The impact of wildfire on mortgages

Photo: Neil K. Lalach

The McDougall Creek fire on the night of Aug. 17.

This week it feels like almost every conversation starts with a question and answer and fire update.

I am very fortunate in that my family lives just outside of an evacuation alert area, so we did not have to leave our home. This has not been the case for many of our friends and neighbours.

The first few days were chaotic and truly frightening. After a few initial adjustments (aka moving my horses a little further from the fire) and packing my trailer in case we had to leave, we’ve settled into an uneasy routine.

Looking at the B.C. Wildfire app on my phone, the entire province basically shows up as red at this point which means there is an active fire somewhere nearby. I have spent the last few days trying to connect with my clients who either live in an active fire zone or have a purchase finalizing in the near future. There have also been a few very heavy conversations with people who have lost their homes.

If you are a homeowner and have been affected by the fires, please reach out to your mortgage provider. I see emails every day about how lenders are stepping up to offer support and relief to their clients.

I am checking in with clients who have mortgages finalizing soon because part of the purchase process is organizing insurance coverage for your new home. This is a condition you need to address before you remove all of the conditions on your purchase and make it a firm and binding contract. Timeline-wise, this means you research insurance packages and obtain an undertaking to insure within the first few days of writing your offer.

The fine print includes verbiage that essentially states the insurer will not insure your home at closing if certain conditions change. One of those conditions is a wildfire within a certain radius of your new home. Most times your closing is weeks, or even months, down the road.

Most clients firm up their insurance coverage a few days prior to the completion (finalizing) of their purchase.

The good news is every purchase contract I’ve seen over the last few years includes a “force majeure” clause. This clause extends the contract when the parties cannot complete the purchase due to a catastrophic event such as a nearby fire.

The other good news is that there are still companies that will offer new insurance policies for homes closer to fire zones. The bad news is that they are considerably more expensive.

The tradeoff for everyone I’ve talked to so far is that they have everything organized to leave their current home and if they do not move forward with their purchase they will be scrambling for a place to live.

If you have a purchase closing soon I recommend you double-check that the insurance company you originally connected with is still willing to provide coverage for you. This way you will not be left scrambling a few days before your closing date.

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Straying from mortgages, I want to share a few thoughts and observations.

I have been overwhelmed by the reach-outs, check-ins and offers of support from friends near and far. I have heard amazing stories of people helping each other and opening their doors to strangers.

I have also heard stories about people taking time off work to volunteer where needed in our community and have also heard through the grapevine that our local food banks are in tremendous need of support. They have been helping so many families who are out of their homes and struggling to keep things right-side up.

I am very thankful for the friends who took my horses on short notice. I’m thankful for a support network that has kept me sane over the last week. I have seen many shining examples of people helping each other day after day.

I am so incredibly grateful for the men and women who have been working tirelessly to save our community.

Thank you for all you do.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.