A casualty is an event such as a fire, storm, flood, or auto accident, and a casualty loss is the damage caused by the event.

Paragraph 14 of the One to Four Family Residential (Resale) Contract (TXR 1601) states that the seller must restore the property to its previous condition as soon as reasonably possible and definitely by the closing date.

If seller fails to complete the restoration by the closing date due to factors beyond the seller’s control, the buyer can terminate the contract and receive the earnest money; extend the time of seller’s performance for up to 15 days and the closing date will be extended as necessary; or accept the property in its damaged condition with an assignment of insurance proceeds, if permitted by seller’s insurance carrier, and receive credit for the amount of the insurance deductible at closing.

Yes, all the other contracts except for the Commercial Contract – Unimproved Property (TXR 1802) contain loss provisions that are either the same or similar to those found in the One to Four Family Residential (Resale) Contract (TXR 1601). The provision is in Paragraph 14 of those contracts, except for the Commercial Contract-Improved Property (TXR 1801), where the casualty provision is in Paragraph 16.

A loss under the Commercial Contract – Unimproved Property (TXR 1802) would be handled in accordance with the Texas Purchaser and Vendor Risk Act found in Section 5.007 of the Texas Property Code, since this contract does not expressly provide for the rights and obligations when all or a material part of the property is damaged or destroyed without fault of the parties. This act protects the purchaser of real estate when there is a binding contract, and the property is damaged or destroyed before the purchaser has taken legal title.

The landlord is responsible for repairing damage caused by a storm, fire, or similar event. The tenant is only responsible for repairing damage caused by the tenant or by someone other than the landlord.

1. If the property is damaged, review the casualty loss provision of the applicable contract with your client to determine the client’s responsibilities or rights, as applicable.
2. If the purchase of the property is being financed, you should advise your client that the lender may want to have the property reinspected, have an additional appraisal performed, and they may request that additional repairs be made.
3. In the event of a delay in closing, the agent must promptly communicate the delay to all parties involved in the transaction, including, but not limited to, the other agent, the parties, the title company, and the lender.

It depends. Paragraph 18 of the Residential Lease (TXR 2001) states that the landlord is not liable for such losses unless the landlord caused the damage. If the tenant or the tenant’s family, guests, or invitees caused the damage, the tenant is responsible for restoring the property.

If the damage was not caused by the tenant or the tenant’s family, guests, or invitees, Section 92.054 of the Texas Property Code applies, as referenced in Paragraph 22 of the Residential Lease. Under that statute, if the property becomes completely unusable for residential purposes, either party may terminate the lease by providing notice before repairs are completed. Texas REALTORS® provides the Notice of Termination Due to Casualty Loss (TXR 2229) for this purpose.

Similarly, under the statute, if the property is only partially unusable, the tenant may be entitled to a rent reduction proportional to the unusable portion of the premises. However, because the Texas REALTORS® Residential Lease does not include a prior agreement between the parties for such rent reduction, any rent abatement would require a county or district court judgment.