If I’m a seller whose house was in escrow, what is my responsibility regarding water damage?

UPDATED: Jan 20, 2012

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If I’m a seller whose house was in escrow, what is my responsibility regarding water damage?

My house was in escrow; I’m the seller and we were going to sign this week. Our real estate agent was going to turn the heat on for a last walk-through by the buyers and came upon a disaster. The kitchen and living room ceilings were on the floor caused by a frozen pipe that burst from freezing. What are my rights – do I fix it with the insurance money and sell at a different price, am I obligated to sell it at the negotiated price before the disaster, or can I leave as is for the buyers to do what they want?

Asked on January 20, 2012 under Real Estate Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Since the house has not yet closed, it--and the risk of damage--is still yours.

Your buyer has a choice: he or she could walk away from the deal if you do not fix the house; or could accept the deal with some credit or compensation for the damage. (Theoretically, they could agree to buy it from you for the full price, no credit or allowance, and deal with the damage themselves, but there's no reason they'd do that.)

You need to disclose the damage to the buyer and determine, with him or her, what to do. Again, the only certainty is that you can't make them buy it for full price with this level of damage.

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