For house hunters worried about job loss, there’s a COVID-19 addendum

A COVID-19 addendum can help a buyer, if a seller agrees. (Photo by ERIC BARADAT/AFP via Getty Images)

If you buy a house and then lose your job, then you are just an unemployed homeowner with no way to reverse the purchase. But if the pandemic costs you your job between the time you sign a contract to buy a home and the sale closes, you could have an out.

It is called a COVID-19 addendum.

“In the residential sales contract, it protects the buyer from any layoff, any furlough due to COVID. Therefore, the buyer can successfully void the contract,” said Chris Channell, regional vice president at Draper & Kramer Mortgage in McLean, Virginia.

It is an extremely rare contractual condition in the residential real estate industry. And there is a catch. Sellers have to agree to a buyer’s COVID-19 addendum, and many, especially in the D.C. area, are not.

“I’m seeing it in less than 50% of contracts at the moment, simply because the market is extremely competitive, and sellers have the upper hand due to lack of inventory,” Channell said.

Many couples actively looking for houses to buy have seen their household incomes unexpectedly cut due to a job loss, layoff or furlough. But does the spouse’s or partner’s unemployment benefits count toward qualifying income?

“Unfortunately they do not. So if a spouse loses a job, that spouse can be on the mortgage, but the unemployment income, and previous employment does not count to qualify them for their new home,” Channell said.

A copy of a sample COVID-19 addendum is posted online by the Virginia Realtors Association.

More Coronavirus news

Looking for more information? D.C., Maryland and Virginia are each releasing more data every day. Visit their official sites here: Virginia | Maryland | D.C.

Jeff Clabaugh

Jeff Clabaugh has spent 20 years covering the Washington region's economy and financial markets for WTOP as part of a partnership with the Washington Business Journal, and officially joined the WTOP newsroom staff in January 2016.

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