The unprecedented scale of this year’s flood has brought out the kindness and hospitality of Calgarians, with many offering homes & meals to those displaced. It will be a long road to a full recovery but if this week has been any indication, Calgary is up to the task.
There are over 550 homes currently listed on MLS that are in communities that still have mandatory evacuated areas, the majority being condos.
The affected communities are home to over 1 in 5 condos currently listed in the City.
Over 200 homes were sold in those communities in the past 30 days. As to buyers who recently closed on homes heavily affected in those areas, each of their cases will need to be addressed on an individual basis as many properties are no longer in “substantially the same condition” as outlined in the purchase contract.
Please stay safe, Calgary and keep up the good work!
Real Estate Transactions and the Current Flooding Crisis
Update: AREA has provided members tips and resources on how to deal with transactions affected by the Southern Alberta Floods. I’m providing them below for information purposes only. Consult with your agent and real estate lawyer before making any decisions.
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 right up until possession at which time the Buyer is in full care and control of the property.
- 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.
- For transferring of insurance and/or government rehabilitation dollars from seller to buyer. See AREA Form – Residential Purchase Contract Insurance Claim Addendum for transference of insurance dollars or use of insurance money.
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.
- 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.
Read the Calgary Herald article: How will flooding impact Calgary housing market for rest of year? (Quotes from CREB’s economist, Ann-Marie Lurie)