When disaster strikes a property during a pending real estate transaction, there are many important issues that must be addressed. The health and safety of everyone involved are the utmost concern. Also, be aware of these five issues so you can help your clients navigate their way through this difficult time. These below points were gathered by the NAR general counsel in coordination with legal counsels across the country, including HAR legal counsel Grant Harpold.
- Speak with your clients as soon as possible. Keep everyone advised as much as possible, both as to what is known and what is not known.
- Don’t panic and try to encourage clients and customers to do likewise. Many people are involved in this difficult situation, and you’ll all need to work together to figure it out.
- Review the purchase agreement as most have provisions addressing damages that occur to the property prior to closing, and whether such damage occurs “in the ordinary course” or due to dramatic events like those you are now experiencing.
- Contracts also ordinarily contain provisions addressing what happens when one or both parties cannot perform for reasons beyond his or her control. Typically the provision holds that such non-performance is not a default. This provision is sometimes called “Force Majeure” or “Acts of God” clause.
- The purchase agreement may also address under what circumstances a buyer or seller may change the closing date.
- The seller and buyer are always free to work together to amend the contract and obligations thereunder based on any new circumstances.
- Apart from contractual provisions regarding loss or damage to property, state law may dictate which party – seller or buyer – bears the risk of loss during the pendency of a transaction. Check your state law (sometimes referred to as the Uniform Vendors and Purchasers Risk Act).
- Consult an attorney if there is any ambiguity as to the interpretation of the purchase agreement, a desire to amend the existing agreement, or a question about compliance with state law.
- Advise your client to file a homeowners insurance claim, or at least notify the carrier of the claim, as soon as possible.
- Document all damages in writing, photos, and video.
- Keep records of everything you spend on repairs and replacements.
- Helpful insurance filing tips are included in this article: https://www.usatoday.com/story/money/2017/08/28/after-hurricane-harvey-tips-filing-insurance-claim/606546001/
|Drone footage shows full impact of Hurricane Harvey
Here are tips for residents affected by the hurricane’s flooding.
- Buyers should check with the lenders to determine how they will handle re-inspections or re-appraisals that may be required.
- Ask lenders about additional costs and or timeframes caused by the disaster.
Here is also an FAQ that the North Carolina Association of REALTORS® published last year when they had Hurricane Matthew hit them. Link to FAQ: http://www.ncrealtors.org/weeklyqandas/1507-101716-legal-qa-public.html
We hope these tips will help you as you navigate the near-term future of your listings. We will continue to work to find more ways to help support you and your business during this time. While life and family come first, we also want to minimize the disruption to your business as you pick back up after the storm has gone.