Property caught fire a few days prior to closing

9 Replies

I was just notified that the property that I was prepared to close on three days from today caught fire. It was a cash deal also... My contractor gave me the head's up today. It looks like I may have dodged a bullet, I am not sure; I will have more details on this tomorrow. 

Question for my BP family... Is there a possibility to get reimbursed for closing costs or anything of the kind, or would I just eat all the costs and be glad that this fire did not happen while I was the owner? 

This seems to have been a fire that stated in one of the kitchens, likely by a tenant. I am not sure yet, so, let's just make this a hypothetical assumption for now. I am curious... If the fire is the fault of the tenant is the owner (and the owner's insurance) still 100% responsible for all damages (in general) and repairs because it is the owner's property? 

I am disappointed in this loss, but also a little relieved at the same time...

Does anyone else want to share a story like this one?

Originally posted by @Richard Bull :

I was just notified that the property that I was prepared to close on three days from today caught fire. It was a cash deal also... My contractor gave me the head's up today. It looks like I may have dodged a bullet, I am not sure; I will have more details on this tomorrow. 

Question for my BP family... Is there a possibility to get reimbursed for closing costs or anything of the kind, or would I just eat all the costs and be glad that this fire did not happen while I was the owner? 

This seems to have been a fire that stated in one of the kitchens, likely by a tenant. I am not sure yet, so, let's just make this a hypothetical assumption for now. I am curious... If the fire is the fault of the tenant is the owner (and the owner's insurance) still 100% responsible for all damages (in general) and repairs because it is the owner's property? 

I am disappointed in this loss, but also a little relieved at the same time...

Does anyone else want to share a story like this one?

 I do believe the owner is on the hook for the rental itself, but not the contents.  The renter would be responsible for their contents and anyone hurt in the fire. Renter's insurance usually covers that.   

I am not sure about the closing cost reimbursement question, but I do know that until the property is recorded, the buyer always has the right to back out if the property is not in the condition it was in when the contract was written.

Agree, fire damage can be repaired if no structural damage. I had 5 out of 6 AC units stolen from 6 new construction duplexes I was buying. This was few days before closing and after the appraisal. I closed anyway and builder put in new units. As a bonus, this built a trust between me and the builder and we have good partnership going.

@Account Closed is an older building and I wonder if it has anything to do with it. I still do not have the details about what happened. I am waiting on those in order to better access the situation. thank you for all your helpful feedback on this subject! 

@Richard Bull you may want to read the fine print in your contract to buy. In Colorado a seller has the option to remedy damage if it is under a certain percentage of sales price and the buyer must allow them to do so. Damage above that percentage then it is the option of the purchaser - they walk (earnest money returned) or they agree to allow remedy or they negotiate a discounted price. 

Read your contract. I've never had it happen but according to the standard sales contract used in my state the buyer could potentially be entitled to the property AND the insurance proceeds:

RISK OF LOSS, DAMAGE, DESTRUCTION AND INSURANCE: Prior to closing, risk of loss, damage, or destruction of premises shall be assumed solely by the Seller. Seller shall keep the premises insured against fire and other extended casualty risks prior to closing. If the premises are damaged or destroyed prior to closing, Buyer may either terminate this Agreement and be refunded the earnest money, or close this transaction and accept the premises "as-is" together with an assignment of the insurance proceeds relating thereto.

Thank you @Teri S. and @Ryan Murdock , today I found out that the seller does not have insurance on this property (believe it or not) and it looks like they are taking the property off market and returning the earnest money. 

It is really a bummer after working so hard at this property, it is now no longer in play. 

You might be able to now get a good deal on a vacant lot (plus tear down), so, stay in touch with the seller and see what they're going to do.