Learn how clear communication and understanding of your contract and insurance can safeguard your home purchase when a natural disaster strikes.

With the wildfires in Los Angeles, many are left wondering, “What happens if the home I’m purchasing gets damaged in a natural disaster?” This is a real concern no matter where you live in the U.S., and we should all be prepared for it. I’ll share three steps you can take to prepare when this happens.

Step 1: Read your contract. Whether you're buying or selling a home, make sure to read your contract carefully. You need to understand every detail. Buyers should know their rights if something happens to the home before closing, while sellers must be aware of their responsibilities.

In Georgia, for example, the contract specifies what happens if the property is damaged after you go under contract but before closing. The seller is still responsible for the home until closing. If the damage is serious, the buyer might have the right to back out and get their earnest money back. 

Alternatively, depending on the situation, they could stick with the contract, delay the closing, or even claim insurance money from the seller.

“Communicating early and clearly is essential during these stressful times.”

Step 2: Assess the damage. If you’re the seller, it’s important to assess the damage and contact your insurance company immediately. After a natural disaster, many homes will be affected, so you want to be at the front of the line for claims.

For buyers, keep in mind that the seller is responsible for the home until closing. If the damage is serious, you can cancel the contract and get your earnest money back. You may also be able to request repairs, either before or after closing, if the damage isn’t severe enough to stop the loan process.

Step 3: Check with your insurance company. Most of us have homeowner’s insurance for a reason, so it’s important to check if your home is covered. This policy can help with repair costs if you need to file a claim. However, manage your expectations because filing a claim can take time, especially if many neighbors are doing the same.

Buyers should also know that filing an insurance claim could affect their financing. Lenders usually require homes to be in good condition at closing, so if an insurance claim is filed due to damage, funding might be delayed until repairs are completed.

During times like these, communicating early and clearly is a must. If you find yourself in this situation, don’t hesitate to reach out to a Realtor, like me, your insurance company, and possibly legal counsel. 

Facing a natural disaster is incredibly stressful, time-consuming, and costly. I sincerely hope you never have to go through it, but if you do, remember that you're not alone and many have successfully navigated similar challenges. If you find yourself in this situation and need assistance, call or send a message at (404) 800-7111 or kelly@kellysellsatlanta.com. I’m always ready to help.