Fires in the Okanagan are not something anyone looks forward to with the unfortunate damage to property and risk to lives (both animal and human) although the unfortunately seem to be part of lie in our beautiful region as we have already witnessed this summer. The presence (and in some cases the risk) of wildfires/forest fires can also cause complications on real estate transactions.  With a busy real estate season in the Okanagan, this can put all involved parties at risk.  While there are some ways to mitigate this risk, it is important that everyone be aware of the steps that can be taken to help do so.

Firstly, we recommend that buyers look into and confirm the availability of fire insurance prior to removing their conditions to be comfortable that the property can be insured.  Insurance is of course important for personal reasons in giving some comfort and security to the homeowner, but nearly every lender will require confirmation of fire insurance  prior to releasing mortgage funds for closing on the purchase of a property.  If insurance is not available, it means that mortgage proceeds may not be either which will put the buyer in a precarious position with respect to their liability under their contract, specifically to be ready, willing and able to purchase the property on the closing date.  Due diligence prior to removing conditions can be helpful in reducing this risk by confirming insurance at the earliest opportunity.  It is also prudent to speak with the lender to confirm whether there are any specific insurance requirements they have as far as limits, coverage, etc. so that the policy can be arranged accordingly.

Another step that can be taken to help protect the buyer is the inclusion of an extension right in the contract in the event that insurance is not available for closing.  This term would act to extend the completion of the transaction for a period up to 30 days (or other period) if the buyer is unable to secure insurance on the scheduled closing date.  While this is helpful to have in place, it should not be used as the sole method of dealing with insurance.  Arranging a policy and binding insurance as early as possible will assist in avoiding delays on completion and potential impacts on the seller of the property where it is not necessary.

As always, we recommend speaking with an insurance professional to determine what insurance should be carried on all real estate including vacant land, strata properties, recreational properties and single family homes (whether owner occupied or rental properties).

Our thoughts go out to those who have been evacuated from their homes or lost them in their entirety and huge admiration and thanks to those who put themselves at risk to fight the fires and protect our communities.

Author: Una Gabie

This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of real estate law at the following: