Texas · Property Code §5.007Texas risk of loss before closing: the Vendor and Purchaser Risk Act

Texas reads the Uniform Vendor and Purchaser Risk Act into every contract for the sale of real property unless the contract expressly provides otherwise (Property Code §5.007). If neither legal title nor possession has been transferred and all or a material part of the property is destroyed without the buyer's fault, or taken by eminent domain, the seller cannot enforce the contract and the buyer can recover any part of the price already paid. Once either legal title or possession has been transferred, the risk flips: if the property is destroyed without the seller's fault or condemned, the buyer must still pay the price and cannot recover what was paid. That is why early possession matters – a buyer moving in before closing under a temporary lease takes on risk the default rule would otherwise leave with the seller, unless the contract and lease say otherwise. The Texas resale contract does say otherwise for damage after the effective date: in paragraph 14, the seller must restore the property by the closing date, and if they cannot for reasons beyond their control the buyer may terminate and get the earnest money back, extend up to 15 days, or take the property as is with an assignment of insurance proceeds and a deductible credit.