Welcome to North Texas where one of the biggest threats to closing on the sale/purchase of a house is Mother Nature. Hail and hurricanes, thunderstorms and tornados, snow and ice … we get it all … even earthquakes (but they aren’t that bad here). So what’s a buyer and seller to do when Mother Nature takes out her aggression on the house you’re scheduled to close on next week?
The Casualty Loss Paragraph (Paragraph 14 of the One to Four Family Residential Contract (Resale)) requires the seller to restore the property to its previous condition by closing. If the seller can’t, the buyer has three options:
- Terminate the contract and get their earnest money back.
- Extend the time for the seller to complete the repairs up to 15 days, with the closing date extended accordingly.
- Accept the property in its damaged state with an assignment of insurance proceeds, if permitted by the seller’s insurance carrier. The seller also credits the buyer the amount of the insurance deductible at closing.
The one thing the buyer CANNOT do is simply terminate the contract without giving the seller the opportunity to fix the problem. If the buyer attempts to do that, the buyer would likely forfeit their earnest money and could be subject to the specific-performance clause of the contract.
The contract does not address situations in which the buyer and seller disagree whether the property has been restored to its prior condition. If a disagreement arises, that determination could be made through mediation or in court.
Source: Texas Association of REALTORS®
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