How a Real Estate Employer Operates
A real estate employer sells access to physical places and the completion of physical acts: the showing of a home to a stranger, the open house to the public, the appraiser's walk through a borrower's rooms, the acknowledgment of a deed before a notary, the recording of that deed at a public counter, the leasing office's tour, the property manager's entry to a unit and the enforcement of a lease in a courtroom. Every one of those acts happens at a place an order can close, with a counterparty an order can confine, or before a public officer an order can send home. This section describes the industry's functions in operational terms so that the sections that follow can show, order by order, which act each instrument reached.
Four terms are used throughout this page. The "Service" is the Internal Revenue Service; the "Notice" is Notice 2021-20, 2021-11 I.R.B. 922; the "United States" is the Government as litigant; the "Library" is this site's Orders Library, and an exhibit identifier such as Ex. SEC-14-023 links to the instrument's record there. The statutory test the functions are measured against, the Suspension Clause of CARES Act § 2301(c)(2)(A)(ii)(I) and I.R.C. § 3134(c)(2)(A)(ii)(I), is set out element by element at /law/statute; this page applies it to one industry.
The industry's shape
The real estate industry (NAICS 531) comprises lessors of real estate (NAICS 5311), offices of real estate agents and brokers (NAICS 5312) and activities related to real estate (NAICS 5313), the last including real estate property managers (531311 and 531312), offices of real estate appraisers (531320) and other real estate activities (531390); the title and escrow trades sit in direct title insurance carriers (524127) and title abstract and settlement offices (541191).1 The Bureau of Labor Statistics counted about 1.75 million employees in NAICS 531 in January 2020 across about 436,000 establishments, and the same series records the loss of 107,400 of those jobs between January and April 2020.2 Employers of this class are small: a brokerage office with a broker, an office manager, transaction coordinators, marketing and photography staff and licensed agents, many of them independent contractors, whose transactions are the office's revenue; a property-management company with leasing agents, maintenance technicians, porters and an accounting staff; a title or escrow agency with examiners, escrow officers, closers and post-closing staff; an appraisal firm with certified appraisers and trainees. The employees whose wages the credit reaches are the salaried staff of those offices, and the functions below are the functions those employees perform or support.3
This page codes the industry's functions as follows.
SH, showings and open houses
A listing agent admits prospective buyers or tenants to an occupied or vacant property, in person, singly by appointment or collectively at an open house; a buyer's agent accompanies purchasers through a series of homes in an afternoon. The function occurs inside a third party's dwelling, involves persons from different households in one room, and is the origin of every commission the brokerage earns. Orders reached it by name (Michigan's "[a]ny showings ... must be performed by appointment and must be limited to no more than four people on the premises"; Pennsylvania's "no more than the real estate professional and two people inside a property"), by gathering caps that made every open house unlawful, by stay-at-home orders that confined the buyer, and by the workplace infection-prevention and exposure-control orders of the Delta wave, universal indoor face coverings foremost among them, that governed every indoor showing.4
LS, listings, marketing and photography
A listing is taken at the seller's home, measured, staged and photographed; the photographer, stager and videographer enter the property; the listing is marketed through the multiple listing service and through broker open houses. Michigan's order named "photography or videography" among the acts confined to appointment and four persons, and Pennsylvania's guidance compelled "virtual tours, virtual showings and virtual open houses" as the substitute for the in-person event.5
CL, closings, notaries, recorders and title
A conveyance requires an acknowledged deed and, for a financed sale, an acknowledged mortgage; the acknowledgment is a notarial act which every State's law required to occur in the notary's physical presence until emergency instruments suspended that rule; the instruments must then be recorded at a county recorder's or clerk's counter or through an e-recording system the county has adopted; the title company examines the public record the recorder maintains and issues the policy at the closing table. Twenty-plus States issued emergency remote-notarization instruments between March 19 and May 4, 2020; recorders' counters closed in the major metropolitan counties in March 2020; the closing table, the notary's desk and the recorder's window were each reached by order.6
PM, property management
A property manager collects rent, enforces the lease, enters units for inspection and repair, operates the building's common areas, gyms, pools, clubhouses and leasing office, and evicts for nonpayment through a summary proceeding in a State court. The federal eviction orders were addressed to "a landlord, owner of a residential property, or other person with a legal right to pursue eviction"; State moratoria in at least thirty-four States and the District of Columbia and the eviction stays of State supreme courts closed the dockets; State fitness, pool and gathering orders closed the amenities; Wisconsin's, Utah's and Milwaukee's orders barred landlords from entering leased premises except for emergencies.7
LE, leasing offices
A leasing office is a retail storefront for apartments: walk-in traffic, tours of model and vacant units, application processing and lease signing at a desk. It fell under every office and retail capacity order, every face-covering and exposure-control order and every appointment-only condition of the reopening plans.8
AP, appraisals and inspections
