One year ago, Hurricanes Helene and Milton disrupted real estate transactions across Florida. Closing offices shut down, insurance carriers paused new policies, lenders delayed approvals, and countless inspections were rescheduled. For many buyers and sellers, closing on time became impossible.
So what happens under the contract when a hurricane, or any other major, unforeseen event, derails a closing? That’s where the force majeure clause in the Florida Realtors/Florida Bar (“FR/BAR”) contracts comes into play.
The FR/BAR Force Majeure Provision
Both the FR/BAR Residential Contract for Sale and Purchase and the FR/BAR “AS IS” Contract for Sale and Purchase contain a force majeure clause in Paragraph 18(G). In plain terms, the provision provides that:
- If a Force Majeure Event (hurricanes, floods, pandemics, government shutdowns, etc.) prevents a party from meeting a contractual deadline, those deadlines are automatically extended.
- The extension lasts up to seven days after the force majeure event no longer prevents performance.
- During that period, neither party is in default.
This clause is designed to protect both buyers and sellers from being penalized when circumstances beyond their control make performance temporarily impossible.
Real-World Example: Hurricanes Helene and Milton
The anniversaries of Hurricanes Helene and Milton illustrate how important this clause really is. Entire regions of Florida came to a standstill. Closing companies couldn’t operate, lenders paused approvals, insurers stopped writing new policies, and many homes required re-inspection before moving forward.
Without the force majeure clause, countless buyers and sellers could have been considered in default of their contracts, even though there was no way to proceed. Instead, the clause automatically paused contractual deadlines. Once normal operations resumed, parties had up to seven additional days to complete their obligations.
That extra time was critical. It allowed transactions to move forward fairly, while giving parties the opportunity to confirm insurance, assess damage, and close without the threat of default hanging over them.
What the FR/BAR Contract Does Not Cover
While the FR/BAR contracts provide broad protection, there is a critical gap to understand: the contract does not contain a built-in contingency for obtaining homeowner’s insurance.
- In financed transactions, this risk is indirectly addressed because lenders require proof of insurance before funding. If coverage cannot be bound, the loan cannot close, which triggers the force majeure protections.
- In cash transactions, however, there is no such safety net. The buyer’s obligation to close is not contingent on obtaining insurance. If insurers issue a moratorium and refuse to bind coverage, the inability to obtain insurance, by itself, is not enough to delay a closing under the force majeure clause.
This means a cash buyer may be forced to close without insurance, or face default, unless they have added the Homeowner’s/Flood Insurance Rider. (See our prior blog on this important rider HERE).
Why This Matters for Florida Transactions
The anniversaries of Helene and Milton are a reminder that Florida real estate deals are uniquely vulnerable to weather and other uncontrollable events. The FR/BAR force majeure clause is a vital safeguard that ensures buyers and sellers are not penalized for delays caused by disasters. It is equally important to understand its limits. For cash buyers, the lack of an insurance contingency poses a real risk. Unless the Homeowner’s/Flood Insurance Rider is included, force majeure will not protect a buyer from being required to close during an insurance moratorium.
In Florida, where hurricanes are a certainty, knowing both the strengths and the gaps in the FR/BAR contract is essential. Force majeure may sound like “legal jargon,” but in practice, it is a lifeline. It allows transactions to pause during emergencies and gives parties the breathing room to close once conditions stabilize. The better you understand these provisions, the more confidently you can guide your clients through uncertain times. If you have further questions regarding force majeure, please reach out to your trusted real estate attorney.
