House Burns Down During Escrow, Now What?

So who gets the payout if a house is significantly damaged in the middle of on escrow? 

In the purchase contract in the state of California, there is a clause that states that a house will be delivered in the same condition it was in when the offer was made, this is because the buyers are basing the offer on the original condition of the house. 

With this being said, if a house is not delivered in the same condition, the buyer has the right to cancel that escrow and for an obvious good cause.

(There are exceptions to this. Contact Anthony Nitz for details). 

There is also a second thing to consider; whose name is on the insurance policy? If a house is in escrow, it is still owned by the original owner, and if the house is damaged the original owner will get the insurance payout.  

While this is a pretty obvious and logical conclusion, some people may never even think about something like this until it’s actually happens.

This is why in the purchase agreement it says the homeowner must maintain appropriate homeowners’ insurance.  The downside is that homeowners insurance doesn’t likely cover losses incurred like moving expenses or lost deposits when you suddenly can’t complete the purchase of you’re replacement home.  

To expect that the sellers of the replacement home would just kindly return your deposit is naive.  They are going to experience the same losses and it’s only your deposit that will help offset their loss.

So to prevent something like this from happening to you on a fluke, contact your insurance carrier and ask them if they have an add-on for a few extra bucks to cover moving expenses and deposits or make sure you structure your listing and subsequent purchase the right way by talking to Anthony Nitz directly.