Property Damage While Under Contract

It’s the day before closing and you are packing up getting ready to move into your new home. Bad storms are making their way through the area when your agent calls with bad news. Your closing has been delayed because a tree fell on the home you were scheduled to purchase. After you get past the initial shock, the question is, what happens next?

If you are represented by a REALTOR(r), utilizing a contract provided by the Georgia Association of REALTORS, then you are protected.  The contract specifies that the Seller is to promptly provide notice that an insurance claim has been filed, from there each party has 14 days to decide how to move forward.

The Buyer could agree to allow time for the Seller to repair the property and close under the terms of the current Purchase & Sale Agreement. For this to happen, both parties would have to be in agreement to continue. Typically this would occur if the damage were minor and the home could be restored to the same condition it was in when the contract was written. If the property is completely destroyed, it gets much more complicated to get the home back to the same condition as before the damage.

The Buyer has the right to call the contract off completely. Perhaps they are selling their home and do not have time to wait for significant repairs to be completed. Some repairs could take weeks or months to complete before the closing can occur.

The Seller also has the right to call the contract off completely. If the home is mostly or totally destroyed, they may choose to take the insurance money and sell the lot as is, or cleared and prepared for development. Instead, they could decide to rebuild the home with additional improvements. For instance, you may have the opportunity to update an old kitchen or reconfigure a floor plan to add a bedroom or create a master that didn’t  exist before. The Seller could use this as an opportunity to invest in and seek higher returns on their home several months down the road.

Either way. If a home is significantly damaged while you are under contract you are completely protected as either the Buyer or the Seller and no one is forced to buy or sell against their will.

Posted In : Atlanta, Buyer Tools, College Park, East Point, Featured, Feed, First Time Homebuyers, Fulton County, Hapeville, Legal Issues, Metro Atlanta, Real Estate, Sellers

This entry was posted on Thursday, January 31st, 2013 at 6:52 am. and is filed under Atlanta, Buyer Tools, College Park, East Point, Featured, Feed, First Time Homebuyers, Fulton County, Hapeville, Legal Issues, Metro Atlanta, Real Estate, Sellers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.