Hurricane Hits Before Closing — Now What?

Every August somebody asks me a version of the same question: we’re under contract, closing is three weeks out, and there’s a storm in the Gulf. What happens if the house gets hit? The plain answer is that hurricane damage before closing is the seller’s problem, not yours. Paragraph 14 of the Texas purchase contract leaves the risk of loss with the seller right up to the day you close, and if the house can’t be put back together in time it hands you three specific choices — one of which is walking away with your earnest money. It’s one of the few paragraphs in the contract that does exactly what a reasonable person would hope it does.

The short version: If the Property is damaged by fire or another casualty after the Effective Date, the seller has to restore it to its previous condition by the Closing Date. If the seller can’t, for reasons outside their control, you may (a) terminate and have your earnest money refunded, (b) extend the time for performance up to 15 days, or (c) close anyway, take an assignment of the seller’s insurance proceeds if the carrier allows it, and receive a credit at closing for the deductible. The paragraph that actually bites, though, is the insurance you have to line up yourself — carriers stop writing new policies once a storm is named.

Until you close, the risk is the seller’s

Here is Paragraph 14 of TREC form 20-19, the resale contract that became mandatory statewide on July 1, quoted in full because it’s short and every sentence carries weight:

“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, but in any event by the Closing Date. 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 (b) extend the time for performance up to 15 days and the Closing Date will be extended as necessary or (c) accept the Property in its damaged condition with an assignment of insurance proceeds, if permitted by Seller’s insurance carrier, and receive credit from Seller at closing in the amount of the deductible under the insurance policy. Seller’s obligations under this paragraph are independent of any other obligations of Seller under this contract.”

“Fire or other casualty” is broad on purpose. It covers a kitchen fire, a pine through the roof in a spring thunderstorm, hail that shreds a west-facing elevation, and a hurricane. The paragraph doesn’t care what caused the damage, only that it happened after the Effective Date — the day the last party signed and the contract came alive.

Paragraph 14 was not one of the paragraphs TREC touched in the 2026 rewrite. Compensation, holiday deadlines, water rights and generators all changed this year; casualty loss was left exactly as it was. That’s a good sign rather than an oversight. This language has been tested through Ike, Harvey, the May 2024 derecho and Beryl, and it has held up. If you want the rundown of what actually did change on the form, I wrote up the 2026 Texas contract changes separately.

“As Is” does not cover a storm that arrives after you sign

This is the misunderstanding I run into most, and it comes from a reasonable place. Nearly every Texas offer is written As Is, and Paragraph 7D defines that as “the present condition of the Property with any and all defects and without warranty except for the warranties of title and the warranties in this contract.” So a seller under pressure — or an out-of-state relocation buyer’s uncle on the phone — will sometimes say the buyer accepted the house as it sits, storm and all.

That reading gets two things wrong. Present condition means the condition on the day you agreed, not the condition on some later Tuesday when a tree came down. And the last sentence of Paragraph 14 closes the door on the argument entirely: the seller’s obligations under this paragraph “are independent of any other obligations of Seller under this contract.” Independent means it stands on its own. The restore obligation doesn’t shrink because you bought As Is, and it doesn’t disappear because your option period expired, because you waived an inspection item, or because you’re already past the financing deadline. It is its own promise with its own deadline.

Possession is the other half of the logic. Under Paragraph 10A you take possession upon closing and funding. Until money moves and the deed records, you don’t own the house and you don’t hold the keys, so it makes sense that you don’t carry the loss either.

What the seller actually has to do

Restore the Property to its previous condition — not make it habitable, not make it weathertight, not give you a credit and call it even. Previous condition. And the deadline is hard: “as soon as reasonably possible, but in any event by the Closing Date.” That’s not a best-efforts clause.

The relief valve is the next sentence: your three choices only open up if the seller fails to restore due to factors beyond Seller’s control. After a real Houston storm, that’s usually the honest situation. Roofers are booked six weeks out, adjusters are running behind, the specific shingle is on backorder in three states, and the fence company won’t quote until October. A seller in that position isn’t stalling, and I’d rather my buyer approach it that way — it produces better outcomes than treating it as a fight. A seller who simply hasn’t called anyone is a different conversation, and that one runs through Paragraph 15 on default, not Paragraph 14.

