How do you work through a home sale if the property under contract was damaged in Hurricane Helene? Can homeowners get SBA loans? And what are some keys to working with insurance adjusters?
These were some of the questions answered in a LOTSAR disaster recovery forum for members on October 17. Here are answers to these questions and others.
Q: What are keys to getting a home sale transaction to the finish line if the property under contract suffered damage in the storm?
Answer from Greg Goosman and Beth Cramer of Goosman, Rose, Colvard & Cramer, one of Asheville’s top real estate law firms:
This type of situation goes far beyond what is included in standard due diligence. If there has been a change to the property’s physical condition, and the seller can’t or won’t remedy it, a key for the agent is to help find a resolution that works.
This has to be addressed case by case. In some situations, it may be time to end the transaction. But we are finding there are often ways to still get a deal to closing.
As your client considers what to do, we suggest that you advise them about the time and money it would take if they take the issue to court.
As the court sets a hearing date, escrow money will sit for at least three months. This means it could be five to nine months, or longer, for the issue is resolved. And the whole time, your client is incurring legal fees.
It makes no sense to take this route if the matter involves a relatively small amount of money. Instead, find an answer that is acceptable to both the seller and the buyer.
Q: Can homeowners receive SBA loans?
Answer from Warren Miller, Senior Advisor for the Small Business Administration’s Office of Disaster Resistance:
Many people don’t know that the SBA offers low-interest loans to individuals as well as to businesses. Residential loans to pay for repairing damage can be as much as $100,000. There is no interest and no payments for the first 12 months.
If homeowners are waiting for an insurance payment to come in, they can take out an SBA loan, and when the payment comes in, adjustments can be made to the loan.
Rates right now are at 2.8 percent for homeowners, and at 4 percent for businesses.
Q: I read that the SBA is out of funding for loans related to disaster assistance. Can I still apply for a loan?
Answer from the SBA’s Warren Miller:
A funding request is now before Congress, and the SBA continues to take applications as more funding is secured.
(President Biden announced that loan applications will continue to be processed, with money to be disbursed after Congress approves more funding. For a news story on the funding situation, click here. And for more information from the SBA, or to apply for a loan, visit sba.gov/disaster.)
Q: What’s the best way to work with an insurance adjuster?
Answer from John Houghtaling of Gauthier, Murphy and Houghtaling, a Metairie, Louisiana-based law firm which represents clients around the country working through property loss claims. Houghtaling did extensive work in this area after Hurricane Katrina.
It’s important to know that when adjuster comes out, they report with a guess on damages after the first walk-through. This resets the insurance company’s reserve related to that property to a more specific amount.
Property owners should report the damage as soon as possible, and have bids or estimates from contractors to give to the adjuster. This will help in having the reserve set more accurately.
This is extremely important, because if the reserve is set too low, that creates problems.
Q: What are some things to remember if you are remediating flood damage to a property?
Answer from Dustin Riddle, owner/founder of Junkernaut, an Asheville company that does eco-conscious junk and debris removal.
Anyone working on sites that have had flood damage should wear a personal protective mask – N95 or N100. Remember that the water which caused the damage is toxic.
If you had flooding in a building, cut out the walls a foot above the water line.
Make sure you get all items out of the building, then disinfect everything within the building as things dry out. Then call a reputable removal company.
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