Tips For Buying A Hail Damaged Home

hail damageExperts say that hailstorms in southern Alberta are happening more often and with more intensity.  A couple prime examples are the hailstorms that recently pounded the Airdrie area which have been classified as a catastrophe by the Insurance Bureau of Canada.

Dealing with hail damage can be a frustrating nuisance for both buyers and sellers, but there are workarounds to make the transaction a successful and relatively pain free one.

In this post we will look at one possible scenario:  a seller’s home was damaged and now a buyer wants to write an offer.

Let’s say the offer was accepted, financing has been approved and the home inspection didn’t turn up any major issues aside from the damage caused by the hail.

As a buyer’s agent, it’s my responsibility to protect my client’s interests so I would recommend one of two options:

1. the seller has to agree to have the damage professionally repaired at their expense, or

2. the buyer is to be compensated monetarily by the seller in order to pay for repairs themselves when they take possession.

Provided the seller had adequate insurance, the work is likely covered and it’s only a matter of time before repairs are made.  But what if the insurance company simply pays out an amount and the seller just takes the money?   That’s why all agreements should be in writing.

Before my buyer waives the property inspection condition, I would advise that an addendum be signed by both parties (Example: Insurance Claim Addendum) which outlines that if the repairs aren’t made by closing, X amount will be held in trust with a lawyer.

Insurance claims can take a while to process so there’s a chance that the repairs won’t be completed when the keys are handed over.   The addendum above allows for repairs to be made even after possession, up until the “Rectification Date.”  If by that time the repairs still haven’t been completed, the buyer is entitled to receive the holdback. It’s important that the holdback amount agreed to is enough to actually complete the work.  Also note that in this case, the repair work would be added as a term to the contract, not a condition  (Read the difference between a term and a condition)

Hail damaged properties are just one of many issues that can arise in a real estate transaction.  If you’d like to be represented as either a buyer or seller, contact me at 403-554-2284 or at mike@findcalgary.com and I would be glad to assist you.

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