Your three choices, and when each one makes sense here

If the Closing Date arrives and the house isn’t restored, the choice is yours, not the seller’s. Which one to take is a judgment call, and it turns almost entirely on how much you want this particular house.

(a) Terminate, with your earnest money refunded

This is the clean exit and it’s absolute — no negotiation, no forfeiture, no argument about who did what. I’d reach for it when the damage is structural, when it’s anything involving the slab or the framing, or when the house was already a stretch on price and the repair gives you an honest reason to reset. I’d also reach for it when the damage changes the insurability of the house. A property with a fresh large wind claim on it can be harder and more expensive to insure than the identical house next door, and that follows you for years. If your carrier’s quote moves meaningfully after the claim, that’s real information about what you were about to buy.

The cost of terminating is everything you’ve already spent that doesn’t come back — your option fee, the inspection, the appraisal, and the time. In a tight submarket like Copperfield or Coles Crossing, where a well-priced home might not have an obvious replacement waiting, that matters. Weigh it honestly rather than reflexively.

(b) Extend up to 15 days

The right choice when the repair is real but bounded — a roof, a few windows, a section of fence, some soffit and gutter — and you want the house. The contract extends the Closing Date as necessary, so you’re not breaching anything by taking it.

Two cautions. Fifteen days is the ceiling in Paragraph 14, not a starting point. If the work will take longer, you’re no longer operating inside this paragraph; you’re writing an amendment on TREC form 39-11 with terms both sides sign. And your other clocks don’t automatically stretch to match. Rate locks commonly run 30 to 60 days, your lease may have a firm end date, and the moving company already has your slot. Call your loan officer the same day you decide to extend and ask what a 15-day slip costs to extend the lock — sometimes it’s modest, sometimes it isn’t, and you want that number before you commit rather than after.

(c) Close anyway, take the insurance proceeds and a deductible credit

This is the option most buyers don’t know exists, and in a post-storm Houston market it is often the strongest one. You close on schedule, you accept the house in its damaged condition, the seller assigns you their insurance proceeds, and you get a credit at closing equal to the deductible. In effect you’re paid the claim and you control the repair — your contractor, your materials, your timeline — instead of inheriting whatever a seller in a hurry could get scheduled.

Three things to check before you pick it. First, the assignment is conditional: the contract says “if permitted by Seller’s insurance carrier.” Carriers vary, and some will not assign. Get that answer in writing from the carrier before you commit, not from anybody’s assumption. Second, the proceeds are what the adjuster allowed, which may be less than what the work actually costs, and any gap is yours. Get a contractor’s number next to the adjuster’s number. Third, your lender has a vote. Many lenders will not fund on a home with open damage, and government-backed loans in particular can require repairs completed before closing. That conversation belongs with your loan officer and the title company on day one, not the day before funding.

The deductible credit is worth understanding precisely, because on a Texas policy it is usually not the number people picture. Wind and hail damage typically carries its own deductible, separate from the one that applies to everything else on the policy, and on a great many Texas homeowners policies it is written as a percentage of the dwelling coverage rather than a flat dollar amount. A two percent wind and hail deductible on a $400,000 dwelling limit is $8,000, not $1,000. Ask for the declarations page and have your insurance agent confirm which deductible applies to the loss — that figure is exactly what Paragraph 14 credits you.

The part that bites more often: bind your own insurance early

In practice, far more Houston closings get derailed by insurance than by damage. Once a storm has a name and a track, insurance carriers stop writing new business in the threatened area. The industry calls it a binding restriction or a moratorium, and it can stall a closing on a house that never sees a raindrop — because your lender will not fund without proof of insurance in place.

The Texas Windstorm Insurance Association is the most explicit about it. TWIA cannot issue a new windstorm policy or increase coverage on an existing one when there is a hurricane in the Gulf, and the moratorium applies across its whole service area: the 14 coastal counties plus the part of Harris County east of Highway 146. That last detail matters locally. If you’re buying in Seabrook, Kemah, La Porte or Shoreacres, you’re inside TWIA territory and this rule is yours. If you’re buying in Cypress, Katy, Copperfield or Bridgeland, you’re not — and that’s the trap, because it’s easy to read “TWIA” and assume the whole subject is somebody else’s.

