Question

A widower owned a residence in fee simple absolute. He contracted to sell it to a couple. The couple did not record the contract. The contract did not require either party to acquire or maintain casualty insurance on the premises, and neither party did so. After the parties entered into the contract, the widower continued to occupy the residence. A week before closing, the residence was completely destroyed by a fire caused by a lightning strike. On whom does the risk of loss fall

Answer 1

The risk falls on the couple as the contract was not recorded and at that time widower has contracted the residence.

What is a contract?

• A contract is a legally binding agreement that establishes, defines, and governs the mutual rights and obligations of its parties.
• A contract usually involves the exchange of products, services, or money, or the promise to exchange any of these at a later period.
• If a contract is breached, the damaged party may seek court remedies such as damages or rescission.
• Contract law, or the law of obligations relating to contracts, is founded on the concept that agreements must be honored.

What happens if a contract is not recorded?

• First and foremost, if your contract is not published, nothing in the public record prevents the seller from transferring the property to others.
• If the seller sells your property to someone else and that person documents your acts at the county clerk's office in front of you, you may be liable for property damage.

Therefore, the risk fell on the couple as the contract was not recorded, and at that time widower has contracted the residence.

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