What About Damage?


If you’re like me, this recent nor-easter scared the living daylights out of you. Many homes saw

significant damage. In the face of that reality, it’s hard to imagine buying a home. But, it does bring up

the issue: what happens when you have an agreement to buy a home, then a tree lands on it, or some

other major damage occurs prior to closing?


This has certainly come up in the past, and the standard Purchase and Sale Agreement has language like this in Paragraph 12ish:


“…if the said Premises shall have been damaged by fire or casualty insured against, then the SELLER shall, unless the SELLER has previously restored the Premises to their former condition…

(a) pay over or assign to the BUYER, on delivery of deed, all amounts recovered or recoverable on account of such insurance, less any amounts reasonably expended by the SELLER for any partial restoration…”


When I represent a Buyer in a purchase, I prefer the following edit:


“…if the said Premises shall have been damaged by fire or casualty insured against, BUYER shall have the right to terminate this Agreement without recourse. In the event Buyer elects to move forward, then the SELLER shall, unless the SELLER has previously restored the Premises to their former condition…

(a) pay over or assign to the BUYER, on delivery of deed, all amounts recovered or recoverable on account of such insurance, less any amounts reasonably expended by the SELLER for any partial restoration…


This language makes it clear how the transaction is going to move forward. If the buyer moves forward, the seller will begin an insurance claim and all proceeds will be assigned to the buyer in order to restore the property to its condition at the time of the signing of the Agreement.


Please be sure to make sure language like this is in your P&S agreements. As always, if you have clients buying or selling property, it’s okay, call me.

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