Home Damaged before Closing – Who Is Liable

Closing the deal between the buyer and seller is a delicate process that requires paperwork, walkthroughs and other professionals to progress the sale along. If the property suffers physical damage before the closing completes, it is important to know what is responsible to repair it or to ensure the home receives all due care.

Defects and deficiencies found before the final stage of the real estate deal pushes through often halt the sale. The buyer has the ability to stop the sale and discontinue progressing through in many circumstances, but he or she should complete a final walkthrough to ensure that no further damage is present. During this level of the dealing, he or she may engage with the seller to repair or replace certain items that suffered damage after the initial assessment but before the final closing of the sale. However, if the property sustains damage before the closing and the buyer is not aware of this, the situation may become complicated.

Proceed in Light of Property Damage

There are rare situations where the property sustains damage and both buyer and seller will still proceed with the sale. These events generally occur through a natural phenomenon or when there are other defects that could harm the house such as a fire, weather or storms and earthquakes. If the property suffers so much damage that is it not salvageable, the buyer will back out. However, if repairs may fix the situation, the buyer and seller may work out how to proceed and ensure that the deal closes between them. It is often important to have a real estate lawyer handy when these circumstances arise.

When the Damage Occurs

Many situations in real estate deals will depend on when the damage occurs. If the property faces serious destruction before the paperwork is available, the buyer may back out of the deal. However, if he or she already signed the last closing documents, the damage may not prevent the sale. However, the buyer and seller usually agree on what terms to end the deal. If the property suffers a fire, the buyer may contact the seller about the issue that was outside eithers’ hands. In these situations, it is possible that insurance will cover the costs and the sale progresses until the buyer is the new owner.

The Extent of the Damage

Some deals do not close if the property suffers extensive damage to the point that the house is not livable. However, the sale may still progress if the seller or an insurance company cover the costs of the destruction. This may depend on coverage and how long it takes to restore the home to the previous condition. Some buyers are willing to add some costs to the closing deal if it improves the property to a state better than it was previously. Insurance and other involvement in the reparations may prevent the sale from falling through. However, the buyer is generally not responsible for the repairs unless he or she is already the owner.

Added Protection

The buyer or seller may add additional insurance to the purchase of the home when the deal goes through escrow but has not started the final closing where the buyer becomes the new owner. In this stage, the seller may protect the invested interest of the buyer by placing more insurance coverage in case of accident or unforeseen events such as a lightning strike, a fire or floods from weather. While the buyer is usually not responsible for the damage to the home, he or she may need to pay additional costs from insurance premiums to help keep the home safe from damage.

Other situations arise with the damage or destruction of the home that lead to the buyer acquiring some of the insurance proceeds for the incident. The real estate contract may have a clause that leads to this action. When the buyer and seller agree to these terms, it could protect what the buyer already pushes through for the purchase along with any problems with the sale. However, if the buyer does decide to back out of the deal, he or she may request the deposit back and sever all connection to the seller.

Real Estate Lawyer in Damaged Property

Sometimes, the buyer or seller may need to hire a lawyer to proceed through the sale when damage happens to the house. A real estate lawyer may help both parties finalize the matter even if the house no longer exists.

Provided by HG.org