Damage by Fire Prior to closing (Ontario)

Damage by Fire Prior to closing (Ontario)

Question:

If you bought a house today, closing in September, but it burnt down in August... Do you still have to close the deal?

Answer:

There are several issues which are significant. This has to be “substantial” damage. The loss of a building may or may not be. In fact, it might even improve the land value. There may or may not be an actual insurance policy. Next step is that there really must be a “payout”. The reference to “substantial” is in the context of the payment of the insurance proceeds. There may not be any payment at all. That’s an insurance issue. Clause 14 deals with Insurance not the Changing Condition of the Premises. The clauses in other jurisdictions on this point usually add clarity. The Buyer can’t collect and must close if he caused or contributed to the fire or the damage. This is often the case with a Tenant and contamination.