The Home Is Damaged Before Completion Day: What a BC Buyer Can Do

A fire, a burst pipe, a storm, a tree through the roof. It happens between the day your contract goes firm and the day you get the keys, and the first question is always the same: am I still buying this house?

The short answer is that the contract is almost certainly still alive, and the clause most people reach for is the wrong one. Here is how it actually works in British Columbia, and what you can do in the first day or two.

First, the clock: risk moves at 12:01 a.m., not when you get the keys

Almost every residential sale in this province runs on the standard Contract of Purchase and Sale published jointly by the Canadian Bar Association BC Branch and the British Columbia Real Estate Association. Its Risk clause is section 16.

According to the British Columbia Real Estate Association’s own explanation of the standard clauses, “Section 16 states that all buildings on the property remain at the seller’s risk until 12:01 am on the completion date, after which time the risk passes to the buyer.”

Read that twice, because the timing is strange. Risk moves at one minute past midnight. The lawyers do not exchange money until business hours. The association puts it plainly: “This means that risk transfers before the transaction actually closes, since closing typically occurs between 9 am-5 pm on the completion date.”

Then there is possession. In BC the possession date is usually one to three days after completion. In that gap the seller is still living in the house you now own and now carry the risk on.

Moment	Who carries the risk of damage	Who is in the house
Offer accepted, subjects still on	Seller	Seller
Subjects removed, contract firm	Seller	Seller
12:01 a.m. on the completion date	Risk passes to the buyer	Seller
Completion, in business hours that day	Buyer	Seller
Possession, usually one to three days later	Buyer	Buyer

So if the damage happened before 12:01 a.m. on your completion date, it is the seller’s side of the line. That is the situation this article is about.

Why that clause exists at all: the default rule is the opposite

Here is the part that is missing from most explanations. Without that clause, the risk would be yours from the moment the contract went firm.

The common-law starting point in Canada comes from the doctrine of equitable conversion and a case from 1801, Paine v. Meller. In a 1984 study of the problem in the Canadian Bar Review, Craig Brown wrote that “The basic common law rule that applies in Canada is that the risk of loss is on the purchaser as soon as the contract becomes unconditional.” He described the standard contractual wording as reversing that effect.

That is worth knowing for one practical reason. The protection you are relying on is a contract term, not a law. If someone drafts an offer that drops or alters it, the default comes back, and it is not in your favour.

An honest limit on that point. The Canadian Bar Review article is from 1984, and we could not test it against a recent BC judgment. The courts’ own decision databases are not reachable for this kind of research. BC’s regulator was still describing the same default in its 2022 licensee material, which is good corroboration and not the same thing as a 2026 court ruling.

The clause everyone quotes is not the clause that helps you

This is the single most common error in writing on this subject, and it matters because it sends buyers to the wrong argument.

Section 16 allocates risk. That is all it does. It contains no election, no option to terminate, and nothing entitling you to the seller’s insurance money. We read the association’s full discussion of the clause and there is no such right in it.

Your leverage comes from section 8, the Viewed clause. The association describes it as the clause stating “the property will be in substantially the same condition on the possession date as on the date the buyer viewed the property”. A burnt kitchen is not substantially the same condition. That is the breach.

Clause	What it does	What it does not do
Section 16, Risk	Says the buildings are at the seller’s risk until 12:01 a.m. on the completion date	Gives you no choice, no termination right, and no claim to insurance proceeds
Section 8, Viewed	Requires the property in substantially the same condition as when you viewed it. This is the clause the seller breaches	Does not set out your remedies. Those come from the common law
Section 9, Title	Deals with title, not condition	Nothing to do with damage
The time-of-the-essence clause	Keeps the completion deadline binding while you decide	Does not pause for a disaster

Two warnings about clause numbers, because stale articles are everywhere. The association’s 1995 piece on this topic calls the risk clause “paragraph six”, which was the numbering then. And one sentence in its 2023 piece calls section 9 the Viewed clause. Its own heading and the rest of that article put Viewed at section 8 and Title at section 9.

The practical lesson: do not argue from a clause number you read online. Open your own contract and read the clause headed “Risk” and the one headed “Viewed”.

