Can the owner of property that is contract for deed still make you pay if it’s destroyed by fire?

I am buying a mobile home not the land contract for deed. I still owed $2,000 on it but last week it was destroyed by a fire. I could not get insurance on it but the owners kept insurance on it. The owner said he would take $1,000 instead of $2,000, but if the insurance company is going to pay for the trailer do I still have to pay. If I do pay it how do they sign over a title for a trailer that’s not there

Asked on May 10, 2016 under Real Estate Law, Illinois


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

No, if the property you are buying is destroyed not through your fault *prior* to you taking title, then the contract is void due to "impossibility": i.e. that the objective physical facts (destruction) make it impossible to carry out the deal. Alternately, you could view it as they will be in material (important) breach of their contract, if again, they can't give you title when they should. In these cases, while if you have had its use (or at least the right to use it, even if you did not in fact make use, by your own choice, of the trailer) for some time, then they could keep money already paid for that use, in an amount equivalent to the "rent" you would have paid to lease the trailer for that time period, but you would not need to continue the deal or pay more.
The key fact for the above is that you did  not receive title yet, which appears to be the case. The way to look at it is this; you're paying for title to a trailer, but if the trailer doesn't exist, you can't get it, so you don't have to pay--other than the "rent" for any use (or right to use) you had.
But if they already transferred title to you, then the risk of loss is on you, not them, and you'd have to finish the payments unless they caused the fire.

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