Most real estate transactions get completed with few or even no hiccups along the way. Pre-approved for your mortgage, check. Down payment in order, check. Love the neighbourhood & schools, check. Home Inspection, problem-free, check. You are all set to get the keys in just a few weeks. Things can clip along smoothly and then WHAM…a big storm or quick spring thaw has hit the area and your new purchase is sitting in 3 feet of water! Now what do you do?!
- Move forward or say so long
Flooding can throw a serious wrench into the home-buying process, particularly if the damage has happened prior to your closing date. It’s a complex situation and in some cases, the damage can be so severe that the buyer will no longer want to close the deal and will ask for their deposit back. In this situation, both the buyer and seller (and lawyers and realtors) will have to decide whether the property damage can be repaired fully in time to salvage the transaction. The buyer also has the right to request that the original sale price gets reduced.
- Fine print for your protection
A well-drafted purchase agreement should list specifics on what will happen if unexpected damage occurs to the home prior to your closing date. If so, that document is worth its weight in gold, as it gives the buyer an important layer of protection, because as we all know, life happens.
- Moving forward
Your agent should spell out in a revised contract that both the buyer and the seller agree to move forward with the transaction, only if the total damage costs are less than a certain percent of the sale price (usually 5%). The seller must show proof of the repairs that were completed by a professional and not just “Uncle Fred” because he’s handy and retired. The responsibility for repairing the damage falls fully on the seller as they retain ownership of the property until the keys are turned over to the new buyers.
- Final steps
The best thing to do after the flood is to have another home inspection to see if the damage is more extensive than it appears. Water damage is one of the greatest culprits for mold, structural and foundational issues that may not be immediately visible. The inspection will also help determine how costly the repairs will be, which in turn will influence the decision of whether or not to proceed with the deal.
Further, it’s also recommended to have another inspection after the repairs to ensure your safety and protect your big investment. A final walkthrough the property with your agent prior to closing will give you the proof to see that the work has been done. For your own peace of mind, you want to know all appliances, fixtures, electrical issues and so on have been checked over.
The amount you are investing in your new property needs to reflect a solid and safe structure. If the sellers won’t cooperate with the repairs, then you’re probably better off moving along to find another home. Disasters do occur, but most situations can be salvaged fairly smoothly. Count on Ares Law to help protect you and your home or cottage purchase. We are experienced real estate lawyers who understand the Parry Sound and Greater Muskoka region well. We can help you just as we’ve helped many clients throughout the years. Speak to us and we can give you expert advice on how to handle your situation. Call us today at 1-705-746-6444.
