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What Happens If the House Is Damaged Before Closing in Texas?
If a house is damaged by a storm, fire or other casualty after the contract is signed but before closing in Texas, the seller is responsible for fixing it. Under the casualty loss paragraph of the standard TREC One to Four Family Residential Contract (Resale), the seller must restore the property to its previous condition as soon as reasonably possible, and by the closing date at the latest. If the seller cannot finish in time because of factors beyond their control, the buyer gets to choose what happens next.
In the Houston area this is not a rare question. A tropical storm, a hail line or a tree through the roof in the middle of a 30-day contract is something we plan for, not something we hope never happens.
What the Contract Says
The rule lives in paragraph 14 of the TREC resale contract, titled Casualty Loss. You can read the current form on the Texas Real Estate Commission’s contract forms page. In plain words:
- The seller has to restore the house to its previous condition as soon as reasonably possible, and no later than closing.
- If the seller cannot do that because of something outside their control, like a roofer backlog after a storm, the buyer picks one of three options.
- The seller’s duty to repair stands on its own. It does not depend on anything else in the contract.
Most of the time the seller’s homeowners insurance pays for the repair. The seller still owns the house until closing, so it is still their policy on the line.
The Buyer’s Three Choices
When the repair cannot be done by closing, the contract gives the buyer these options:
| Option | What happens |
|---|---|
| Terminate | The contract ends and the earnest money goes back to the buyer |
| Extend | Closing moves out by up to 15 days so the seller can finish |
| Take it as is | The buyer closes on the damaged house, gets an assignment of the seller’s insurance money if the insurer allows it, and gets a credit for the seller’s deductible |
The third option sounds simple and often is not. Insurance companies do not always allow the claim to be assigned to a new owner, and the claim amount may not match what the repair really costs. If you are leaning that way, get a contractor’s estimate first and talk to your lender.
If you are still inside your option period when the damage happens, you have a simpler exit. You can terminate for any reason and get your earnest money back. Our piece on what happens to your earnest money if a Texas sale falls through covers the timing on that.
Your Lender Has a Say Too
The appraisal was done on the house before the storm. Your lender is lending against that value, and most will not fund until the damage is repaired and confirmed. Some send the appraiser back out for a re-inspection. After a federally declared disaster, some lenders require a new inspection on homes in the affected counties, even if the seller swears nothing happened.
That can push a closing date by days or weeks. If you have a lease ending or a moving truck booked, tell us early so we can plan around it.
What We Have Buyers Do After a Storm
When a storm comes through during a contract, we ask the seller’s agent for a walkthrough as soon as it is safe to drive, well before the final walkthrough. Look at:
- The roof line, shingles and any flashing you can see from the ground
- Ceilings for new water stains
- Fences, windows and garage doors
- Trees and large limbs near the house
- Standing water around the foundation or in the garage
Anything you find goes to the seller in writing, through your agent, right away. A dated notice protects you far better than a conversation at the closing table. Then use the final walkthrough to confirm the repair was done and looks right.
A Note for Sellers
If you are the seller, call your insurance company the day the damage happens and tell your agent the same day. Do not wait to see whether the buyer notices. Hiding damage creates a much bigger problem than the repair itself.
Peter has been licensed in Texas since 2004 and has walked buyers and sellers through more than one storm season mid-contract. The Move Live Love TX Team™ is a husband-and-wife real estate team with CB&A, Realtors, serving Houston and the surrounding areas. If something happens to a house you are under contract on, call us before you call anyone else, and we will walk you through what happens next so nothing catches you off guard.
Frequently Asked Questions
- Who is responsible if a house is damaged after the contract is signed in Texas?
- The seller is. Under the casualty loss paragraph of the standard TREC resale contract, the seller has to restore the property to its previous condition as soon as reasonably possible, and in any event by the closing date. The seller's own homeowners insurance usually pays for that repair.
- Can a buyer back out if the house is damaged before closing in Texas?
- Yes, if the seller cannot finish the repair by closing because of factors beyond their control. The standard TREC resale contract then lets the buyer terminate and get the earnest money back. If the buyer is still inside the option period, they can also terminate for any reason under that paragraph.
- What are the buyer's choices if the seller cannot repair storm damage by closing?
- There are three. The buyer can terminate and get the earnest money back, extend the closing by up to 15 days, or accept the house as it is with an assignment of the seller's insurance money, if the insurer allows it, plus a credit for the seller's deductible.
- Does the buyer's lender care about damage before closing?
- Yes. The appraisal was based on the house before the damage, and many lenders will not fund until repairs are done and confirmed, sometimes with a re-inspection. After a declared disaster, some lenders require a new inspection even when the seller says nothing was hurt.
- Should a buyer do another walkthrough after a storm?
- Yes. Ask for a walkthrough as soon as it is safe after a storm, before the final walkthrough, and look at the roof line, ceilings, fences, windows and any trees near the house. Put anything you find in writing to the seller through your agent right away.