Away from the coast, the Texas Department of Insurance is clear that wind and hail coverage generally sits inside your regular homeowners policy, though often with a different deductible. So for most Houston buyers the question isn’t TWIA at all — it’s whether your particular carrier has stopped binding new policies while a storm is in the forecast cone. That’s a company-by-company decision rather than a published rule, which means the only reliable way to find out is to ask your insurance agent directly. Ask early.

Flood coverage runs on its own clock and catches people out. A National Flood Insurance Program policy normally takes 30 days to take effect, but there’s no waiting period when the policy is purchased in connection with making, increasing, extending or renewing a loan — so if your lender requires flood insurance, that policy is effective at closing. The exposure is the other case. If you’re paying cash, or you’re outside a mapped high-risk zone and buying flood coverage voluntarily — which plenty of Houston buyers should, because a great deal of the water that came into houses in 2017 came into houses outside the mapped zones — the 30 days applies to you. Start that policy during your option period. If reading the flood section of a seller’s disclosure is part of your homework, I walked through what each of those checkboxes actually tells you line by line.

The rule I give every buyer closing in the second half of the year: get quotes during your option period, and bind the policy the moment you have a firm closing date. Not closing week. The premium is part of your monthly payment anyway, so the quote is information you want early regardless — and if you’re wondering why the coverage matters beyond satisfying the lender, that’s a separate conversation worth having.

If you’re selling: call your insurance agent before possession changes

Sellers get one line of warning about this, and it’s tucked inside Paragraph 10A where nobody reads it: “Consult your insurance agent prior to change of ownership and possession because insurance coverage may be limited or terminated. The absence of a written lease or appropriate insurance coverage may expose the parties to economic loss.”

Two situations make it urgent. The first is a leaseback, where you stay in the house after closing under a temporary residential lease — you’re now a tenant in a home you don’t own, and your homeowners policy was not written for that. The second is a timing gap, which is easier to fall into than it sounds: you cancel the policy effective the morning of closing, funding slips a day because a lender condition came in late, and the house sits uninsured overnight while Paragraph 14 still has your name on it. Don’t cancel anything until the file has funded and you’ve been told so. Your insurance agent will tell you how to structure it — that’s a five-minute call that prevents a very bad week.

Closing in August or September? Make a plan, not a panic

Peak season on the upper Texas coast runs from about mid-August through early October, which is precisely when a lot of Houston families close so the kids can start the school year in the new zone. That timing is fine. It just deserves a plan.

Four things, in order. Get your insurance quotes during the option period and bind the policy as soon as the closing date is firm — this single step prevents most of the trouble. Know where your closing date sits relative to the peak, and if it’s inside it, tell your lender and your insurance agent now so nobody is surprised later. If a storm gets named, make those two calls that day rather than after landfall, because the binding window closes before the weather arrives. And if the house does take damage, get the adjuster’s report, a contractor’s estimate, and the carrier’s written position on assigning proceeds in hand before you choose among your three options — the choice is much easier with three numbers in front of you than with none.

The thing I’d want you to take away is that hurricane damage before closing is a solved problem in the Texas contract. Somebody thought this through, wrote it down, and gave the buyer the choices rather than the seller. That doesn’t make a storm pleasant, but it does mean you’re not improvising. If you’d like to read the paragraph with your own eyes, form 20-19 is posted publicly at TREC and Paragraph 14 sits on page 6. I’m a real estate broker, not your attorney or your insurance agent, so for a specific address and a specific policy, loop in your title company, a Texas real estate attorney, and a licensed insurance agent early.

Last updated: July 2026 · Paragraph references are to TREC form 20-19, adopted May 4, 2026 and mandatory for Texas license holders beginning July 1, 2026. This is general information about the contract forms — not legal advice, and not a recommendation about any insurance product or carrier. Deductibles, coverage and binding practices vary by policy and by company. For a specific property, talk with your title company, a Texas real estate attorney, and a licensed insurance agent.