can I delay a house purchase when I am in escrow
August 16, 2018 11:11 AM   Subscribe

I'm in the process of buying a home in Lake County, California, which is currently on fire. We're supposed to close Monday but no insurance companies will issue policies when there's an active fire in the same zip code. Fire is like 60 something percent contained, may take a month for full containment. Can I delay close of sale?

I've given over ten thousand in earnest money to the title company, we're supposed to sign papers and record sale Monday. What happens if I say I want to delay sale until I can insure house? I have no idea how this works. My agent is also the sellers agent.

(Just so you know, I recognize most of what I've typed above sounds extremely ill advised. The back story on this is complicated and boring. I won't be living in the house. I just need to know if I can delay the sale when I did sign an offer with an escrow period that is already passed.)
posted by latkes to Law & Government (15 answers total)
Wouldn't it just be delayed because of the loan (if you're getting a loan). How can the loan be disbursed without the home insurance?
posted by gt2 at 11:16 AM on August 16, 2018 [8 favorites]

I would think that anyone currently selling a property that's on fire wouldn't mind delaying a sale, over walking away from a sale.

At this point you go back to the seller and propose a new closing date. If they are amenable to that, you're all set.
posted by humboldt32 at 11:17 AM on August 16, 2018 [2 favorites]

(Lake County is on fire, I'm assuming the property itself is fine, or this sale would not be going through at all).
posted by brainmouse at 11:19 AM on August 16, 2018 [7 favorites]

Strictly from the seat of my pants, but no court in the land will find fault with you for delaying your purchase of a house that's currently on fire. Don't rely on this, but I don't think you should worry either.

Has the seller or his agents actually refused to delay the closing? You didn't mention. Why not just ask them? What's the risk?

ETA: OK, there's a fire nearby, the house is not on fire. Same comments apply.
posted by JimN2TAW at 11:19 AM on August 16, 2018 [1 favorite]

Response by poster: Yes, sorry. House is not on fire or in danger of fire at the moment. Nearby fire is now under control but not fully contained yet. Purchase is in cash, there's no loan.
posted by latkes at 11:27 AM on August 16, 2018

Generally homeowners insurance is a requirement to close a loan, so if no insurance is in place I can't imagine the lender will let you close anyway. Is insurance not a condition of the loan? Or is this a cash sale? If it's a cash sale I would FOR SURE ask for a delay in closing until you can get a policy in place. It's absolute lunacy to own a property in an area with an active wildfire and not have insurance on it. Everyone will understand this.
posted by rabbitrabbit at 11:37 AM on August 16, 2018 [6 favorites]

If you can't get new insurance on the property because of the current wildfires then no one can. The sellers should be amenable to delaying since they won't find another buyer regardless.

One potential resolution could be negotiating with their insurance to potentially take over their policy upon sale? I don't know if it's actually feasible, but it's a thought.
posted by lydhre at 11:49 AM on August 16, 2018 [4 favorites]

There's no way to know "what happens," because people are people and unpredictable, but you should reach out to the agent and tell them you want to delay the sale until you are able to insure the house. I am sure a good real estate agent will explain to the seller that a good, ready-to-roll all-cash buyer is worth waiting for, and no other buyers who need loans are going to come by easily especially in a fire zone. I'd be surprised if there wasn't a clause in your contract that deals with what happens if the home is found to be uninsurable by closing, though. If there's not, that's a serious error on the agent's part.

Besides, if something happens to the house (as fires are as unpredictable as people), the seller would be relieved to have the insurance money so they can rebuild or buy another home at their discretion.
posted by juniperesque at 12:12 PM on August 16, 2018 [2 favorites]

I've had buyers bail out (and retain their damn escrow money) for a lot less. I've also had them delay, and retain, for a lot less.

Contact the agent, this should be no problem.
posted by aramaic at 12:27 PM on August 16, 2018 [2 favorites]

You can do anything you want as long as both sides agree. So, have your agent ask the seller for what you need.

You have to read your contract but in most cases, the worst that can happen is that you walk away and the seller keeps your earnest money. The seller has an incentive to agree because if you walk away, they get the benefit of the earnest money but they are still faced with the prospect of trying to find a new buyer who wants a home in a fire zone.
posted by metahawk at 12:32 PM on August 16, 2018

There's no harm in asking, though they may choose to say no and keep the earnest money. It really depends how motivated the are to sell, how motivated they are to sell *to you*, whether they believe there are other buyers out there, whether they're assholes, etc. And how much $10K is relative to the overall purchase price of the property.

Presumably you don't have any insurance contingency in the contract, or you wouldn't be asking, but if you're not 100% sure you don't have one, read that contract!
posted by mskyle at 2:32 PM on August 16, 2018

Your contract should have contingencies, if any, for you to back out of a deal. What are they? Have you waived them yet? Typical contingencies in California include inspection, mortgage, and insurance. If any of those are still in place you can might be able to use them to delay or back out of the contract without penalty.

As folks have said above, even if you don't have an escape as a practical matter the homeowner is probably willing to accept delaying a deal under these circumstances. They'd probably rather close the sale of the house in a month or two than keep your earnest money.

The fact your agent is also the seller's agent is not great; that agent doesn't really represent you in the transaction. But short of hiring your own lawyer, I think your next step is to call them and ask the same question.
posted by Nelson at 2:40 PM on August 16, 2018 [1 favorite]

If you were getting a loan, the sale could not close until insurance was obtained. Since it is a cash sale, I would simply tell my agent that I will not close on the sale until I am covered with insurance. If that creates a big hulabaloo, I'd be prepared to walk away even if it meant I gave up all or part of the earnest money. The fire is not the seller's fault, but the property is their responsibility until they have met all your requirements.

...and by the way, don't ever use the seller's agent. Your situation is a perfect example why.
posted by summerstorm at 3:00 PM on August 16, 2018

Can you ask the seller's insurance company if they will issue you a policy, since they currently insure the house?
posted by theora55 at 3:11 PM on August 16, 2018

Response by poster: Thanks all! I asked to put off the sale until I can secure insurance and am waiting to hear from sellers.

I did get the number of current insurance broker and he said he can't just transfer the policy, he'd have to write a new one for me, and the moratorium on all new polices would apply. Doesn't matter that the company is already insuring this house, it's a blanket policy during forest fires I guess.
posted by latkes at 9:12 PM on August 16, 2018

« Older Capitol Hill cafe with a view   |   Microscopes for short people Newer »
This thread is closed to new comments.