In the 1996 movie Twister, Philip Seymour Hoffman’s character Dusty exclaims, “It’s the wonder of nature, baby!” as he begins to chase a storm. Throughout the movie you see the devastating effects of storms and tornadoes. Although the characters and events in Twister are fictional, the damage depicted in the movie can tragically reflect reality. With all the recent storms and tornado warnings across the state, sellers and buyers might wonder what happens when severe weather causes damage to the property in the middle of a transaction. Licensees should be prepared to provide guidance to parties after disaster strikes.
Additional inspections
After a hailstorm, a buyer may want to hire a contractor to determine whether the roof and exterior of a property has damage, or, after a flood, a buyer may want to have another inspection of the basement to confirm there is no water seepage or leaking. Although the buyer’s concerns are legitimate, the offer terms still control the transaction.
As such, if the accepted offer does not include an inspection contingency or if the inspection contingency deadline has already passed, the seller is not required to provide access to the property for the buyer’s requested inspections or evaluations.
If the buyer wants to request verification of hail damage or water in the basement, the buyer can propose an amendment requesting such inspections. The amendment should include who is allowed access and when, for what purpose, what is being inspected, whether the buyer can send a notice of defects, and whether this constitutes an inspection contingency, among other considerations. The buyer should understand that the seller is not required to agree to such an amendment.
Property damage between acceptance and closing
Although the seller is not required to allow the buyer access to the property for additional inspections if the inspection contingency has passed, the Property Damage Between Acceptance and Closing provision of the WB offer to purchase would still apply.
If the property damage is not more than 5% of the purchase price, the seller must notify the buyer in writing and restore the property. Additionally, the seller must provide the buyer with copies of all required permits and lien waivers no later than closing.
If the property damage exceeds 5% of the purchase price, the buyer then decides whether to terminate the offer or carry out the offer and receive the seller’s insurance proceeds and a credit in the amount of the seller’s deductible on their insurance policy.
The parties may agree to have a professional determine which services and associated costs are possible to help meet the terms and conditions of the offer to purchase. Alternately, the parties may execute an agreement relating to the damage via an amendment regardless of the value of the damage.
Move forward
One of the main themes in Twister is learning to move on after disasters, and real estate transactions are no different. Understanding how to help buyers and sellers after “the wonder of nature” hits can lead to a successful closing and better brokerage service.
