Question: We have a contract on a home in California which has now been destroyed by the recent fires. Does the sale still take place? The structure was insured recently for 380k and the house sold for 570k. The land might be worth about 350-400k by itself.

Answer: You have a contract with the seller. A seller in the usual case is obligated to deliver the property at closing in substantially the same condition as it was on the day your offer was accepted.

However, in this instance the seller is a victim of either a natural event or possibly arson. There is insurance -- and it helps that there has been a recent appraisal to establish value.

The insurance does not equal the property's full value and it shouldn't. While "improvements" such as a house can be covered, land generally is not -- the theory being that land cannot be destroyed.

Can the seller deliver a habitable residence to you by closing? Not likely because it will take time to clear and re-build the property. Timing may be a huge problem in another way: What if your home has been sold, you must move out, but you now do not have a replacement residence? Should the sellers be responsible for the cost of your temporary quarters, storage and other expenses? And if both buyer and seller decide to end the agreement, what compensation will be due to the brokers who brought the parties together?

Your next step is to communicate with the sellers' agent to determine the owners' plans. They have just lost their home and personal possessions, so one must use tact.

Consider the owner's offer, see what works best for you, and review the matter with your broker and attorney because new circumstances will require a new or amended written agreement. In the end, it may be that the insurance money can be used to build a house which is closer to your needs and preferences.

Important: Sellers sometimes cancel homeowners insurance as of the date of closing. However, it may take a few days before title is officially transferred in the public records and thus ownership continues past closing. If you're a seller, be sure to continue insurance coverage until title has been officially changed in the public records.

Question: How do I find reviews for a local builder I'm considering?

Answer: The best measure of a builder's work is what they have produced and what they are producing. It makes sense to review model homes and plans with care, to see the quality of construction and to assure that if you buy the level of workmanship is maintained.

It can also be useful to visit projects where builders have been active in the past year or six months. Stop by, say hello to folks, explain your interest and ask about their experiences.

Also, brokers who have worked with new home buyers may be able to discuss builders with whom they have had experience.

Question: We put a non-contingent offer on some property, but there was already a contingent offer on the same piece of property. Our offer was full price, we have already been approved for the financing, and we can close within a month. We got bumped by the other offer which doesn't have proof of financing. The other offer was accepted, provided the buyer comes up with financing within 60 days, when we could close within the month. Is this right, can the seller do this?

Answer: As I read your letter, yes. And yes.

The other offer was submitted and accepted. Once an "offer" is accepted it becomes a "contract" under which both parties are expected to do whatever it is they promised in the agreement. There is nothing unfair about this.

Offers are complex and there might be terms in the competing proposal which are particularly attractive to the seller -- for instance, maybe the seller wanted to delay closing so more time would be available to find a replacement property.

In addition, there may be provisions and concessions in the other offer of which you are not aware.

Question: I signed a lease contract to rent my house 30 days before the tenants' move-in date. Ten days prior to move-in things have happened and I can no longer rent it. I talked to the agent and they want to force me to rent it. Don't we have a period in which we can decide not to proceed? On top of that, these future tenants have a delinquent credit status. What should I do?

Answer: You could have rejected the tenants for bad credit if you applied the same credit standard to all prospective renters. But instead you accepted their application.

A lease is a contract. You agreed to rent the property for a given term under certain conditions. The tenants accepted. If they can no longer rent the property because of your changing interests, where are they supposed to live? Will they have a claim against you for failing to honor the lease?

Alternatively, the tenants must also live up to their end of the bargain. If they pay their rent in a full and timely manner and otherwise adhere to the lease then what can you say? For specifics, have an attorney review the agreement and explain how local courts treat landlord/tenant disputes.

Your best option may be to accept the rent and tax benefits -- and then rent a place for yourself.

Question: I bought a brand new house which is being built right now. I would like to know who is paying for the property transfer tax, the builder or the buyer? I can't find the amount on the good faith estimate of settlement charges.

Answer: Who pays all or part of the transfer tax is a matter which should be established in the sale agreement between the parties. The approximate amount of such taxes should be shown in the lender's good faith estimate -- look at items such as recording fees, city/county/tax/stamps and state tax/stamps.

In addition, the lender and the settlement agent who conduct the closing should know if taxes are a cost to you, or the builder.

Are there other costs which may not be known to you? Please review your estimated closing cost statement with your broker and lender.

Have a real estate question? Send your inquiry to . Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here.

This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought.

Published: October 31, 2003

Use of this article without permission is a violation of federal copyright laws.