Property Under Contract and then.... Fire!!!

[Austin Elm]

I have a property under contract in Great Falls, MT that recently had a fire break out and was a complete loss. Every one is fine and no one was hurt during the blaze. I am still within the property inspection period, so I am not worried that I will be forced to purchase the property or lose any earnest money. I have a question for the experienced attorneys and lawyers, potentially insurance agents in the community:

Do I still have any claim to the improved property after it is rebuilt?

Meaning purchase at the current agreed to price according to the contract, but benefit from the new rebuild on the property after the insurance claim process is complete. My thought is no as I am not the current owner, and it's not my claim, but thought the question is worth asking.

I am not seeking legal advice and understand that I should consult with a local attorney. I am just curious if anyone has been involved with a total loss insurance claim while having a property under contract.

[Jerel Ehlert]

I don't know anything in particular about the laws in MT, but *generally* when an insured loss happens between contract and close of escrow there are a couple of accepted solutions.  For example, let's say a house is worth $100K and a covered loss happens that pays $20K.  Buyer (B) and Seller (S) bargained for the purchase/sale of a $100K house.

* S makes repairs to restore property to $100K value; B buys for $100K, gets $100K house.

* S does not make repairs, keeps insurance money; B buys property for $80K, gets $80K house.

* S does not make repairs, delivers insurance money to B; B buys property for $100K, gets $80K house + $20K insurance check (really an offset resembling above).

When the damage is so extensive that the repairs substantially and materially improve the value of the house, probably easier to just renegotiate.  You buy the lot and they keep the check; or you pay the agreed price and they sign over the insurance claim to you - you do the rebuild.