What If the House Gets Wrecked Right Before Closing? What Texas Buyers and Sellers Need to Know

When the storm rolls in before closing, the real test isn’t the weather—it’s the contract.

Have you ever wondered what happens if a home you're under contract to buy gets hit by a major storm or suffers water damage from a busted pipe—after you’ve already signed the papers but before closing day? Who’s responsible for the damage? For how long? And more importantly—why? In Texas, these questions are answered directly in the state’s real estate contract, and the protections for buyers are stronger than many realize. If disaster strikes before the ink dries at closing, you’re not left powerless. Let’s break down what the contract says, how liability works, and what rights you have to walk away with your earnest money fully refunded.

When a property in Texas is under contract and suffers damage—such as from a burst pipe, flooding, hailstorm, tornado, or any other catastrophic event—the responsibility to restore the property falls squarely on the seller, up until the day of closing. This is clearly addressed in the Texas Real Estate Commission (TREC) One to Four Family Residential Contract (Resale), Paragraph 14, titled Casualty Loss. According to this clause, “If any part of the Property is damaged or destroyed by fire or other casualty after the effective date of this contract, Seller shall restore the Property to its previous condition as soon as reasonably possible.” This means that from the time the contract is signed until closing, the seller carries the burden of both the risk and the repairs, not the buyer.

If the seller is unable—or unwilling—to restore the property to its prior condition before the scheduled closing date, the buyer has the right to terminate the contract and receive a full refund of the earnest money. This protection is explicitly built into the same contract clause, which continues by stating: “If Seller fails to do so due to factors beyond Seller’s control, Buyer may: (a) terminate this contract and the earnest money will be refunded to Buyer…”

Contract Proof: Buyer’s Right to Terminate + Get Earnest Money Back

Here’s the full relevant language from Paragraph 14 (Casualty Loss) in the current TREC One to Four Family Residential Contract:

“If any part of the Property is damaged or destroyed by fire or other casualty after the effective date of this contract, Seller shall restore the Property to its previous condition as soon as reasonably possible. If Seller fails to do so due to factors beyond Seller's control, Buyer may: (a) terminate this contract and the earnest money will be refunded to Buyer, or(b) extend the time for performance up to 15 days, or(c) accept the Property in its damaged condition with an assignment of insurance proceeds and the right to prosecute a claim.”

This clause explicitly protects the buyer’s right to terminate AND get their earnest money refunded.

There is no ambiguity here. The moment the seller is unable to restore the property (due to storm damage, flood, burst pipes, fire, etc.), and especially if the property’s condition has materially changed, the buyer has a clear exit route with full refund rights.

What to Do If You Need to Terminate After Property Damage

Here’s a quick summary of the steps involved if you're a buyer needing to terminate the contract due to storm damage, flooding, or any other major casualty. Your Realtor will know exactly how to walk you through this process and can explain your specific situation in more detail—since no two contracts or circumstances are exactly alike. But the basic contract protections are the same:

1. Submit the TREC “Notice of Buyer’s Termination of Contract”– Check the box that cites Paragraph 14 as your reason for termination.

2. Complete the TREC “Release of Earnest Money” form– Clearly state that the earnest money should be refunded to the buyer based on your rights under the casualty loss clause.

3. Provide proof of the damage– This may include photos, inspection reports, or insurance documentation—especially if the seller disputes the termination.

This 3-step process legally enforces your right to walk away and protects your earnest money under Texas real estate law.

However, If a buyer wishes to proceed with the purchase despite the damage, they have the option to negotiate new terms. These may include a repair allowance or a closing delay to allow time for restoration. However, such changes must be agreed to in writing via an amendment to the original contract, and buyers should never rely on verbal promises. If both parties agree to extend the closing, TREC provides an Amendment form that can be used to revise the closing date and other terms.

It’s also important to note that ownership—and thus risk—does not transfer until closing and funding. This legal principle underlies the entire TREC contract and is further supported by Texas Property Code § 5.008, which outlines the seller’s duty of disclosure and condition of the property. Therefore, if the home is damaged prior to closing, all risk and liability remain with the seller, not the buyer.

In Texas, the seller assumes the risk for any property damage that occurs after the home goes under contract and before it closes. That’s why it’s crucial for a skilled Realtor to have honest, upfront conversations with their sellers about what happens if the unexpected occurs—whether it’s a burst pipe, a hailstorm, or a sudden fire.

Many people sign contracts without reading the fine print, unaware of their responsibilities or rights when something goes wrong. But transparency at the beginning sets the tone for trust, and clear communication helps avoid panic when challenges arise. Buyers and sellers alike deserve to feel confident—not confused—if a situation unfolds. With the right communication and guidance, both parties can find a fair and lawful outcome—even in the face of unexpected events. When you work with a Realtor who understands the contract, knows how to protect your best interest, and keeps everyone informed, you’re not just getting a transaction—you’re gaining a teammate. And in moments like these, not just any Realtor will do.

—Amanda Allen, Realtor®

📞 903-603-0648