So, how will a hurricane affect the sale or Closing of my property in Florida?
There are a few ways which your Closing will be affected. The first is that if the Buyer is obtaining a loan then that loan requires insurance on the property. If there’s a hurricane on the way then the insurance companies stop issuing new policies. No insurance => No loan => No Closing. Also, if there’s a hurricane coming or we’re cleaning up from one then everything stops. No power, no water, people not working, banks closed etc then it’s hard in a digital age to get paperwork signed at a lawyers office and funds wired from a bank to the Closing Agent.
Some agents use the phrase ‘in the box’ when discussing this issue. The phrase will be used in the context of … ‘can’t close with a storm ‘in the box’. The explanation of this is fairly straight forward. Each insurer has someway of determining objectively when to stop issuing policies. Now, this can be something like say when a hurricane watch or hurricane warning is issued by the National Hurricane Center or may actually be a distance from Florida that if there’s a hurricane inside of no new policies are bound.
I copied the following from the FAR BAR As-Is Contract…
“If extreme weather or other condition or event constituting “Force Majeure” (see STANDARD G) causes: (i)
disruption of utilities or other services essential for Closing or (ii) Hazard, Wind, Flood or Homeowners’
insurance, to become unavailable prior to Closing, Closing shall be extended a reasonable time up to 3 days
after restoration of utilities and other services essential to Closing and availability of applicable Hazard, Wind,
Flood or Homeowners’ insurance. If restoration of such utilities or services and availability of insurance has
not occurred within _______ (if left blank, then 14) days after Closing Date, then either party may terminate
this Contract by delivering written notice to the other party, and Buyer shall be refunded the Deposit, thereby
releasing Buyer and Seller from all further obligations under this Contract.”
“FORCE MAJEURE: Buyer or Seller shall not be required to perform any obligation under this Contract or be
liable to each other for damages so long as performance or non-performance of the obligation is delayed, caused
or prevented by Force Majeure. “Force Majeure” means: hurricanes, earthquakes, floods, fire, acts of God,
unusual transportation delays, wars, insurrections, and acts of terrorism, and which, by exercise of reasonable diligent
effort, the non-performing party is unable in whole or in part to prevent or overcome. All time periods, including
Closing Date, will be extended for the period that the Force Majeure prevents performance under this Contract,
provided, however, if such Force Majeure continues to prevent performance under this Contract more than 14
days beyond Closing Date, then either party may terminate this Contract by delivering written notice to the other
and the Deposit shall be refunded to Buyer, thereby releasing Buyer and Seller from all further obligations under
this Contract.”
