A Florida storm or hurricane could cause delays in completing a real estate transaction. As reported by Bankrate.com, in the event of a power outage, for example, a closing date needs changing.
The consequences of postponing a sale might include an increase in the interest rate on a mortgage. If rates suddenly rise, a buyer may not have the means to afford a higher monthly payment.
Weather conditions causing property damage
If severe weather conditions cause damage to property under contract, a lender may require a new appraisal. A closing date could require a postponement to accommodate an inspection and provide time for reviewing its results.
In some cases, flood or water damage requires fixing. Before a lender gives final approval for funds, a property may need to get the repairs completed. Parties could also negotiate who pays for the repairs. Discussing a new sale price could further delay a final closing date.
Contract terms with relief for delays
According to the National Association of Realtors, 29% of real estate sale contracts in January of 2021 faced closing delays. As reported by Realtor Magazine, problems relating to buyers’ financing caused 22% of the delays. Issues with a property’s appraisal value delayed 20% of the closings.
Reportedly, 11% of the parties canceled contracts because of appraisals. Only 9% of the sales fell through over last-minute financing issues. On average, home inspections and environmental problems delayed or canceled signed contracts for about 10% of January’s contracts.
If parties find an issue that could prevent closing, they may consider adding a contingency plan to their agreement. Including a “risk of loss” clause could outline which party pays for an unexpected delay such as repairs. When events outside a party’s control make it impossible to complete a transaction, parties may also agree to cancel their contract.