Forest Fires & Approvals: The Force Majeure Clause
If you're in the process of buying a home or getting a mortgage, you’ve probably come across a ton of legal terms and fine print. Some of it helpful, some of it downright confusing. One term you might have seen in contracts lately is "force majeure."
Let’s talk about what a force majeure clause is, and more importantly, how it can impact your mortgage approval here in British Columbia.
What Is a Force Majeure Clause?
"Force majeure" is a French term that translates to “superior force.” In legal terms, it refers to unexpected events that are beyond anyone’s control = things like natural disasters, pandemics, wars, strikes, or other “acts of God.” A force majeure clause is commonly found in contracts, and its purpose is to protect both parties if something extraordinary prevents them from fulfilling their obligations.
For example, if a developer can’t complete a home build on time due to wildfires or flooding, a force majeure clause might excuse them from penalties or delays.
How It Affects Real Estate Contracts
In BC, especially with new builds or pre-sale properties, you'll often see force majeure clauses included in the purchase and sale agreement. These clauses are more common now due to things like supply chain issues and climate-related disruptions.
Here’s the catch: when you’re applying for a mortgage, your lender wants certainty. They need to know:
When you’ll take possession of the property, and
That the contract will be completed as agreed.
A force majeure clause, by its nature, introduces uncertainty. If the contract allows the seller or builder to delay the completion date indefinitely due to unforeseen events, that becomes a risk factor for the lender.
Forest Fires, Insurance & Mortgage Approval
Another growing concern especially during wildfire season in BC is home insurance.
Lenders require proof that your property is insured against fire loss before they will fund your mortgage. If there's an active forest fire in the area where you're buying, insurance providers may pause or decline to issue a policy until the risk subsides.
Here’s the domino effect:
No insurance =No mortgage funding =Your purchase may not complete on time (or at all).
This isn’t just hypothetical. Every year in BC, we see real estate deals delayed—or fall apart—because buyers couldn't secure fire insurance due to nearby wildfires.
This can be especially frustrating if you're already packed and ready to move!
Why Lenders Might See This as a Red Flag
Mortgage lenders in BC—and across Canada—need to protect themselves too. When a force majeure clause is too open-ended or gives too much leeway to one party (like the developer), lenders might be hesitant to move forward with the mortgage approval.
Here’s why:
Uncertain timelines = uncertain financing. Your rate hold or mortgage approval might expire before the deal closes.
Appraisal validity can lapse. If delays stretch on for months, the original appraisal could become outdated.
Market risk increases. If the property market shifts dramatically during a long delay, the lender may reconsider their financing offer.
Insurance issues = funding problems. If your insurer won’t issue a policy due to active wildfires nearby, your lender won’t release the mortgage funds even if everything else is ready to go.
💡 How to Protect Yourself
As your mortgage broker, here’s what I recommend:
✅ Review your contract carefully. Don’t gloss over the fine print especially in pre-sale agreements. Ask your realtor or lawyer to explain the force majeure clause in detail.
✅ Talk to your mortgage broker early. I can review your contract and flag any issues that might cause concern with lenders. Some lenders are more flexible than others, and it’s my job to find you one that fits your situation.
✅ Check the insurance situation. If you're buying in a wildfire-prone area, make sure you can get a binder for fire insurance early in the process. This can help avoid delays or last-minute surprises.
✅ Ask about conditions. Can the force majeure clause be narrowed or time-limited? A clearly defined window for potential delays is usually more acceptable to lenders than an open-ended clause.
Bottom Line
Force majeure clauses are meant to protect everyone from the truly unexpected but when it comes to getting a mortgage in BC, they can sometimes do more harm than good. Add in fire season and potential insurance issues, and you’ve got a few more moving parts to keep an eye on.
The key is to understand what you're signing, and to work with professionals who can guide you through the process from contract review to lender selection to securing the right insurance.
Got questions? I’m always happy to chat.
Helping you find the right mortgage, rain or shine or even during fire season