For buyer’s and seller’s under contract on a home, you may be curious about your obligations under the contract in regards to a hurricane or natural disaster. In order to shed some light on your obligations, here are three excerpts from the contract that will clarify your options and obligations.
The first section in the contract is the Property Maintenance Agreement, that obligates the seller to “maintain” the property in a condition which it was the day the contract was executed.
11. PROPERTY MAINTENANCE: Except for ordinary wear and tear and Casualty Loss, Seller shall maintain the Property, including, but not limited to, lawn, shrubbery, and pool, in the condition existing as of Effective Date (“AS IS Maintenance Requirement”).
“Force Majeure” is a fancy word for natural disaster. This section of the contract gives us a playbook for how we go about extending the closing date, and other time frames within the contract with respect to a hurricane or other type of disaster.
G. FORCE MAJEURE: Buyer or Seller shall not be required to perform any obligation under this Contract or be liable to each other for damages so long as performance or non-performance of the obligation, or the availability of services, insurance or required approvals essential to Closing, is disrupted, delayed, caused or prevented by Force Majeure. “Force Majeure” means: hurricanes, floods, extreme weather, earthquakes, fire, or other acts of God, unusual transportation delays, or wars, insurrections, or acts of terrorism, which, by exercise of reasonable diligent effort, the non-performing party is unable in whole or in part to prevent or overcome. All time periods, including Closing Date, will be extended a reasonable time up to 7 days after the Force Majeure no longer prevents performance under this Contract, provided, however, if such Force Majeure continues to prevent performance under this Contract more than 30 days beyond Closing Date, then either party may terminate this Contract by delivering written notice to the other and the Deposit shall be refunded to Buyer, thereby releasing Buyer and Seller from all further obligations under this Contract.
The property maintenance section above gave an exception to a “Casualty Loss” and this is the section in the contract that determines the threshold which a seller must make the required repairs to keep the contract moving forward.
M. RISK OF LOSS: If, after Effective Date, but before Closing, Property is damaged by fire or other casualty (“Casualty Loss”) and cost of restoration (which shall include cost of pruning or removing damaged trees) does not exceed 1.5% of Purchase Price, cost of restoration shall be an obligation of Seller and Closing shall proceed pursuant to terms of this Contract. If restoration is not completed as of Closing, a sum equal to 125% of estimated cost to complete restoration (not to exceed 1.5% of Purchase Price) will be escrowed at Closing. If actual cost of restoration exceeds escrowed amount, Seller shall pay such actual costs (but, not in excess of 1.5% of Purchase Price). Any unused portion of escrowed amount shall be returned to Seller. If cost of restoration exceeds 1.5% of Purchase Price, Buyer shall elect to either take Property “as is” together with the 1.5%, or receive a refund of the Deposit thereby releasing Buyer and Seller from all further obligations under this Contract. Seller’s sole obligation with respect to tree damage by casualty or other natural occurrence shall be cost of pruning or removal.
Remember, the contract is an agreement that plans for the worst situations, and lays the groundwork for how to resolve should the unforeseen present itself. In most cases, buyer’s and seller’s both still want to sell after an event like this, so with your patience and understanding, we will do everything we can to find a solution to meet everyone’s needs. Hopefully, these selections from the contract at least give you an idea of your obligations under the contract.