We were about to close and Harvey trashed the house, now what?

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We were about to close and Harvey trashed the house, now what?

What happens when disaster strikes while a home is under contract? What do you do if your home was damaged and you still need to sell? We can absolutely help get you started in the right direction. Take a look at the following General Guidelines Regarding Insurance, Repair, and Pending Transactions after Hurricane Harvey. Everyone’s particular situation will be different, but everyone at CENTURY 21 Realty Partners will be on hand during the recovery process to make sure that our clients real estate needs are met.

  1. DISCLAIMER. We are not lawyers. We cannot give legal advice. This is general advice about real estate that is not legal advice and is not meant to apply specifically to any particular contract or client. All properties are case by case situations. All properties are different and will require different repairs.
  2. Insurance and FEMA.
    • There is a rumor spreading that you must make a claim by Friday, September 1 in order to be covered. This is false. Texas House Bill 1774 is about notice prior to filing lawsuits in regards to claims concerning certain insurance policies. For more information see the Texas Department of Insurance notice on HB 1774.
    • If you do not have flood insurance, you can can still file for disaster assistance through FEMA. FEMA will likely offer a loan to help repair/rebuild. The fastest way to register is to go to http://www.disasterassistance.gov/, if you do not have internet service you can also call 1-800-621-3362.
  3. Pending Transactions.
    • Transactions with third party financing will need to be re-inspected by appraisal company prior to move forward with closing. This could take days to weeks, or possibly even months. The fee is negotiable by all parties.
      • May be paid by Buyer, Seller, Agent or a combination of the three
      • Prices are currently around $150-$175
    • Some properties may be allowed to close but will require a mandatory re-inspection.
    • Transactions due to close could be pushed back (up to several months) for necessary repairs.
  4. Casualty Loss. What happens if the property I am buying or selling has suffered flooding, wind damage, and/or fire? The answer depends on the type of contract. However, most transactions we see use the TREC One to Four Family Contract (Resale). If this is the case there is a provision (Paragraph 14) for casualty loss:
    • 14. CASUALTY LOSS. “If any part of the Property is damaged or destroyed by fire or other casualty after the effective date of this contract, Seller shall restore the Property to its previous condition as soon as reasonably possible, but in any event by the Closing Date. If Seller fails to do so due to factors beyond Seller’s control, Buyer may (a) terminate this contract and the earnest money will be refunded to Buyer (b) extend the time for performance up to 15 days and the Closing Date will be extended as necessary or (c) accept the Property in its damaged condition with an assignment of insurance proceeds, if permitted by Seller’s insurance carrier, and receive credit from Seller at closing in the amount of the deductible under the insurance policy. Seller’s obligations under this paragraph are independent of any other obligations of Seller under this contract.”
    • Other types of contracts may have provisions or defaults provided by state law. An attorney with knowledge of Texas real estate transactions should be able to interpret any contract.
  5. Rebuilding and Repair.
    • Once immediate danger has passed and you have spoken to your insurance company, start the cleanup and repair process as soon as you are able to do so. This will help avoid subsequent damage to the property.
    • Beware of Scams! Some criminals prey upon those recovering from natural disasters, particular by posing as contractors or laborers. Following these tips from the Texas Association of Builders will minimize the risk that you are scammed.
      • Make sure the contractor has a permanent business location and a good reputation with a local bank and suppliers.
      • Find out how long they have been in the building business. You want to know that your contractor will be around after construction is complete to fulfill any warranty obligations.
      • Check with your local Better Business Bureau to learn if any complaints have been filed against your contractor.
      • Some Texas cities require that builders are registered and bonded. Check with your city’s building permits department in this regard.
      • Ask for and verify references.
      • Enter into a complete and clearly written contract with your builder or remodeler.
      • Do not pay for the entire job up front or pay in cash. In fact, state law prohibits contractors in disaster areas from taking up front money unless they have held a physical business address in the county or adjacent county for at least one year. This law, found in Chapter 58 of the Texas Business and Commerce Code, provides other valuable protections for those rebuilding in disaster areas.
      • Be cautious of unusually low-priced bids or a hard-sell to “sign today” for a low price.
    • Keep in mind that Texas law has several sales tax exemptions for goods and services purchased to rebuild after a natural disaster. Keep this in mind when reviewing invoices related to rebuilding.
      • Texas never imposes sales tax on labor for residential repairs.
      • In a declared disaster area, purchasers may claim an exemption from sales tax on separately stated charges for labor to repair or restore nonresidential real property damaged by the disaster. The materials that are used to perform the repairs are taxable.
      • Taxpayers may claim an exemption from sales tax on charges for labor to repair or restore items damaged by a disaster. The exemption may be claimed on labor to repair furniture, appliances, or other items of tangible personal property. The exemption includes labor costs to launder or dry clean damaged clothes or other property.
      • Arborists’ services, such as cutting down or cutting up a damaged or dead tree in a declared disaster area, are not taxable.
      • Hauling away branches, limbs, or trees are waste removal services and are taxable.
      • Goods and taxable services may be purchased tax free with FEMA, Salvation Army or Red Cross debit cards or vouchers.
By | 2017-08-31T12:03:25+00:00 August 31st, 2017|Advice, News, Our Communities|Comments Off on We were about to close and Harvey trashed the house, now what?