An appraiser inspects the interior and exterior of the property, measures it and photographs it; a home inspector spends hours inside it with the buyer present. The stay-at-home orders limited interior access, and the federal housing regulators authorized exterior-only and desktop appraisals as the compelled substitute from March 23, 2020 through May 31 and June 30, 2021; Michigan's and Pennsylvania's orders named "appraisals" and "inspections" among the acts confined to appointment and party caps.9
CM, commercial leasing and tenant closures
A commercial brokerage or landlord leases retail, office and hospitality space to tenants whose own operations were closed or capped by the restaurant, retail, fitness, personal-care and office orders of every State; commercial eviction moratoria (Oregon's, Seattle's, Nevada's, New Jersey's early order, Massachusetts' small-business provision, Illinois' non-residential enforcement bar) reached the landlord's remedy directly.10
HR, hiring, licensing and training
Salesperson and broker licensing examinations, continuing education and pre-licensing courses are given in person at testing centers and classrooms; State real estate commissions suspended or converted them, and the workforce's entry into the industry was delayed accordingly.11
OP, office premises and telework
The brokerage office, the title agency's closing rooms and the property manager's back office are workplaces reached by the closure, telework, capacity and workplace infection-prevention orders addressed to every business; Kentucky's order named the industry and commanded that "[p]rofessional services firms must implement telecommuting and remote work to the fullest extent possible."12
WF, workforce availability
The industry's staff were confined by stay-at-home orders, kept home by school and child-care closures and by the paid-leave mandate of the Families First Coronavirus Response Act, quarantined by health-officer orders, and conditioned in their commutes from February 1, 2021 by the CDC's conveyance order, the federal airborne-transmission control that required face coverings on every conveyance and at every transportation hub.13
CB, the customer base
Buyers, sellers, tenants, landlords, lenders and investors were confined by stay-at-home orders, quarantined on interstate travel, and, as businesses, closed or capped by the orders on their own industries; the demand for space and the ability to view it moved with those orders.14
The revenue lines
A brokerage earns a commission, customarily five to six percent of the sale price divided between the listing and selling sides, payable only at closing; a sale that cannot be shown cannot be sold, and a sale that cannot be closed pays no commission. A title or escrow agency earns a settlement fee and a title-insurance premium per closing. An appraisal firm earns a fee per completed report. A property manager earns a percentage of collected rent, customarily six to twelve percent, and leasing commissions on new tenancies. Every line is transactional; none is earned until a physical act is complete, and the function-by-function section below cites the instrument that reached each act.
The industry's counterparties are the recorders and clerks who make a conveyance effective; the notaries who acknowledge it; the lenders, appraisers and inspectors whose work precedes it; the courts that hear evictions; the multiple listing services, photographers, stagers and moving companies of the transaction; the licensing boards that admit its workforce; the schools that keep its workforce's children; the transit systems that carry its staff and customers; and the tenants of every commercial building, whose own orders determined whether rent was paid and space was leased. For each class the orders that reached it are set out in the layers section below: the recorder and clerk closures and remote-notarization orders (the sector regulators and the counterparties); the court eviction stays (the counterparties); the licensing and examination suspensions (the sector regulators); the school, leave and transit orders (the ecosystem); and the orders on tenants' industries (the counterparties, and the companion analyses of those industries on this site).15
The workforce
Office staff live in the metropolitan area they serve and commute by car or transit; agents work from the office and from their cars; maintenance and leasing staff work on site at the properties they manage. Their children attended schools that closed in March 2020 and stayed remote or hybrid through the 2020-21 school year in most large districts; their commutes fell under the CDC conveyance order and the TSA directives from February 1, 2021; their exposure to a positive case placed them under the isolation and quarantine orders of their State and county health officers throughout the period.
Seasonality and geography
Residential sales peak in the spring and summer; the March-through-June 2020 stay-at-home orders fell across the industry's principal selling season, and the appointment-only and party-cap conditions of the reopening plans governed the summer that followed. The industry exists in every county of the United States, which is why the fifty-State table on this page and the metro pages of this site are the record of its suspension rather than any one State's order.
The counterparty map
For each counterparty class the following orders, by category, reached it: buyers, sellers and tenants, the stay-at-home, gathering and travel-quarantine orders of every State (the fifty States, below); recorders and clerks, the county closure notices and the State orders closing public offices (the counterparties); notaries, the emergency remote-notarization instruments (the sector regulators); appraisers, the federal appraisal-flexibility instruments and the stay-at-home orders (the federal layer and the sector regulators); courts, the judicial-emergency and eviction-stay orders (the counterparties); commercial tenants, the closure and capacity orders on their industries (the counterparties); the workforce, the school, child-care, leave, quarantine and conveyance orders (the ecosystem); lenders and servicers, the CARES Act, HUD, FHFA and CFPB instruments (the federal layer).