Posted by: Robin Gronsky | September 7, 2011

What If the House You Are Buying Was Affected by Hurricane Irene?

If you are buying a house and it is shortly before closing, you are lucky.  I am writing this blog post just after Hurricane Irene has come and gone.  If the house you are buying has not been damaged by Hurricane Irene, you can breathe more easily.  You now know that your new home can withstand weather conditions that you will probably not experience again.  But don’t take the seller’s word about the lack of damage.  You should visit the property to see for yourself that there is no damage.

If you are buying a house that did get damaged by Hurricane Irene, you have both information and a potential headache.  Now you know what happens when a hurricane comes through the property you are buying.  Although it is not common for hurricanes to come through New Jersey, we do have nor’easters and summer tropical storms every few years.  If the house that you want to buy gets damaged by these types of storms, you have to prepare to deal with them.

If the house you are buying has been damaged, the issue of who is responsible for repairs should be covered in your contract of sale.  It should be in the “risk of loss” section.  The typical provision states that the seller is responsible for the house and any damage it may incur until closing occurs.  This means if the seller moved out before closing, and Hurricane Irene caused damage to the house, the seller is responsible for fixing the damage.  If your lawyer changed the typical “risk of loss” provision to permit the buyer to cancel the contract if a certain amount of damage is sustained, then you must investigate how much damage there was, how much it will cost to fix and how long it will take to fix the damage.  The timing of how long to fix may impact your mortgage commitment.  If it will take 2-3 months for the seller to fix the damage, you may lose your mortgage commitment.  Or the lender may withdraw the loan commitment if the damage is too extensive.  Does the “risk of loss” paragraph in your contract deal with this possibility?   Does your “risk of loss” paragraph let you cancel the contract if a certain percentage of the house is damaged?

You must immediately find out whether the house you are buying is damaged, what insurance the seller has, how much it will cost to repair the damage, and how long the repairs will take.  You should have the property re-inspected so the full extent of the damage is known to you.  Once you have all of this information, you and your attorney should review your options and take action.  Do not let too much time pass before you
notify the seller of your decision.  The longer you wait, the more likely the seller is to rely on your waiting for the repairs to be completed and to expect you to close on the property.

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