Who's Responsible If a Home Is Damaged Before Closing in BC?
“• Under BC’s standard Contract of Purchase and Sale, the home stays at the seller’s risk until 12:01 am on the completion date. After that minute, the risk passes to the buyer.
• If a fire, flood, or burst pipe seriously damages the home before completion, the buyer generally isn’t forced to take it at full price. The usual options are a price reduction, damages, or walking away, depending on how bad it is.
• There’s an awkward gap most people don’t know about: risk moves to the buyer at 12:01 am on completion day, but the seller usually stays in the home for another day or three until possession.
• The simple fix is overlapping insurance. The buyer’s policy starts at 12:01 am on completion day, and the seller keeps their policy until they’ve handed over the keys.”
How Risk Works Between Signing and Getting the Keys
THE CONTRACT DECIDES, NOT THE CALENDAR
Once an offer is accepted and the subjects are removed, you'd think the home is basically the buyer's. Legally, it isn't yet. BC's standard Contract of Purchase and Sale has a risk clause that keeps the property at the seller's risk until 12:01 am on the completion date (the day the money moves and title transfers at the Land Title Office).
That clause exists for a reason. As lawyer Gerry Neely explained in a BC Real Estate Association (BCREA) Legally Speaking column, the old common-law rule was harsh: if the house burned down after the contract was signed, the buyer still had to pay the full price. The risk clause flips that, so the person who still owns and controls the home is the one who carries it.
Until 12:01 am on completion day, damage to the home is the seller's problem. One minute later, it's the buyer's.
WHAT HAPPENS IF SOMETHING GOES WRONG BEFORE COMPLETION
Minor damage, like a cracked window, is usually handled with a quick repair or a small credit through the lawyers or notaries. Serious damage is where it gets more involved.
According to that same BCREA commentary, if the seller can't repair significant damage before completion, the buyer can typically cancel the contract, sue for damages, or complete the purchase with appropriate compensation, often a reduced price. A seller trying to force a buyer to take a badly damaged home at a discount faces a much tougher test: would a reasonable buyer accept what's left?
Both sides are also expected to behave reasonably. In one BC case BCREA summarized, a buyer and seller spent the post-fire period making demands instead of negotiating a sensible extension and price adjustment. The court found both had failed to act in good faith, and neither got what they sued for. The lesson: when something happens, talk early and put any agreement in writing.
THE GAP BETWEEN COMPLETION AND POSSESSION
Here's the part that surprises most buyers. On the North Shore, like the rest of BC, possession (when you actually get the keys) is usually one to three days after completion. A BCREA article by lawyer Lisa Niro points out the problem: risk has already passed to you at 12:01 am on completion day, but the seller is still living there.
At the same time, the contract says the home must be in substantially the same condition on possession day as when you last viewed it. So if a pipe bursts the night before the movers arrive, both clauses are in play, and who pays depends on the facts. That's exactly the kind of situation you want insurance to settle, not a debate between lawyers.
CONDOS AND TOWNHOMES WORK A LITTLE DIFFERENTLY
If you're buying a strata home, like a condo in Lower Lonsdale or a townhome in Lynn Valley, the building itself is insured by the strata corporation, not the individual owner. Your own policy covers your contents, your improvements, your liability, and, importantly, the strata's insurance deductible if a loss starts in your unit. The BC Government notes that strata deductibles can run from $100,000 to $750,000 or more, which is why that coverage is worth checking before completion, and why the insurance section of your strata document review deserves a careful read.
What This Means for You
If you're buying, book your home insurance to start at 12:01 am on the completion date, not on possession day. Your lender will almost certainly ask for proof of it anyway, and it's a small cost to add to your cash to close. It's also worth doing a walk-through before possession if your contract allows it, so any change in condition is caught while the seller's still responsible.
If you're selling, don't cancel your policy the day the deal firms up. Keep it in place until you've handed over the keys. That overlap costs very little and protects you during the days you're still living there. This matters even more if the home is vacant, which is common with an estate or executor sale, since many policies have conditions on unoccupied homes.
My read: this almost never goes wrong. But when it does, the people who come out fine are the ones whose insurance overlapped and who picked up the phone the same day. After subject removal, the deal is firm, and a little planning around those final few days is what keeps it that way.
A Low-Pressure Next Step
Looking to buy or sell, or have questions about the process? I'm happy to help. No pressure, just a clear-eyed read on where you stand.
Related Reading
Land Title Fraud Is Rare in BC, But Here's the One Free Step Every North Shore Homeowner Should Take
Selling an Inherited Home on the North Shore: A Plain-English Guide for Executors
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Matt@RossettiRealty.ca
About Matt Council
Matt Council is a North Vancouver Realtor and West Van specialist with a background in finance, focused on a data-driven, pressure-free approach to buying and selling on the North Shore.