Closing Time! But What if Insurance Can’t Be Bound?

As Hurricane Irma grew in strength in the Caribbean and started to approach Florida last September, I was boarding a plane from Tampa to Birmingham for a meeting. I received several emails and calls from a colleague related to an urgent client issue, and I quickly returned his call before we departed. A new client was under contract to purchase commercial real estate in Florida and the closing date was two days away, but the client was unable to obtain insurance because the insurance companies had stopped binding insurance due to the approaching hurricane. The client was financing the acquisition, and the client’s lender certainly would not fund closing without the required insurance in place. The client’s contract did not address this issue and did not include a force majeure provision; the client was anxious to find out whether the failure to close because of the inability to bind insurance would be a default that would put the deposit at risk. The client wondered what, if any, options were available to extend closing as a result of the inability to obtain insurance. Certainly the seller would be reasonable and agree to extend closing until insurance could be bound, but what if he wouldn’t? Rather than making legal arguments under applicable law and negotiating with the seller, the best case scenario would have been for the client’s purchase and sale agreement to expressly address this situation.

The complete article was published in the Daily Business Review on March 29, 2018.