After the Hurricane: Now what? 

Due to the damage sustained in Southwest Florida from Hurricane Ian in September and the following months, our local real estate community became intimately familiar with relatively seldom-used contractual provisions such as the “force majeure” and “Risk of Loss” clauses in both versions of the FAR/Bar contracts. By this point, it’s safe to say that most agents (and real estate attorneys) wouldn’t mind if we never dealt with those provisions ever again! The good news is that time will soon come, at least for a while, as those two provisions only generally apply when there is an “act of God” or “casualty loss” event between the contract’s Effective Date and the Closing date. However, this does not mean we are out of the woods by any means when it comes to dealing with Ian-related issues. In fact, many agents and their customers will likely be confronting certain Ian-related challenges for the foreseeable future. But fear not! Below are a few helpful tips to get out ahead of common challenges in the days to come: 

MOLD

While mold is an ever-present concern here in Florida due to our climate, it can often be a much more significant concern following extreme weather events due to the increased likelihood of water intrusion into homes. One suggestion to protect homebuyers, especially when purchasing a home they suspect might have experienced water intrusion, is to attach the FAR Mold Inspection Rider to the contract. The Mold Inspection Rider allows the Buyer to conduct a mold inspection(s) within a certain timeframe. If the inspection report reveals that required remediation costs would exceed a certain amount, the Buyer may cancel the contract by notifying the Seller within the inspection period.

Insurance

The Florida homeowner’s insurance industry was experiencing significant challenges even prior to Hurricanes Ian and Nicole. It is too early to tell exactly how these storms will add to said challenges long term, but suffice, obtaining homeowners insurance will remain a challenge for some Florida homebuyers for the foreseeable future. This issue is even more challenging for homebuyers on a tight budget who need their insurance premium to be at or less than a certain amount. Enter the FAR Homeowner’s/Flood Insurance Rider (“Insurance Rider”)! In short, the Insurance Rider allows a Buyer to cancel the contract if they are unable to obtain homeowners and/or flood insurance for a certain amount by a certain date.

Seller Disclosures

As has been well documented in previous blogs, sellers have an affirmative duty to disclose certain property-related defects to buyers. Proper disclosure of defects, and Buyer review of said disclosures, has never been more important than it is now due to the incredible amount of damage local properties sustained. Sellers may assume that because they properly repaired the damage their property sustained, they do not need to disclose that there was damage in the first place. This assumption is incorrect; and if Sellers fail to disclose the damage and the steps they took to make repairs, they are potentially opening themselves up to liability in the future. The best advice is if the Seller is debating whether to disclose or not, disclose! The Seller can always further explain the discloser, but once the closing happens, it is too late!

Special Assessments

Many HOA and condo associations are already discussing what special assessments may be necessary to repair the damage done to common elements within their communities. In the near future, Buyers and Sellers will need to account for said special assessments when buying and selling homes within associations. For this reason, it is extremely important to pay close attention to the HOA addendum and Condo Rider, specifically, the sections which detail which party is responsible for paying special assessments and how that is decided. For example, suppose a special assessment has been levied against a unit, and the Seller failed to disclose this fact. In that case, the Seller could be on the hook to pay the entire special assessment prior to closing if the Condo Rider was not filled out correctly. Rather than relying on the Seller to properly disclose, Buyers can make the contract contingent upon review of the most recent board meeting minutes, in addition to the mandatory review of certain other “condo docs” as described in the Condo Rider.  This will give the Buyer a chance to find out for herself if the board is currently discussing special assessments.

The tips discussed above are just a few steps agents can take to protect customers better and assist them in navigating the present set of challenges our local real estate industry currently faces. If you are facing challenges similar to those discussed above and need further assistance, please do not hesitate to contact your local trusted real estate attorney.

Sincerely,
Andrew Conaboy, Esq. aconaboy@berlinpatten.com 
Andrew is a partner at Berlin Patten Ebling and manages the Venice office. He focuses his practice on residential and commercial real property transactions. 

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