Closing Extensions in FAR/BAR Contract
With Hurricane Matthew threatening Florida, it can also threaten scheduled real estate closings. A person may think the obvious power outages at the closing offices, unable to fly in for closing, or unexpected delays with sellers ability to move during the storm. But it actually is much more that.
Buyers have to be aware how hurricanes can impact closing
Florida Insurance Companies will not issue new Home Owners or Flood Insurance policies several days around an impeding hurricane. Your lender will require you to have Home Owners Insurance in effect on the day of your closing. If you do not, the lender will not issue you a clear to close which will delay your closing.
If you are paying cash the lender will not have any say so about your insurance. For your protection you should make sure you have insurance on the date of closing. You may have property damage from a storm after you close.
Even if all parties can physically attend closing, you will want to make sure that the property has not experienced unexpected property damage before you purchase it. The timing of the hurricane should be considered when you do your final walk. The final walk through is something we recommend to every buyer. A final walk through is a final check of the property before you buy. Should there be any property damage it may extend closing.
How to handle closing extensions
There is relief for home buyers that face these situations. The great news is FARBAR contracts automatically allow these types of closing extensions. This alleviates any renegotiation or creating a new addendum. There is language in the FARBAR contract that already determines how to handle closing extensions.
“If extreme weather or other condition or event constituting “Force Majeure” (see STANDARD G) causes: (i) disruption of utilities or other services essential for Closing or (ii) Hazard, Wind, Flood, or Homeowners insurance, to become unavailable, prior to Closing, Closing shall be extended a reasonable time up to 3 days after restoration of utilities and other services essential to Closing and availability of applicable Hazard, Wind, Flood, or Homeowners insurance. If restoration of such utilities or services and availability of insurance has not occurred within (Fill in the Blank or 14 days) after Closing Date, then either party may terminate this Contract by delivering written notice to the other party, and Buyer shall be refunded the Deposit, thereby releasing Buyer and Seller from all further obligations under this Contract.”
You need an experienced Buyer’s Agent
Tensions can be high for both buyers and sellers when unexpected delays occur with a closing of this nature. It is important that home buyers hire an Exclusive Buyers Agent that understand how to handle closing extensions. They can help home buyers move past the storm and sail to a smooth closing. For an Orlando Buyers Agent call 407-539-1053.