Property Damage Addendum Guidance

Short Answer: 

No, but Buyers and Sellers may want to consider an amendment to the Louisiana Residential Agreement to Buy or Sell.  A sample amendment is provided above.  This sample form is not a mandatory form.

A more detailed response...

The RPA form does not contain an Act of God or Fortuitous Event Clause which might provide an automatic extension.  In the absence of such a provision, it is possible that the RPA could be deemed in default upon the expiration of the deadline for closing, despite the occurrence of such disaster.  Generally, there is no Louisiana law that specifically grants purchasers in private contracts an automatic extension of time to perform such obligations in the event of a natural disaster.  However, the parties may certainly agree in writing to extensions of deadlines in the RPA.  Also, government Orders or the concepts of equity may impact the granting of additional time to complete a transaction.  See Transaction Guidance After a Natural Disaster for further discussion.  

If the Buyer and Seller are agreeable, an amendment of the RPA could be signed.  A sample amendment with several options Buyers and Sellers can consider is included above. An annotated version with explanation on using the form is also included.

Short Answer:  

It depends on the language of the insurance policy and whether the claim is assigned to the Buyer.  The lender may also be involved if there is a mortgage on the property.

A more detailed response...

Many insurance policies contain “anti-assignment” clauses which state the policy itself cannot be assigned without the consent of the insurance company.  However, a post-loss claim where the assignment is made after the loss event may be assignable (See In re Katrina Canal Breaches Litig., 645 F.3d 703, 706, 5th Cir. 2011) .   The specific contract language of the insurance policy should be reviewed to determine the rights and obligations of the parties.  

Further, if the Seller has a mortgage on the property, the Seller will need to consult with his or her lender regarding the damage to the property and making an insurance claim.  Many mortgages include a provision that insurance proceeds will be assigned to the lender (See La. R.S. 9:5386 - a mortgage may include a pledge of the mortgagor's rights to insurance).   In such a case, the payment checks from the insurance company will be made payable to both the Seller and the lender.  The lender will hold the insurance proceeds and disburse payments of the insurance proceeds to the homeowner as repairs are incrementally made to the property.  Depending on the extent of the required repairs, this process may cause delays.  

The RPA does not address assignment of insurance claims.  Without an assignment, only the Seller would be able to bring a claim for loss or damages under an insurance policy that was in place at the time of the damage, because the Buyer would not have standing to bring such a claim.  In such an instance, a Seller could reduce the purchase price by the amount of the claim that the Seller stood to recover, in order to put the Buyer in the same place that he or she would have been had no loss occurred.  

If permissible by the insurance policy and lender, if there is a mortgage on the property, the Seller may assign the insurance claim to the Buyer.  Then, the Buyer would have the right, per the assignment, to collect the proceeds of the insurance claim and make the repairs to the property.  The sales price would not be reduced.  The parties may consider using the sample addendum to the RPA to put their agreed upon terms in writing.

Short Answer:  

Contact your insurance agent to report the loss as soon as possible.  Also see FEMA guidance related to hurricanes, flood insurance claims, and what to expect during the claims process.  The NFIP Claims Handbook may be found here.

Short Answer: 

Maybe, but there may be a delay until utilities are restored.   

A more detailed response...

Residential Real Estate:

The RPA provides the seller must provide utilities for the due diligence period and the final walkthrough of the property (See RPA, lines 175-180).  The seller must also provide immediate access to the property.   If the utilities are not provided or available the deadline for the due diligence period is extended until the utilities are provided.

Commercial Real Estate:

For commercial properties, this will be very contract-specific as to whether loss of utilities will allow for any delay under the circumstances.  The specific contract should be examined carefully.