Real Estate Transactions and the Current Flooding Crisis
As a result of these difficult circumstances and in an aim to provide resources to members that can serve as a guide for you and your clients, AREA has compiled a number of tips that may prove useful to you.
Purchase Contract: Buyer's and Seller's Obligations
- Buyers and Sellers must contact their lawyer if they have any questions about their legal obligations under an existing purchase contract, e.g. what to do if a property is to close but is not in substantially the same condition as it was last seen?
- Sellers are obligated to provide insurance coverage until the purchase price is paid.
- Both parties may need to find alternative accommodation until damages can be remediated once health and safety issues are addressed.
- Discussion of time frames may happen on a transaction-specific basis. Contact your lawyer to discuss your options. Past AREAHub Monthly articles on Tenancy at Will and Condition of Property at Inspection may contain helpful information for you.
- For transferring of insurance and/or government rehabilitation dollars from seller to buyer.
Seller's Representative: What to Do
Firm sales contracts that were signed or any conditional sales where the conditions were waived in writing are still binding on the parties to the contract. In extreme instances the contract may be terminated by the Common Law.
- Contact your client to:
- Determine the extent of any damages;
- Discuss what steps are necessary to complete the sale; and
- Confirm if they are prepared to take the necessary action to complete the sale.
- Contact the Buyer's Representative to let them know about the condition of the property and what your clients are prepared to do to ensure that the property is restored to the condition at the time of the sale.
- Advise the Seller to contact their lawyer for any legal information they require to determine their legal obligations and their course of action with respect to closing the sale.
- Advise the Seller to contact their insurance company regarding any possible claims.
- Refer your clients to section 5.1 of the purchase contract, which notes that, “Risk of loss or damage to the Property shall lie with the Seller...” and remind clients to extend insurance coverage if they have already cancelled, based on the revised anticipated closing date.
Buyer's Representative: What to Do
- After speaking with the Seller's Representative, contact your client and let them know what the state of the property is and let them know what the Seller is prepared to do to ensure that the property is restored to the condition it was in prior to the flooding disaster.
- Once you have provided your client the information, advise them to consider and consult with a lawyer and then advise you how they wish to proceed.
- If either party to the contract have reservations about closing the sale, refer them to their respective legal counsel and disclose the situation to the REALTOR® on the other side of the transaction immediately.
Continuing to Write a Deal on Flood-Impacted Property
Clients may be inclined to proceed with buying or selling an impacted flood property.
- Consult with a lawyer on what contract language should be included for your specific transaction that captures the remedial work to be done and associated cost and who is responsible.
- Confirm with the lender if they will fund a mortgage given the property condition and agreed upon remedial work obligations.
- Ensure the timelines captured in the contract are conducive given the agreed upon remedial work and obligations.
- If eligible for any disaster recovery funding or if insurance coverage applies, be sure to discuss and include the necessary details and obligations.
Land Titles Update
*Update: The Land Titles Calgary office has re-opened effective Wednesday, June 26th. Due to the hard work of the Edmonton office, there does not appear to be a delay in registrations.