What happens if disaster strikes just before you close?
In 1985, an F4 tornado struck the City of Barrie, causing massive damage to a large part of the city. I was only five years old at the time; my memories of the day consist of being upset that my mother wouldn’t let me walk to my friend Erin’s house because she was concerned about the green sky and the weather reports. The next day, I heard that my friend Robin’s house had been entirely ripped apart around them; thankfully, everyone was safe. We had an eerie echo of this on Tuesday, when an F2 tornado hit the community of Angus, just west of Barrie; there has been significant damage there, though thankfully no one was hurt.
Today, I have been busy getting in touch with all of my clients who are about to buy or sell homes in Angus, because there are things to think about. Tornadoes can cause all sorts of damage that doesn’t show up for a significant amount of time; there can be microfractures in the brickwork, debris pushed into a chimney or attic insulation sucked out or blown around. With roofs, the shingles can lift and then settle back down, so that it looks fine, but down the road it can cause problems. Generally, you want to have a full home inspection if your house has been damaged at all by a tornado to ensure that your insurance company deals with everything now, rather than trying to get them to cover damage two years down the road.
The general rule when there is damage to a property in the period between agreement and closing is that the buyer can choose between closing as is and having the seller’s insurance cover the cost of repairs, or delaying the closing to allow the seller to do those repairs. You can also negotiate with the seller to reduce the purchase price and take it truly as is. Usually, cancelling the deal altogether is not an option.
If there is a major natural disaster in your city shortly before you are about to buy a house, you should check the status of the house itself and, if it’s damaged, you should call your insurance agent and lawyer right away so that you can make an informed decision.