What are the best steps to cope with a purchase involving mudslides?
Jan 29, 2023Marketwise for the Bay Area News Group and its flagships The Mercury News and East Bay Times
By Pat Kapowich | Published: January 28, 2022
Question: We were supposed to move into our new home three rainstorms back, but our plans have changed. The atmospheric rivers soaked the hilly slope in the property’s backyard, and the sellers reported part of the hill broke free and slid into our backyard. That’s not all. Mud broke through the sliding door of the family room. The sellers notified the real estate agents that a foot of earth was in the family room.
We must extend the escrow period to sort things out. We would like all the issues fixed before completing the home purchase. However, we could instead close escrow and have a seller rent-back situation with the sellers agreeing to pay for any damages. In other words, the sellers would make the house and yard whole again before we take possession.
Are the solutions presented by the real estate agents and the sellers realistic? Or should this act of nature have us questioning the prudence of finalizing this purchase?
Answer: It is laudable the sellers are taking an active role in remediation. However, you should still consult a real estate attorney to have proper paperwork, guidelines, guarantees and oversight of the plan(s) that the sellers and real estate agents have presented. So, be sure to call a real estate attorney ASAP, as you’ll have to get in line. Real estate attorneys are busy after earthquakes, floods and mudslides. Homebuyers often try to cancel a sale, especially if an act of nature causes damage to the property, but they can work with you on getting you your dream house in the condition you expect.
Insurance agents remind us that a standard homeowner policy does not insure for “earth movement.” However, flood insurance will cover mud in the house. Previously flood insurance on the house was probably optional or ignored.
The home sellers most likely will be remediating the damage with out-of-pocket expenses. Lest we forget, licensed, bonded and insured remediation companies, contractors, and roofers have been swamped with customers since the atmospheric rivers streamed over the Bay Area. So, these home sellers will need more time and money than they think.
If the property needs a new retaining wall behind the house, that will take serious time, engineering and money.
These are the steps that would need to be followed:
1. Learn what work is required to make the property whole again.
2. What firms will be working on the property and their qualifications.
3. Learn what building permits and engineering will be required and utilized.
4. Find out the cost of repairs and estimate of completion.
5. Decide if you want to carry the burden of this happening in the future.
6. The real estate attorney will question you about closing a home sale with sellers in possession with only their promise to pay for repairs.
7. At that point, you become the landlord, and the sellers become tenants.
8. If you decide to move forward, you’ll have to disclose this hill slide to your insurance company and prospective homebuyers in the future.
Mother Nature started this chain of events. It’s up to you to finish it.
Questions? Or are you or someone you know navigating life’s transitions? Let lauded negotiator Pat Kapowich make your next move easy. Visit Kapowich’s website for free area housing data, insights and trends. Or put his artful blend of specialized credentials, decades of experience and endorsed skill set to work for you. Kapowich instills confidence when buying, selling, relocating or resizing homes. Do not just make a move — make the best move. Contact him today, Realtor Pat Kapowich, a career-long consumer-protection advocate.
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