Over the last few days in Toronto we’ve had a big ice storm. Electricity in some neighbourhoods, like mine, has been off for over 24 hours and we’ve been told to prepare for another 48 hours without power.
Without power significant damage can happen in a home or condo. Water lines can freeze and burst, Alarm systems may not work and chattels may get stolen, moisture can build up and mold can start growing, electrical systems can be damaged by the huge load when the power comes back on….
The point that I am trying to make is that the house (or condo) and all the chattels have to be in the same condition that they were when the deal was negotiated. We don’t have escrow here in the Toronto Real Estate market, but the same would probably apply for the real estate markets that do. When there is substantive change (damage) two things can happen; the owner needs to fix the damage at their expense, or the price needs to be adjusted downward to offset the cost of repairs.
I had a situation a few years ago when a water pipe burst after negotiations and before closing. The owner had to replace almost all of the hardwood on the main floor. We negotiated an extension to the closing by a few weeks and gave the buyer the ability to decide on the colour of the new hardwood. It was all done before the closing date and both the Buyer and the Seller were extremely happy with the outcome.
After a little negotiation between my client and his insurance company he got the money back for the repairs. All in all it was an amazing deal and everybody ended up being happy with the way it turned out.