Selling a Fire-Damaged House in Texas

A kitchen fire, a lightning strike or smoke from a neighbor's house all raise the same practical question: can you sell it, and what do you have to tell the buyer? Texas does not have a separate fire-sale statute. The rules that matter are the seller's disclosure, the smoke-detector law, your insurance contract, and the resale contract if a buyer is borrowing.

The disclosure form asks about previous fires

Property Code Section 5.008 requires the seller of residential real property with not more than one dwelling unit to give a written notice. The statutory form includes a checkbox for previous fires, along with questions about smoke detectors and the roof. You answer from what you know on the day you sign. If you do not know, the statute lets you mark unknown. An as-is price does not erase the notice.

If the buyer receives the notice after signing, Section 5.008(f) lets the buyer terminate for any reason within seven days after receiving it. Have the form ready before you accept an offer. Our guide to selling a house as-is in Texas walks through the as-is clause in the resale contract.

Smoke detectors are a building-safety item, not a negotiating chip

The same notice asks whether working smoke detectors are installed in line with Chapter 766 of the Health and Safety Code, and it allows an unknown answer when you do not know the local rule. Chapter 766 is the state's smoke-detector chapter for residential units. A missing or dead detector is something you either cure or disclose. It is also one of the first things a city inspector writes up when a fire unit has already been on the property.

An open insurance claim is a separate deal from the sale

The Texas Department of Insurance home-insurance guide says that if you still owe on the house, a repair check is commonly payable to you and your mortgage company, and the lender usually releases funds as work is finished. On a replacement-cost policy, many companies issue a second check after they see the bill for the completed job. Selling in the middle of that process means the unpaid balance has an owner. Ask the adjuster and the loan servicer, in writing, who is entitled to money not yet paid, and say the same thing to the buyer. Our page on a house that needs repairs covers how to compare repair bids with a listing.

Why a financed buyer often cannot close on a burned house

FHA's minimum property standards, in HUD Handbook 4000.1, section II.D.3, tell the appraiser to report a roof with less than two years of remaining life, to operate the plumbing, heat and electrical systems, and to call out visible structural problems. Fire damage often fails more than one of those checks. The buyer's lender then asks for repairs before it will fund. Paragraph 7E of TREC No. 20-19 says that, unless the parties agree in writing, neither side has to pay for lender-required repairs. Without that agreement the contract ends and the buyer's earnest money is refunded. The buyer may also terminate if those repairs exceed 5 percent of the price.

That is the usual reason a fire-damaged listing falls apart after the inspection, not a lack of interest. A cash buyer has no lender and paragraph 7E never comes up.

What to pull together before you ask for a number

• The fire department's incident report, if you have it, and any engineer or contractor report on what is still standing.
• The insurance claim number, what has been paid, and what the carrier says is still open.
• Photos of the roof, the electrical panel, and any room you cannot safely walk.
• The payoff on the mortgage and any city lien for board-up or demolition.

You do not have to rebuild before you sell. You do have to tell the truth about what you know.

Selling the damaged house to Cash Home Advisors

You can sell as-is, without making repairs. We pay all closing costs, and we can close in 7–14 days. There is no agent commission. The request is free and carries no obligation, and a real person calls you back. Loan payoff, tax liens and city demolition liens are paid from the price at closing, not on top of our costs. Read how a sale works or ask for a number. If the house is in North Texas, start with the Dallas or Fort Worth page.

Statewide notes are on the Texas hub.