Pre-Closing Damage: Why You Need Your Sale Contract To State Everything
As you approach the closing date on your new house, you want everything to go smoothly. This is why the appearance of damage on the home, be it from a weather event, vandalism, or another problem, is so distressing. What's worse is that, when the home sale is just about ready to close, the responsibility for fixing and paying for the damage can be unclear.
Unless the damage was caused by a particular person (who would then be responsible for the damage), you could find yourself caught in a bureaucratic loop as both you and the seller battle to avoid responsibility. Ensuring your home sale contract states exactly what needs to happen in these circumstances, and who pays to fix the damage, is essential.
At Some Point, It's All on You
There is a dividing point in the sale process where the financial responsibility for the home becomes all yours. Obviously any damage that occurs after the sale closes and the house becomes yours is your responsibility (again, of course, excepting damage where there is a clear culprit such as a vandal). And anything that happens before you agree to buy the house is the seller's responsibility. But between those points, there can be a gray area. When you and the seller are already knee-deep in paperwork, inspections, and escrow, who has to pay for repairs to the property if something happens?
Your Loan Can Be Canceled
One of the reasons you don't want to be made responsible for damage toward the end of the sales process is that your loan approval can be canceled if the cost of the repairs increases your loan request over a certain amount. Say a hail storm damages the roof badly and damages the siding, but the sale is just about to close, so the sellers are trying to avoid being the ones who have to pay for repairs. If you try to increase your mortgage cost to cover the repairs, and the increase is too much, you could lose the loan and thus the house.
And don't rely on insurance to cover it all. At best, you'd still have a deductible, still have to pay costs the policy won't cover, and still put your future coverage in doubt as your insurance company could cancel your homeowner's insurance policy.
As for why the sellers wouldn't simply cover it, in their minds, the house is pretty much no longer theirs. You've agreed to buy it, and the damage occurred when the house was yours in all but a few signatures and bank approvals.
The solution is to have a real estate attorney go over your sales contract and ensure that there are clauses stating exactly how to handle damage that occurs post-bid acceptance but pre-closing. When you have a contract in place that has instructions, there's no doubt about who pays for what.
Get in touch with a company like Souders Law Group for more information.
