You bought a home and it burns down just before you take possession. You dont have to go thru with the deal, do you?
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[00:00:00] You buy a house and it burns down before you take possession. You don't have to go through with it, do you? [00:00:04][4.7]
[00:00:09] You're listening to the Bo Knows Real Estate Podcast tips and advice for home buyers, sellers and owners with award winning Remax agent Bo Kauffmann. [00:00:18][9.9]
[00:00:23] I love law and I love history. And in Canada, our law has been based on British common law, which is something that has evolved over the centuries, literally over hundreds and hundreds of years. So I learned about this case a few years ago and I wanted to share it with you. I found it to be very interesting. So the story goes that in the mid 1500's, a home purchase took place in England and it resulted in a court case and ruling, which still impacts us today. Now, the names and the dates have been changed to protect the innocent, even though nobody from that time is still around. But the underlying facts are true. So let's go back in time and see what happened. [00:00:57][33.6]
[00:01:00] It was a sunny day, March 30th in the year of our Lord, 1546. A buyer, Richard Smith, was viewing a gorgeous homestead in Upper Uxton, being sold by the longtime owner, William White. Mr. Smith was quite impressed and decided to make an offer. [00:01:16][15.6]
[00:01:17] "I offer the total sum of a hundred gold coins and I would like to move into this home, on May the 15th, in the year of our Lord 1546". [00:01:24][6.7]
[00:01:26] "I accept your offer. Let's put it in writing". [00:01:28][1.8]
[00:01:28] And so the customary contract was drawn up with payment to come on the date of possession. On May 15th, the buyer arrived at his new home to find, to his horror that the place had burned down a week earlier, as a result of a freak lightning strike. As one might expect, the buyer was not happy and tracked down the Seller at his new home. [00:01:48][19.5]
[00:01:55] "How can I help you?". [00:01:56][0.6]
[00:01:57] "The place is burned to the ground on I'll not be concluding our purchase. You can keep your charred pile of rubble". [00:02:03][5.8]
[00:02:04] "We'll see about that. I'm taking this to court.". [00:02:06][2.0]
[00:02:06] The case went before the courts and the resulting ruling was a bit of a surprise to the buyer. "This court rules that are legally binding agreement was made on March 30th in the year of our Lord 1546, with the acceptance by the seller. And on that date the buyer became the new owner of the home. The sellers role switched from that of an owner to that of a caretaker of the property. It was the seller's responsibility to maintain the property to his best ability. However, a lightning strike cannot be prevented. Therefore, the buyer must conclude the transaction and pay the seller the agreed upon sum of money. [00:02:40][34.0]
[00:02:41] And we're back in the present day. And remember how I said that our laws today are based on these old English court rulings? Well, the underlying reasoning for what we just heard still holds true today. A buyer becomes the actual owner of the property, the minute all conditions of the offer are satisfied. The buyer might not take possession for several weeks, but they are the owner and the seller becomes a caretaker of sorts. So how do we protect today's buyer from the taper scenario we just heard? I'll have the answer right after this. [00:03:08][26.9]
[00:03:11] You're listening to Bo Kauffmann of RE/MAX performance realty. If you were enjoying the show, please subscribe so that you never miss an episode. Bo knows real estate. [00:03:21][9.7]
[00:03:27] So you bought a house and it burns down between now and your possession date. How do we protect the buyers interest in this? Well, over the years, several clauses have been incorporated into the standard offer to purchase in Manitoba. Here is just a few examples. [00:03:40][12.7]
[00:03:41] For starters, Section 4, (a) 3 states 'unless otherwise specified the property and all included items will be in substantially the same condition they were at the time with the offer.' This would include things like appliances, furnace, hot water tank, etc.. The interesting part here is the phrase substantially the same condition. What does that mean? What happens if the furnace quits? Is the seller obligated to replace it? What about a hot water tank? These are topics for another episode and we'll discuss them another time. [00:04:09][28.3]
[00:04:10] But here's an additional section number 11 B 1, which states 'if the property suffers substantial damage, which is not repaired before the time of possession to substantially the same condition it was in prior to the damage occurring, the buyer may terminate this agreement'. [00:04:25][15.6]
[00:04:26] As we can see, this places is the responsibility of protecting the property back onto the seller's shoulder. Although it specifies until the time of possession, I always tell my sellers to maintain home insurance for an extra week, maybe 10 days or so beyond possession date. Just in case the buyer doesn't show up to pick up his keys or for some reason walks away from the deal. You don't, as a seller, you don't want to be in a position where your place is uninsured while you still own it. Well, I truly hope you've enjoyed this episode and found it to be helpful. [00:04:56][29.7]
[00:04:57] And hey, if you're still with me at this point, why not grab my free podcasting app available for AOS and Android devices? It's super easy. Just go to Winnipeg. Got tips, slash Apple or slash Android. That's Winnipeg. Doct t I.P.S. Slash Apple or slash android. That way you'll never miss another episode about Winnipeg will or both. [00:05:19][21.8]
[00:05:23] You've been listening to Bo Kauffmann of RE/MAX performance realty, are you thinking of buying or selling a house or a condo in Winnipeg call Bo at 2 0 4 3 3 3 2 2 0 2? Remember, Bo knows real estate. [00:05:23][0.0]