Knowledge Mondays – Closing Delayed by Hurricane?
Purchasing a property at any time can be a hectic process filled with bumps along the road. However, purchasing a property during hurricane season can be hectic and frustrating as a hurricane can threaten your closing. Therefore, it is important to note the disruptions that may be caused by a hurricane to your closing.
One of the biggest disruptions is that insurance companies do not issue new policies once a hurricane or tropical storm is in the “box.” The box refers to an area, around 16,000 square miles, that the insurance company draws out around Florida, the adjacent states, and the Atlantic Ocean. If a hurricane or tropical storm is in the box, an insurance company will not issue a policy for your property. As a buyer, one of the most crucial steps during a closing is receiving an insurance policy. Therefore, a closing may be delayed because the buyer cannot obtain an insurance policy.
If a hurricane is announced after an insurance company has officially committed to a policy for the property, the insurance company is bound to that policy. Therefore, your closing will not be delayed due to an unattainable insurance policy. Instead, your closing may be delayed due to damage to the property.
If a property that you are under contract for is damaged during a hurricane, it is important to inspect the property right after. If an inspection discloses that the property has sustained damages that are less than 1.5% of the purchase price, the seller of the property has the obligation of repairing the damages or providing the money to repair the property. On the other hand, if the damages to the property are over 1.5% of the purchase price, the buyer may cancel the purchase or take the property “as is” and have the seller pay the 1.5% of the purchase price.
Additionally, standard real estate contracts should have a provision regarding natural disasters. Most of these provisions state that after a hurricane the closing on a property will be delayed. If a closing is not possible due to insurance being unavailable, the home not having any power, or the home sustaining damages, your closing will be extended about 7 days. However, if after a hurricane the closing is delayed more than 30 days, the buyer or seller may be able to terminate the contract. If the contract is terminated, the buyer is entitled to their deposit.
If you would like to discuss your purchase contract, schedule a consultation with the experienced attorneys at Alvarez Law Group today. Call us at (786) 620-2820 or email email@example.com to schedule a consultation.
*Disclaimer: this blog post is not intended to be legal advice. *