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Ely, Counselor at Law
Category: Real Estate Law
Satisfied Customers: 102521
Experience:  Qualified attorney in private practice including business, family, criminal, and real estate issues.
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I had a rent to own building purchased thru Derksen

Customer Question

I had a rent to own building purchased thru Derksen Buildings, TJ Rentals is the financer. The building was in the process of being finished out into a home. 2 months after delivery of the house, (two wks ago) it was destroyed in the Hidden Pines Fires in Smithville Texas. I tried to get it insured, but the ins. co. stated I needed my contractor to insure it, but I was the contractor. Now, I am 2 months into my 5 yr rent to own, and my home was completely destroyed in this "declared disaster" fire. What are my rights here? Should the company of had it insured since it was a finance situation? I am just lost, in my contract it loosely states, that if building is destroyed I am liable for FMV, which is about 15 grand. What are my options here? I haven't contacted the company yet, I wanted to get some advice on the matter first.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Ely replied 1 year ago.

Hello and welcome to JustAnswer. Please note:This is general information and is not legal advice. No specific course of action is proposed herein, and no attorney-client relationship or privilege is formed by speaking to an expert on this site. By continuing, you confirm that you understand and agree to these terms.

I am sorry to hear about this situation. Can you please tell me: Is the owner demanding that you make payment on the property? And, what started the fire - is there a finding as to the cause? Whose fault was it?

This is not an answer, but an information request. I need this information to answer your question. Please reply, so I can answer your question. Thank you in advance.

Expert:  Ely replied 1 year ago.

Hello! Just touching base to see if you still needed an answer and if you could reply to my query. Thanks!

Customer: replied 1 year ago.
The fire was started on a nearby ranch. Due to negligence. The company says i am still liable for the fair market value of the house. Theres an investigation on the exacts of the fire. But i hear lawsuits are in the making. It was the Hidden Pines Fire in Smithville texas.
Customer: replied 1 year ago.
The fire and now floods have been declared a disaster by the state. I hear FEMA may get involved but havent yet.
Expert:  Ely replied 1 year ago.

Thank you.

Someone in your situation may not be liable, despite what they claim., under the doctrine of impossibility. Impossibility applies if the contract becomes impossible to perform, such as if the house burns down (as in literally what happened here) without the tenant or the landlord being at fault.

The common-law rule is stated in Restatement of Law, Contracts (vol. 2, § 454) as follows: "§ 454. Definition of impossibility. In the Restatement of this Subject impossibility means not only strict impossibility but impracticability because of extreme and unreasonable difficulty, expense, injury or loss involved."

In other words, this is when the contract is impossible to enforce, the tenant/buyer may be off the hook. Someone in your situation may wish to let the owner know of this via certified letter.

If the owner files suit against someone in your situation, "Impossibility" would then be an affirmative defense to their claim.

I hope this helps and clarifies. Please use the SEND or REPLY button to keep chatting, or please RATE when finished. You may always ask follow ups at no charge after rating. Kindly rate my answer as one of TOP THREE FACES/STARS and then SUBMIT, as this is how I get credit for my time with you. Rating my answer the bottom two faces/stars or failing to submit the rating does not give me credit and reflects poorly on me, even if my answer is correct. I work very hard to formulate an informative and honest answer for you; please reciprocate my good faith with a positive rating.