Often, parties seeking to buy and sell real property only concern themselves with Florida’s Selling Season and do not take into consideration the other season – Hurricane Season. Florida’s Hurricane Season is kicking off and now that Hurricane Irma is approximately two-years in the rearview mirror, Berlin Patten Ebling would like to remind our buyers and sellers of their closing obligations to prevent a potential closing migraine in the event of impending inclement weather during your purchase.
Florida’s standard “AS IS” Residential Contract for Sale and Purchase (the “AS-IS”) and Residential Contract for Sale and Purchase (the “Residential Contract”) (collectively, “FAR/BAR Contracts”) generally do not allow the parties to cancel or suspend contractual deadlines because of potential bad weather prior to or after closing (excluding a specialized addendum). A buyer cannot re-inspect and cancel the purchase or request potential restoration/repairs in the event of a developing weather storm. FAR/BAR Contracts do provide for a closing extension in circumstances where a “Force Majeure” event (natural disaster) causes a loss in essential closing services. However, today’s high-tech world makes it less likely that bad weather will impede such services. So what might a buyer do to protect against the unknown?
The FAR/BAR Contracts do provide protections to the parties. A seller still must maintain the real property pursuant the FAR/BAR Contracts’ Paragraph 11 Property Maintenance. Note the maintenance clause does not consider normal wear and tear, which is potentially ambiguous when considering older properties and weather. However, a buyer will be unable to re-inspect the premises and cancel the contract pursuant to Paragraph 12 of the AS IS or request further potential restoration/repairs under the Residential Contract right before or after significant Florida weather event. Paragraph M of the FAR/BAR Contracts do require a seller restore and repair the premises in the event of a casualty loss that does not exceed 1.5% of the purchase price. And if there is a casualty loss above 1.5% the parties may make said repairs, the buyer may close “AS IS” with a 1.5% purchase price deduction, or the buyer may cancel the purchase and receive the return of the escrow deposit.
Now let’s discuss the not-so-uncommon nightmare scenario where a buyer and seller are under contract when a Targaryen tropical depression transforms into a Khaleesi hurricane. Florida buyers 99% of the time will be barred from procuring casualty insurance when a hurricane is developing. Why? Florida insurers are not required to issue property and casualty insurance concerning certain perils such as “Flood”, “Windstorm” and/or “Hurricane” before, during or right after a hurricane. Therefore, a buyer should seek “binding” insurance for the property that is effective as of the closing date, and a seller should ensure that their existing casualty policy remains effective through that date as well. A buyer secures peace of mind if a closing occurs a week before a potential hurricane strike and a seller is insulated from liability if a policy exists through the closing date to respond to any damage casualty damage that occurs.
Ultimately, the above is brief and cursory list. In the event you are closing during Hurricane Season, it is highly recommended you speak with your local real estate attorney to avoid unwanted closing surprises and expense!
Berlin Patten Ebling, PLLC
Article Authored by Michael Schuchat, Esq.,email@example.com
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