, from Dawda Mann Mulcahy & Sadler PLC in Bloomfield Hills spoke to John Swift and I about how his practice is responding to COVID-19. You can hear the conversation by clicking the audio player. The transcript of our conversation is below.Transcript
John: Hello, this is John Swift.
Max: And this is Max Matthies.
John: We're two of the staff attorneys at ICLE. We're talking to other Michigan attorneys about how the COVID-19 pandemic is impacting them and their clients.
Max: We thought it might be helpful to share how our colleagues and their firms are responding to the COVID crisis and provide some insight on how you might do the same.
Alfredo: My name is Alfredo Casab. I'm an attorney at Dawda, Mann, Mulcahy & Sadler, PLC, in Bloomfield Hills, Michigan. My practice is generally in real estate, corporate, and I do some business litigation.
John: I really appreciate you talking to us today. I guess first off, how are you staying current with everything that's going on, with court closures and all the other changes?
Alfredo: Well, I must say that the courts have been pretty good about sending mass emails to the attorneys that have cases pending in the particular courts. One other way that we're staying current is to check the court’s website to see if they're open or if they're closed. Earlier today, I believe the Michigan Supreme Court issued an order that superseded all local orders. Basically, kind of using common sense here, closing the courthouses for nonessential matters. Criminal matters still have to go forward for constitutional concerns there. Of course, not my area, but that goes first. Obviously, child protective–type services, those are still going on. Those should be going on, right?
John: Have you done any hearings over the phone or anything like that?
Alfredo: I have not. But earlier today, I read an article in the Free Press, … and I actually spoke with an attorney yesterday, [about] certain hearings … being conducted by video. I believe the app is Zoom. I've never conducted one via video conferencing. I've obviously done telephonic hearings at the U.S. Bankruptcy Court or at certain circuit courts and somebody just wasn't available and had to call in for whatever emergency, and the judges are usually pretty lenient on those. So as the technology catches up, I think we're going to see more video conferencing, which will alleviate traffic concerns and whatnot.
John: So on the real property side, I know Greg Gamalski just posted something in the Real Property Section about the register of deeds offices potentially closing and how that's going to impact transactions going forward. Have you heard anything about that? Do you have any thoughts?
Alfredo: Oh, they’ve closed. There are a lot of register of deeds offices that have closed. Actually yesterday afternoon I received an email from a real estate group that one of my colleagues belongs to forwarded to us, that had a list county by county of closures. So most are closed. Some of them are accepting e-recording. But not all. For example, Macomb County is closed and not accepting e-recording. Livingston County is accepting e-recording.… Oakland County is … closed but not accepting e-recordings. So it's going to impact closing because there are certain time frames within which you have to get security instruments recorded. A mortgage, for example, has to be recorded within a certain time frame. Otherwise it opens up to potentially losing priority if there's a bankruptcy filing or if somebody files something ahead of you. So when these register of deeds offices reopen, it could create a little bit of an issue. And remember, Michigan is a race notice state, so filing priority is a big deal. This is definitely a cause for concern.
Max: What about what about other third parties like title offices? Are those going to impact closings as well?
Alfredo: Absolutely. We actually received an email that came from [ATA title agency] for all the major underwriters. And they said they would continue for the foreseeable future to close deals. But at some point in time, they're going to stop. They're actually doing just what we're doing. They're seeing how things develop. And if it looks like the register of deeds offices are going to [be] closed for more than 30 days, and, frankly, I would not be surprised if they are closed for more than 30 days, at least the ones that are already closed, that is certainly going to impact closing. And title insurers will not issue the title insurance policy, which means that a buyer probably isn't going to close. Remember, title insurance is voluntary, but it's extremely recommended. So you can still have your closing. Remember, the recording of the deed is not what transfers title, it's the signing of the deed and the delivery of the deed. However, common practice is [that] you record your deed, and then you get title insurance. So there may be some buyers out there that are comfortable. But I would not be advising most clients or any clients that that's a good idea. And I don't think many other lawyers would either.
