STORM DAMAGE – DISCLOSURE AND CLAIMS
With the recent storms, calls are coming in concerning roof and property damage and what legal issues may arise as a result. Today’s Article will address some of the key issues. As always, if you have any questions about your business, real estate, estate planning, or any other legal issue, please let us know by e-mailing me at email@example.com. Also, remember that we do legal presentations for business and community organizations. If your group would like this, please contact me to setup a date and time.
Winter storms, especially with the severe amounts of rain and wind we have recently experienced can trigger a great many problems with real estate ranging from flooding, mold, roof leaks, and even worse when trees crash down. They also create issues for real estate agents, sellers and buyers. Here are a few key points to keep in mind.
Actions needed by Agents:
In many cases, storm damage may occur while a property is listed for sale or is even in escrow. In such circumstances, it is vital that agents ask about and inspect for possible leaks, flooding, subsidence, and other such problems. Even when inspection period may have already ended, when disclosed conditions change anytime prior to closing, the Seller must disclose the change to the Buyer and agents have the forms for this. Often times storm damage will result in insurance claims, the repairs from which may take months for completion. Is an extension required to provide for this? Is the Buyer’s loan extendable and who pays the extension cost? Will the Buyer’s lender pull their loan approval based upon damage to the Property? All of these issues and more must be addressed by the real estate agents involved in the sale. Part of the value that real estate agents bring to their transactions is the experience of negotiating terms under these circumstances and the network of professionals they can call on to facilitate and potentially expedite getting repairs done.
Actions needed by Sellers:
The key is to disclose all and act. Generally, weather-related damages will be covered by insurance but the seller must keep everyone informed as to the scope of damage, the anticipated repairs to be done, and the estimated time-line for completion. This is not a time for a seller to think that if their property ends up with a new roof, they should be able to charge the buyer more or get a different buyer who will pay more. A Seller must act “reasonably” in restoring the property to sellable condition so the sale can be completed. Failure to due so can constitute a breach both of the Contract with the Buyer as well as a breach of the Listing Agreement. Unfortunately, there may be times when costs of insurance co-pays or other financial incapacities preclude a seller from being able to afford timely action at restoration. In such cases, it is critical that the Seller communicate early with the agents and buyer to negotiate some means of bridging the problem. Also, for property owners who have not as yet listed their home for sale, damage and repairs within typically 1-2 years prior to sale must be disclosed as well as any damage that was not repaired.
Actions by Buyers:
For Buyers experiencing delays due to storm damage to the home they are purchasing, it is critical that the Buyer gather as much information as possible about the scope of damage and anticipated repairs so they can inform their lenders, insurers, and others and obtain necessary extensions. They should also, with their agent, inspect the property with their agent so that they can get a sense whether the condition of the home or the topography of the land would make future damage more likely.
Every year following storm damage, we are retained by Buyers who belatedly discover that the home they purchased had sustained storm damage in the past and nothing about this was disclosed to them by the seller or agents. Claims against sellers and agents typically involve failure to inspect, inquire, or disclose those matters affecting the property which they “know or should have known” about. Most of the time, these defects were covered over or not completely resolved… defects that are not visible to a buyer or agents or maybe even to inspectors when they first see the property. The slope and grading of the land can be a perpetual cause of “seasonal flooding” resulting in standing water under raised foundations and mold from evaporating moisture. If an inspection reveals a sump pump under a home, the Buyer should ask why.
Lawsuits typically are raised by an unhappy buyer after a later storm causes leaks and/or flooding… especially when neighbors state that the seller had previously experienced the same problems.
for sellers and agents is always: “disclose, disclose, disclose”; and for agents and buyers, the point is to “ask, ask, ask”.
If you or your clients have experienced problems as a result of storm damage or undisclosed prior storm damage, we are here to help guide the parties to a resolution. We have substantial experience over many years of effectively handling such disputes, often resolving them before incurring the costs of legal action. A one hour consultation with one of our attorneys can address questions, go over all of the facts, and determine how to best move forward. All for a low flat fee. If you would like such a consultation, please call our office at (916) 966-2260 and our staff will schedule you. If you or they have any questions, please feel free to e-mail me at firstname.lastname@example.org.