{"id":24339,"date":"2021-05-28T10:06:43","date_gmt":"2021-05-28T17:06:43","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=24339"},"modified":"2026-04-06T07:14:14","modified_gmt":"2026-04-06T14:14:14","slug":"buyer-what-happens-to-a-home-sale-in-a-fire","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-what-happens-to-a-home-sale-in-a-fire\/","title":{"rendered":"What Happens to a Home Sale in a Fire? A Homebuyer\u2019s Road Map"},"content":{"rendered":"

A house fire<\/a> is a homeowner\u2019s worst nightmare. It isn\u2019t just a matter of financial loss, but you\u2019ve spent years building a life there. Your possessions, memories, and hard work? All up in smoke. It\u2019s devastating, to say the very least.<\/p>\n

On the flip side, imagine if you found the house of your dreams and it\u2019s under contract<\/a>, closing day is just a few short days away, and it<\/i> falls victim to a fire? Understandably, you\u2019re going to panic and wonder: What happens to a home sale in a fire? Will the sale fall through? Will you be able to renegotiate the terms of the contract<\/a>? Will the closing be delayed while repairs are made? It\u2019s a lot to be concerned about.<\/p>\n

In this guide, we\u2019re going to walk you through the different steps, scenarios, and options you may have in the event that the house you want to buy is in a fire.<\/p>\n

\"A<\/a>
<\/a> Source: (LinkedIn Sales Solutions \/ Unsplash)<\/figcaption><\/figure>\n

Step 1: Talk to your agent<\/h2>\n

Your real estate agent is going to be your crutch while you\u2019re navigating this unfortunate incident. There is usually a stipulation in the purchase contract that says the home must be in the same condition as when you made your offer \u2014 free of additional damages or defects. In tax and legal circumstances, when a home is damaged or destroyed, it\u2019s known as casualty loss<\/a>.<\/p>\n

What does casualty loss mean?<\/h3>\n

Casualty loss<\/a> states that if a portion of the home or the property is \u201cdestroyed by fire, explosion, accident, an act of the public enemy, natural disaster<\/a> or another similar event,\u201d the seller must notify the buyer immediately after learning of the event.<\/p>\n

The buyer is not obligated to purchase a damaged property. If they choose to move forward with the purchase, the purchase price will likely be reduced by whatever the estimated damages will cost to repair.<\/p>\n

Lisa Jacquez, assistant to Californian top-selling agent, Janet Anderson<\/a> (who sells homes 27% faster than the average agent in the Tracy area<\/a>), gives a simplified explanation:<\/p>\n

\u201cIn California, the seller is responsible for any damage that happens before handing over the keys because they\u2019re still the home\u2019s owner \u2014 they\u2019re still in possession of the home. But, you\u2019ll have to look at the contract because each state is different and will say who\u2019s responsible for the repairs.\u201d<\/p><\/blockquote>\n

Step 2: Assess the damage<\/h2>\n

Sometimes a sale is terminated if the property is damaged<\/a> to the point where the home is uninhabitable.<\/p>\n

In the Connecticut Supreme Court in 1935 (Anderson v. Yaworski<\/a>), Anderson took Yaworski to court to recover his deposit after the home was in a fire before the deal closed.<\/p>\n

The court ruled in Anderson\u2019s favor because Yaworski couldn\u2019t uphold her end of the deal \u2014 to give the home to Anderson in the same condition as when he submitted the deposit. So Anderson was able to back out and<\/i> get his money back.<\/p>\n

On the other side of the coin, there\u2019s often a stipulation in the contract that states that if the damage amounts to less than 5% of the home\u2019s purchase price (some contracts will go up to 10%), the seller is responsible for making repairs \u2014 as long as they can get them completed before closing.<\/p>\n

If the damage is greater than the amount outlined in the contract, both parties will need to come to an agreement because the seller isn\u2019t obligated to do the repairs<\/a>, and the buyer can back out of the deal<\/a> with no repercussions.<\/p>\n

How are damages assessed?<\/h3>\n

A restoration company will have to come to the property to assess the damages. They\u2019ll provide a list of the damages, estimate the cost to repair everything, and give an estimated time frame to get the job done.<\/p>\n

\u201cThe insurance company will come in after the restoration company to assess the damages and then compare the reports and then decide the extent of the damage,\u201d Anderson adds.<\/p>\n

Note: Be aware that if the property is damaged due to a wildfire or another widespread disaster, there will likely be a delay because many other homeowners are in the same predicament.\u00a0<\/i><\/p>\n

\"An<\/a>
<\/a> Source: (Bartolomiej Pietrzyk \/ Shutterstock)<\/figcaption><\/figure>\n

Step 3: Inquire about the seller\u2019s insurance policies<\/h2>\n

After the damages have been assessed, ask your real estate agent to inquire about the seller\u2019s insurance policies<\/a>. If the seller still holds a mortgage on the property, they will have homeowner\u2019s insurance<\/a>. If they\u2019ve paid off their mortgage, they may be one of the 5% of homeowners who do not<\/i> have homeowner\u2019s insurance<\/a>.<\/p>\n

Standard homeowner\u2019s insurance policy<\/h3>\n

The lowest level homeowner\u2019s policy<\/a> (also known as an HO-2) will have three types of coverage:<\/p>\n