Hurricanes not only threaten our homes and lives; they also can be disruptive to real estate deals.
In anticipation of Hurricane Lane hitting the Hawaiian Islands, the state closed many of its departments, including the Bureau of Conveyances, which maintains the permanent record system for title to real property in Hawaii.
With the bureau closed for business Thursday and Friday, real property documents were not recorded — delaying the scheduled closings of real estate transactions and mortgage refinances for at least a day or more.
Transactions scheduled to record Friday will be pushed to when the bureau reopens, which could be as early as Monday or Tuesday. This little-known state department carries a lot of weight and importance as it handles records and microfilm for about 350,000 Regular System and Land Court documents and maps annually. Hawaii is just one of two states with a single statewide recording system.
Insurance matters Most, if not all, insurers have placed a moratorium on writing new hurricane policies in Hawaii because of Hurricane Lane. The moratorium is a temporary freeze insurance companies put in place on writing new business or increasing limits on existing policies.
This means if you have a home purchase scheduled to close soon, and you did “bind” your policy earlier, you could be forced to wait — thus delaying closing until the moratorium is eventually lifted — which is usually one to three days after a hurricane or storm passes and the watches and/or warnings are canceled.
Moratoriums were put in place to prevent property owners from rushing to insure their properties or increasing coverage just as they are threatened by a hurricane. Hurricane insurance is a supplemental coverage to homeowners insurance that covers wind and wind-related damage from hurricanes.
Lenders require homebuyers to obtain hurricane coverage as part of their mortgage approval.
Many insurers stopped providing hurricane policies following Hurricane Iniki in 1992, which devastated Kauai and parts of Oahu and caused $2 billion in damage. In the wake of Iniki, the state created the Hawaii Hurricane Relief Fund, which provided hurricane coverage. Insurance companies resumed writing hurricane policies in 1992, which is when the state stopped collecting money for the fund.
This is a good time for all homeowners to review their homeowners and hurricane policies to understand your coverage.
Closing issues Finally, if you are a homebuyer in escrow and are scheduled to close soon, your lender might require a re-inspection of the property, depending on the severity and effects of Lane. The inspection by the appraiser is to ensure there is no damage and it is in the same condition as before the hurricane.
This could delay your closing as appraisers would need to inspect the property to update their reports.
Sellers and buyers also might want to take a look at the property after the storm passes.
Communication key No one wants delays in a real estate transaction, especially when the deal is about to close. It can be a challenging and confusing time to many homebuyers or sellers in escrow, whether you are affected by one or all of these potential hurdles.
Communication will be key in ensuring your real estate deal is protected. Remember to keep your cool and understand that you have no control over these potential delays. Check in and communicate regularly with your escrow officer, Realtor, insurance agent and loan officer to stay updated on the potential delays and hurdles.
Hurricane Lane is the second hurricane to threaten Hawaii this season, which began in June. Hurricane season runs through November.