As realtors, we understand that the process of closing on a home is typically straightforward, whether you’re buying or selling. However, there are times when unexpected events—like severe weather, accidents, acts of terrorism, or even a pandemic—can disrupt the transaction. In these rare situations, a ‘force majeure’ clause, which means ‘strong force’ in French, can provide a reassuring layer of protection to both buyers and sellers, instilling a sense of security and confidence. 

What is a “Force Majeure” Clause? 

A force majeure clause is essentially a safeguard built into contracts to protect both parties if something truly out of their control happens. In real estate, this clause commonly allows for a delay in the closing process rather than a cancellation. For Example, Hurricanes and COVID-19 created widespread economic challenges that forced many buyers and sellers to invoke this clause to extend their closing timelines. 

How Can a Force Majeure Event Affect Your Closing? 

There are several ways that a force majeure event can delay your home closing: 

Financing: Missing your original closing date, even by just a day, can mean your mortgage rate lock expires. This could lead to a higher interest rate, which increases your monthly payments—potentially to an unaffordable level. 

Insurance: Insurance companies often pause issuing new policies when major storms or disasters hit. As a hurricane approaches, insurance companies may stop taking new applications or issuing and binding new policies.” If you can’t secure homeowner’s insurance, your lender won’t let you close, causing further delays. 

Appraisal: If your closing is delayed for an extended period, your lender may require a new appraisal of the property, which will add more time to the process. 

Documentation: Natural disasters like fires or floods can damage essential documents, such as your deed, which must be replaced before the closing can proceed. 

Move-In: If the property suffers significant damage due to a force majeure event like a storm or fire, repairs may be necessary before the buyer can take possession, which could push the closing date back. 

What This Means for Buyers 

If you’re a buyer, the force majeure clause can give you a sense of control if an unexpected event makes it impossible to close on time. For example, if a hurricane hits and delays your ability to finalize inspections or secure financing, this clause could empower you to extend the closing without penalties, giving you a feeling of empowerment in uncertain situations. 

What This Means for Sellers 

For sellers, the clause can protect you if you cannot complete necessary repairs or move out due to a force majeure event. Suppose something like a wildfire or government-imposed restrictions impact your ability to fulfill your obligations. In that case, you can use this clause to request more time. 

Key Takeaways 

It’s important to remember that not every unexpected event qualifies as force majeure. These clauses typically outline specific situations—like natural disasters, acts of terrorism, or government actions—that can invoke the clause. Additionally, invoking force majeure doesn’t mean you can leave the deal altogether; it just provides time to work through the unforeseen challenges. 

The Simmonds Team’s goal is to guide you through the entire buying or selling process smoothly, and part of that involves preparing for the unexpected. By understanding how the force majeure clause works, buyers and sellers can have peace of mind, knowing they’re protected when life throws a curveball. We’re here to support you every step of the way, ensuring you feel cared for and supported. 

Feel free to reach out if you have any questions about how this clause could impact your real estate transaction! 

Would you like more information on buying or selling a home? Call us at 561-491-2381 / email us at team@simmondsteam.com.