What to Do When Storm Damage Occurs During Escrow?

Joe Derhake, PE

Let’s face it, there’s no good time for a storm or disaster event to occur. The devastating impact of recent Hurricanes Irma, Harvey and Maria showcase the full-scale capacity of destruction that Mother Nature can incur. But if a natural disaster occurs while you are still in escrow, and before the deal has been closed with the lender, it presents some unique challenges, especially if the property has been heavily damaged, beyond cursory drive-by visual assessments.

If your third party reports (Phase I Environmental Site Assessment, Property Condition Assessment, and Appraisal) have been done, you need to re-inspect. When the value of the property has been compromised, it essentially presents a reboot on escrow and the due diligence process. It is in every stake holder’s best interests to carefully reassess full damage, remediation cost and time scale for restoring the property relative to the investor or buyer’s needs.