Never Close On A Friday In Hurricane Season And Other Hard Earned Wisdom

Hurricane Bill just skirted our coastline and there will be more hurricanes to come. North Carolina residents know that this time of year means firing up the generator to make sure it works and laying in the list of supplies on the Hurricane Preparedness Checklist. As a professional Realtor I owe it to my clients to tick the extra boxes that my experience has put on my Closing Preparedness Checklist!

Consider this scenario:

Closing is scheduled for 9 a.m. on Friday morning. The seller has moved out and the buyer has the moving truck ready to head to the new house as soon as he has the keys in hand. The seller informs his insurance company that he will no longer own the home as of Friday and cancels the homeowners’ policy as of that date. The buyer has his insurance in place, set to insure the home as of the same date. But at 9 a.m. Friday the loan docs aren’t ready. The attorney hasn’t gotten the package from the lender and has been informed that it is “on the way”. Closing time is delayed until 4 p.m. The buyer is nervous and had planned to stay in the house that night, getting settled over the weekend before starting a new job on Monday. No keys, no occupancy. Agents are scrambling to accommodate. Can the buyer move in early? Will the seller allow a rent back if closing doesn’t take place until Monday? (Did I mention there is a hurricane off the coast?)

The loan docs arrive! Closing will proceed at 4 p.m. All is well! Not so fast. The Orange County Register of Deeds closes at 4:30 p.m. and is a 20 minute drive from the attorney’s office. The attorney informs you that there is no way the deed will be recorded on Friday. The paralegal will do it first thing Monday morning. At least the buyer will have the keys and everything can get on as planned. The buyer rushes to get things moved in…hurricanes at the coast mean rain inland. There’s just one little thing about hurricanes…they don’t always listen to the weatherman. By Saturday the hurricane has tracked west…it’s heading toward the Triangle. Nothing like 60 mile an hour gusting winds to mess up a moving weekend.

By Saturday evening there are trees down all over the neighborhood and one has managed to puncture the roof in its fall. Water is quickly pooling on the Living Room ceiling as it drips through the attic. Not to worry. The buyer has insurance! Or does he?

The deed has not yet been recorded meaning the buyers insurance may not be in force under the presumption that you cannot insure what you do not own. The seller canceled his insurance as of Friday and the damage occurred on Saturday. I think you can see where this is going. Suffice it to say that at the minimum, the insurance companies will be talking and there will be some anxious days ahead for both buyer and seller.

In North Carolina you do not actually “own” the property you just closed on until it is recorded with the Register of Deeds in the county where the home is located. This actually came about because of a hurricane! After Hurricane Fran in 1996 there were, what can only be described as, “Insurance Wars.” As a result, our standard purchase contract in NC was amended to specifically define “closing” as the date and time of recordation of deed.

My job is to foresee possibilities like this and do my utmost to avoid them! I ensure that the buyer and his attorney know my concern and make all efforts to schedule closing at a time when I can be reasonably sure that the deed will be recorded. I discuss with the seller why I feel it is important that they do not cancel their homeowners’ policy until I call them and tell them the deed has been recorded. I cannot predict or promise any outcome but I sure can make sure my client knows what might happen and is prepared as well as possible for the unpredictable.

I’m quite sure there are hundreds of closings that occur every day in North Carolina and never run into a “worst case” scenario like I have just described. As a buyer or seller it is ultimately your call how much risk you wish to absorb. But I also know way too many stories about what happens when folks aren’t prepared. Replace “hurricane” with “fire” or “burst water pipe” and you’ll begin to see what I mean.

Do you need an experienced Realtor to help you buy or sell your home? Maybe not…or maybe the peace of mind is worth it to you!