many experts believe some capital gains tax breaks that have been widely used by many people may be coming to an end. Under current law, heirs are not required to pay capital gains taxes on the amount a property increases in value over the lifetime of the deceased individual’s life. However, repealing what is referred to as a “stepped-up” tax basis is expected to occur, meaning heirs could find themselves paying much more in capital gains taxes than they expected.
New Refinancing Fees
If you are a homeowner who is wanting to refinance your mortgage, expect to be paying more in 2021 should you choose to do so. Beginning December 1st, the Federal Housing Finance Agency that is responsible for oversight of Fannie Mae and Freddie Mac imposed a .5% fee on lenders who help with refinancing mortgages, meaning the cost will be passed on to you the homebuyer unless you can convince your lender to waive the fee, which is unlikely under the current economic climate. However, the good news is that if your loan falls below $125,000, the fee will be automatically waived.
Due to the many complexities that are involved in real estate law in a normal year, don’t even try to make sense of anything involving real estate law during a pandemic. Instead, call upon an experienced and knowledgeable real estate attorney who has stayed up-to-date on the latest changes and can give you sound legal advice.
