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Condo got on fire during escrow

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tiras25

Junior Member
Source of fire - downstairs unit. Their ceiling fan caught fire and went up into my unit. Firefighters were there in two minutes, busted my door open, and cut opened the floor in my unit. Fire apparently was in between the ceiling / floor joists.
Luckily my unit was empty. In escrow and I wasn't even there.

So yeah, very unfortunate situation. I assume I'm still responsible since the condo isn't technically sold yet.

Do I need to claim my insurnace or the unit below? Can the buyer back out in this situation since looks like it will take longer to close the escrow until place is fixed and screw up buyer's plans on moving, etc.
 

adjusterjack

Senior Member
I assume I'm still responsible since the condo isn't technically sold yet.
Nothing technical about it. You own it until close of escrow.

Do I need to claim my insurnace
For your damage, yes.

The downstairs insurance isn't going to pay for your damage due to an electrical fire if the fire wasn't due to the negligence of its insured. You're welcome to go after the fan manufacturer and claim a product defect if you like.

Can the buyer back out in this situation since looks like it will take longer to close the escrow until place is fixed and screw up buyer's plans on moving, etc.
Yes, the buyer can cancel the purchase and get his money back. You'll have to remarket the condo after repairs are completed.
 

LdiJ

Senior Member
Source of fire - downstairs unit. Their ceiling fan caught fire and went up into my unit. Firefighters were there in two minutes, busted my door open, and cut opened the floor in my unit. Fire apparently was in between the ceiling / floor joists.
Luckily my unit was empty. In escrow and I wasn't even there.

So yeah, very unfortunate situation. I assume I'm still responsible since the condo isn't technically sold yet.

Do I need to claim my insurnace or the unit below? Can the buyer back out in this situation since looks like it will take longer to close the escrow until place is fixed and screw up buyer's plans on moving, etc.
I would recommend claiming it on your insurance. Your insurance will go after anyone they feels is negligent, or has liability in the situation.
 

Mass_Shyster

Senior Member
Nothing technical about it. You own it until close of escrow.

For your damage, yes.

The downstairs insurance isn't going to pay for your damage due to an electrical fire if the fire wasn't due to the negligence of its insured. You're welcome to go after the fan manufacturer and claim a product defect if you like.

Yes, the buyer can cancel the purchase and get his money back. You'll have to remarket the condo after repairs are completed.
I'm not sure any of the above is correct. The risk of loss under the doctrine of equitable conversion varies by state.

Some states hold that risk of loss stays with the party in possession. Others hold that the risk of loss stays with the party with equitable title. A buyer acquires equitable title upon signing of the purchase and sale agreement.

I'm honestly not sure where California falls on that doctrine. I found some very old Law Review Articles (1948 and 1961) and they both indicated that the tide was turning.
 

adjusterjack

Senior Member
In California the risk of loss during escrow stays with the party in possession (the seller) per California Civil Code Section 1662(a):

Any contract hereafter made in this State for the purchase and sale of real property shall be interpreted as including an agreement that the parties shall have the following rights and duties, unless the contract expressly provides otherwise:

(a) If, when neither the legal title nor the possession of the subject matter of the contract has been transferred, all or a material part thereof is destroyed without fault of the purchaser or is taken by eminent domain, the vendor cannot enforce the contract, and the purchaser is entitled to recover any portion of the price that he has paid;

(b) If, when either the legal title or the possession of the subject matter of the contract has been transferred, all or any part thereof is destroyed without fault of the vendor or is taken by eminent domain, the purchaser is not thereby relieved from a duty to pay the price, nor is he entitled to recover any portion thereof that he has paid.

This section shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it.

This section may be cited as the Uniform Vendor and Purchaser Risk Act.
http://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=CIV&division=3.&title=3.&part=2.&chapter=&article=
There is also that real estate contracts have contingencies, not the least of which requires that the property be conveyed at close of escrow in substantially the same condition it was in when the contract was signed. Fire damage would certainly allow the buyer to cancel the purchase. There is also the inspection contingency. If the fire occurred during the inspection period, the buyer would be allowed to cancel. Of course that wouldn't prevent the buyer from completing the purchase as is if he was getting a smoking deal. (Pun intended, couldn't resist.)
 

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