By Frederick W. Jones, Real Estate Attorney
The Orlando area's housing market stays hot as ever in the late summer months.
Just last August, 3,418 existing homes were sold in the Orlando area, making it one of the stronger months of 2005, according to the Florida Association of Realtors.
That was up slightly from August 2004, when the association reported 3,141 existing sales. What makes that remarkable is August 2004 was the month that Hurricane Charley tore through Orlando. That means hundreds, maybe thousands, of Central Floridians closed on sales contracts during the month a hurricane ripped through the area with winds exceeding 100 mph, causing widespread damage to property.
Sales in Orlando tend to continue at a steady pace in September and October, the other two most active months of the north Atlantic hurricane season. The association reported last year 3,105 sales of existing houses in the Orlando area for September and another 2,702 in October.
The strong sales volume continues during these months despite the fact that storms are very much on the mind of homeowners. In Orlando, being hit by a hurricane is the biggest real estate concern among homeowners, according to a survey released in July by the Attorneys' Title Insurance Fund's Consumer Education Campaign. Thirty-four percent of homeowners rated hurricanes as the top concern, more than those who were most worried about the impact of a housing bubble or rising mortgage interest rates.
As Florida's peak hurricane season begins, we all need to be mindful of basic preparations to take care of our property and our loved ones. Most of us know the basic emergency preparedness drill - stock up on bottled water, batteries and canned goods. Buy storm shutters and plywood to protect windows before evacuation orders are given. And when the evacuation order does come, already have a plan for where you're going to go and how you're going to get there.
And, should you be one of those people who have a house under contract when a storm comes through, you can gain a lot of peace of mind if a real estate attorney helped write contingencies into your contract that account for a natural disaster like Hurricane Charley.
Unfortunately, standard contracts won't necessarily offer you much protection in that event. What problems can - and do - crop up when purchase agreements don't address the possibility that a hurricane might interrupt things?
The contract can expire. In some cases in the aftermath of a hurricane the house might not be habitable for weeks or months after the contract is due to close. If both parties didn't agree to a contract spelling out what would happen in case of a natural disaster, then the seller might declare the contract expired and change the terms. Or the buyer might argue that the seller couldn't deliver the house as promised and try to back out of the contract.
Responsibility for repairs may be disputed. A re-inspection of the house will likely be necessary if there is storm damage. If there is damage, it doesn't necessarily mean that the sale can't go through. But if the contract anticipates the possibility that storm damage is the responsibility of the seller, that could be an opportunity for the buyer to offer to take on that expense and renegotiate the sales price to subtract the cost of repairs.
Delays can change the terms of the deal. While storm repairs take place, interest rates can rise and substitute-housing costs can mount. Your contract should stipulate what happens if, for example, you agreed to buy a house as long as you qualified for a loan at 7 percent interest or lower, but due to delays your lender is no longer offering mortgages at that price.
If you're a seller, you'll be obligated to reveal any new problems with the house caused by a storm. Did it flood? Is a mold problem looming? You should disclose all known damage. A good rule of thumb is to tell the buyer anything you would want to know before you purchased a house, but a real estate attorney can advise you about your obligations.
These concerns are far from hypothetical for some people. A homebuyer in Louisiana put her house near New Orleans under contract last summer six weeks before Hurricane Katrina hit. Her contract was scheduled to close in the middle of September.
Of course, her house wasn't fit for occupation just two weeks after the catastrophic hurricane and floods. The buyer sought to extend her purchase agreement, but the seller declined and re-listed the house for a higher price.
The contract didn't say what should happen in the case of a natural disaster. Still, the would-be buyer is suing the seller and the real estate agent, arguing that they should have told her of her risk if a hurricane hit.
It's a sad situation for everyone involved. The buyer lost out on the home purchase and the seller wound up defending himself against charges he voided a contract primarily to profit from a housing shortage caused by a terrible natural disaster.
The dispute could have been prevented if an attorney had reviewed the contract and inserted language that made clear what should happen in the event a hurricane caused unavoidable delays in the closing date. With storm season on the minds of Orlando homeowners, buyers and sellers, it's important to remember that these months are least stressful on those who prepare well.
Frederick W. Jones is a Board Certified Real Estate Attorney in the Orlando area. He is the president of the Central Florida Real Estate Council, a member of The Florida Bar, the Orange County Bar Association, and Attorneys' Title Insurance Fund, Inc. For information on real estate in your area, log onto: