For people buying or selling a home, having the property flood in the midst of a transaction can create a whole new set of headaches.
Who’s responsible for the cleanup? Whose insurance to use? What happens on the date of possession?
The Calgary Real Estate Board is urging people in the midst of residential real estate transactions to consult their lawyers to find out the impact of the devastating floods that hit the city.
“Those who have closings or sales that were affected by the flooding in Calgary and surrounding areas should call their lawyers as soon as possible for guidance. All questions must be referred for a legal opinion and addressed on a case-by-case basis,” said the board on its website.
“Lou Pesta, senior associate at Walsh LLP, recommends that all parties attempt to resolve the situations fairly. He also advised that for houses which are affected, no keys should be exchanged until the emergency has subsided and any legal issues have been resolved.”
Jeff Kahane, a Calgary lawyer specializing in real estate, said the situation right now is a mess and a complicated one with a number of different issues, which are very situ-ationally dependent.
“It’s the biggest week for real estate of the year, in a year that has been exceptionally busy in general, and then you throw in all the flood issues, it’s just been nuts,” Kahane said.
“It’s a mess.” In a blog on his website, Mike Fotiou, associate broker with First Place Realty, said there are more than 550 homes now listed on MLS in the flood-affected areas, the majority of them being condos.
The affected communities are home to more than one in five condos now 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,” he wrote.
In a blog on its website, the Real Estate Council of Alberta said it has already received calls from industry professionals about what will happen to transactions that were underway.
“What should industry professionals do if the flood has destroyed their brokerage office, their contracts and other paperwork? What is to be done for a consumer who has sold his or her home and purchased a new one, when the new home has been damaged by flood waters? What about a seller brokerage agreement for a seller whose current home is no longer saleable because of extensive damage?” it said.
“Brokerages and offices that have suffered flood damage and may have lost their records should, to the best of their ability, start recreating transaction records using copies of contracts obtained through lawyers, lenders and the consumers themselves. Call the real estate lawyers involved, call the mortgage broker, call the lender and call the local bank, if possible. …”
The Real Estate Council of Alberta said industry professionals should also reach out to their clients, both buyers and sellers, who are currently involved in transactions in areas affected by flooding to find out how clients wish to proceed.
“Once you are clear on how the consumers want to proceed, a determination has to be made as to whether that course of action is legal. If all parties to a transaction do not agree on a course of action, recommend to your clients that they seek legal advice from a lawyer familiar with handling such disputes,” the association said.
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