John: So do you think from a lending perspective, a lot of people can just push out a closing in a lot of circumstances? But I mean, they might lose a rate lock. Do you think the banks would be willing to extend rates? I guess they’re pretty low now anyway.
Alfredo: Well, yeah. So you've got two different areas right there—you've got the residential market, and I really don't practice much in the residential market myself. But nobody knows what’s going to happen there. I have no idea what the banks are going to do. Whether it's a good business decision or bad business decision, I don't know. And then you've got commercial loans. Banks on the commercial side, they're generally a lot more careful if they're closing. They will not close without title insurance. Which means if you can't get your mortgage recorded, there's no loan, which provides kind of an additional blow to the economy there because we've got all these restaurant closures, bar closures, other public areas, fitness centers, etc., closed. A lot of money isn't getting spent. And then you throw in the additional layer of banks not lending because they can't get their mortgages recorded, it's just another domino. But I think it will absolutely have a massive impact if the register of deeds offices don't open. Or alternatively, I guess you could have a change in the law. But that's I think a little bit more far-fetched.
E-recording has become a fantastic option. So hopefully, if the register of deeds office can maybe even partially staff an office, obviously, they’ve got to make sure that their personnel are going to be safe, because that's of the utmost importance. But if they can partially staff an office and accept e-recording, or set up their personnel to work remotely from home, which I don't know what technology they use, but at our office we can work from home. Hopefully they have the same technical … abilities that we do and can start accepting e-recordings. Again, that would certainly alleviate a lot of issues and anxiety.
Max: How are your clients responding to the closure of the register of deeds and the title insurance issues? What seems to be their biggest concern?
Alfredo: Well, it depends on the type of client, obviously; those that are doing real estate deals, those are pretty much on hold. You can't close a loan. On the other hand … I have one particular client that operates a business that was mandated to be shut down. So their biggest concern is, what are we going to do with our employees? And sadly, the response is, they're going to have to be laid off. There's no revenue coming in; they cannot meet payroll. You can take out a loan, I suppose. But most businesses, or I shouldn’t say most businesses, but a significant number of businesses, perhaps most, are going to choose to not take out loans to cover salaries. Salaries are generally one of, if not the largest expense, of a business, and you rely on the general income—the revenue that comes in from the operation of business—to pay those folks. And it's not just the restaurants and bars that are affected. There are a lot of other businesses. There are schools are that are going to be impacted.
I've got another client that’s a manufacturing facility. They're not closing; they're not ordered to close. And as a matter of fact, I think the government is encouraging factories to try and remain open as much as they can. But they have to take reasonable precautions to protect the employees. So they're implementing spacing rules or hiring extra cleaners to come in and wipe everything down, [and] instituting policies of if you're sick in any way, shape, or form, just stay home.
John: Lastly, do you have any advice for attorneys as far as taking care of themselves both emotionally and physically?
Alfredo: Okay. Emotionally, the first thing I would say is, There will be a tomorrow. There will be. I mean, we don't know what it's going to look like, but you know 2008 wasn't really that long ago. And honestly, you know that 2008 to 2012 growth malaise that we suffered. Honestly, I never thought I'd see anything like it in my lifetime again, because usually you can get one massive downturn every maybe 20, 30 years. I think we're certainly going to be seeing another one. This is incredible. But I remember August 1, 2008, Bear Stearns went down. A couple of the other big brokerage houses in New York went down, and everybody thought, Oh,w my gosh, the world is ending. It certainly changed. And before that there was 9/11/2001. Life changes, but there is always a tomorrow. Our clients are going to need our advice. They are going to need us to remain objective. They're going to need us to make sure that we're staying current on the law, which is changing almost every minute with new executive orders coming down. All I say is look forward to tomorrow. I don't know what it's going to look like, but there will be a tomorrow.
John: That’s good advice. Thank you so much, Fredo. This has been really helpful, and I appreciate you being accommodating and flexible with us.