FOREST FIRES – HOW TO PROTECT YOUR HOME PURCHASE WHAT IS A FORCE MAJEURE CLAUSE?

Forest fires are no joke. While Revelstoke is typically affected by smoke during the summer months, we are mostly isolated from the actual fires.

Do forest fires relate to your real estate transaction? I received a call a few years back from a buyer who was frantic because the bank wasn’t going to lend them the funds to close on their purchase because forest fires were burning within a 50-kilometre radius of the property!

Let’s explore the situation by taking a step back; when you are buying a home your contract of purchase and sale will have “condition precedents.” These allow the buyer a due diligence period. A common condition is regarding home insurance and reads: Subject to the Buyer(s) obtaining approval from a licensed insurer for property (including fire) and liability insurance for the Property on terms and at rates satisfactory to the Buyer.”

So, why does a contract to purchase a property have this condition and when does the home insurance policy take effect? When you call an insurance company to inquire about insuring the property, the company is only giving you a quote for the product. At completion, or the closing date, at 12:01 a.m. that policy is underwritten, and it takes effect. You, the buyer, have this quote secured at condition removal so your lender will advance the funds at completion or on the closing date.

Now, let’s circle back. If forest fires are burning within a 50-kilometre radius of that purchase at the time of closing, the home insurance provider will not underwrite the policy. Long story short, they don’t want to take on the liability. That’s fine you say, I’ll just wait to close until those forest fires move out. Unfortunately, you are contractually obliged to close on the day specified in your contract. But it’s not my fault, you say! I did everything right!?!

Enter the force majeure clause. This clause provides a mechanism by which a party can claim relief from its obligations under a contract, due to the presence of circumstances beyond the contracting parties’ control. For example, a forest fire burning within 50 kilometres of the home you are purchasing. Logistically you have your lawyer send notice to the other party in your contract – the seller – notifying them that closing will be delayed until you can get home insurance.

Once it can be provided you notify them and close. More or less – I won’t bore you with the entire clause and, let’s be honest, I can’t give away all my secrets! The takeaway here is that a realtor should know when and what clauses to add to the contract as the market, seasons and even home criteria change. I am a quaified realtor so please reach out and we can talk about this and other terms, questions, or anything real estate related in more detail. Looking forward to hearing from you.

*Tara Sutherland, Associate Broker – RE/MAX Revelstoke Realty – 250-814-8677 or tara@revelstoke-realty.com

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CONTRIBUTING WRITERS

Welcome to our June 2023 issue

Welcome to the June issue of Revelstoke Mountaineer Magazine.

This month, gear up for the Mountain Paradise Show ‘n’ Shine, showcasing the craftsmanship and passion of automobile enthusiasts. With an array of classic and modern vehicles on display, the car show promises to be a haven for car aficionados and curious onlookers alike.

We delve into Tourism Revelstoke’s newly introduced destination management plan. We explore the implications of this plan, delving into the potential challenges and opportunities it presents for our town. Change is on the horizon, and we invite you to join the conversation.

CONTRIBUTING PHOTOGRAPHERS & ILLUSTRATORS

Hannah Dotznroth, Pat Bruderer, Hywel Williams, Tom Poole,

Visiting Revelstoke for the first time?

Explore the vibrant colors, bustling atmosphere, and the farmers and artisans who bring life to this cherished community gathering. If you’re here on a Saturday, it’s a must.

It’s springtime and the sewage treatment plant is once again reminding Southside residents of its presence. We checked in with the city’s engineering department for an update on plans to replace the facility.

In a trend piece, we dropped in on a Revelstoke Chamber of Commerce presentation on the subject of attracting migrant workers to Revelstoke businesses. Find out about what employers are doing to find staff in a competitive market.

These stories and more in the June issue of Revelstoke Mountaineer Magazine

-Revelstoke Mountaineer Magazine staff

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