Your two real choices, and the clock running on them

Once the seller cannot deliver what the contract promised, you are in ordinary breach-of-contract territory. The association’s case comment “When Disaster Strikes”, published 24 November 2016, sets out the choice. The buyer may elect “either to affirm the contract (in which case the contract remained in force with all its original terms) or to accept the sellers’ repudiation (in which case both parties were relieved of their contractual obligations).”

Affirm means you still want the house. You complete, and you pursue the seller for the cost of the damage, or you push for a reduction in the price. The case discussed in that comment ended in specific performance with an abatement of the price, which is the legal way of saying: you get the house, for less.

Accept the repudiation means you treat the contract as at an end and expect your deposit back. That is cleaner in theory and much messier in practice, because the seller may not agree that they repudiated anything.

You are not expected to decide on the spot. The association records the buyer’s right to a “reasonable opportunity to assess their position and the damage before electing to affirm or to accept the sellers’ breach”. But “reasonable” is not “whenever you like”, and the time-of-the-essence clause is still running underneath you.

The case behind that comment is Gill v. Zhang, 2016 BCSC 1464. We are citing it from the association’s own comment and from the regulator’s licensee material, both of which print that citation. Nobody involved in writing this page has read the judgment itself, because BC court judgments are not reachable for this research. Treat the citation as a pointer for your lawyer, not as a summary you can rely on.

The association’s much older 1995 article, published 1 March 1995, framed the same remedies as rescinding the contract, suing for damages, or insisting on a transfer with compensation “which may be a reduction in the purchase price”. The wording has aged; the structure has not.

“Can I just say the contract is frustrated?” Almost certainly not

Frustration is the doctrine that kills a contract when an event makes it pointless or impossible. It is the first thing people reach for when a house burns down. It is also the first thing that fails.

The reason is in the Frustrated Contract Act, which at section 2 says the Act applies to a contract “only to the extent that, on the true construction of that contract, it contains no provision for the consequences of frustration or avoidance.”

Your contract does contain such a provision. That is exactly what the Risk clause is. So the Act steps back, to the extent the contract has already dealt with the problem. The association reached the same conclusion in 1995: because the parties had agreed how this would be resolved, “the doctrine does not apply and the contract continues in force.”

Two further details from that Act, which we read at source and which nobody else seems to mention.

Land is not excluded from the Act. Section 1(2) lists only three exclusions: certain charter parties and contracts for the carriage of goods by sea, contracts of insurance, and contracts entered into before 3 May 1974. The words “land” and “real property” do not appear anywhere in the Act. People sometimes assert that land sales are carved out. They are not.

And if the Act ever did apply, it tells the court to ignore the insurance money. Section 8 provides that in working out restitution, “account must not be taken of” two things, the second of which is “insurance money that becomes payable because of the circumstances that give rise to the frustration or avoidance”. The same sentence then adds that “account must be taken of any benefits which remain in the hands of the party claiming restitution”.

So frustration is not a route to the seller’s insurance payout. It never was.

Why you cannot just claim on the seller’s insurance

This is the question every buyer asks on day one. The seller has a policy. The house is damaged. Why can the money not simply come to me?

Because you are a stranger to that contract of insurance. BC’s Insurance Act sets out, at section 29, a list of statutory conditions that are “deemed to be part of every contract” of property insurance, and says “no variation or omission of or addition to a statutory condition is binding on the insured”. Two of them matter here.

Statutory Condition 2, headed “Property of others”, says “The insurer is not liable for loss or damage to property owned by a person other than the insured” unless the contract says otherwise or states the insured’s interest in it.

Statutory Condition 3, headed “Change of interest”, says “The insurer is liable for loss or damage occurring after an authorized assignment under the Bankruptcy and Insolvency Act (Canada) or a change of title by succession, by operation of law or by death.”

Look at what is on that list: bankruptcy, inheritance, operation of law, death. An ordinary sale to a buyer is none of them. We read the whole of that Part of the Act, from section 8 through to section 36, and the words “sold” and “purchaser” do not appear in it at all.

We should be careful about how far that goes. Statutory Condition 3 says what the insurer is liable for; it does not say “and not on a sale”. Reading the omission as a limit is a sensible way to read it, not a rule the Act states. We also did not read the later Parts of the Act or its regulations. So the fair conclusion is this: nothing in the general insurance Part of BC’s Insurance Act hands a pre-completion buyer a claim on the seller’s policy, and anyone who tells you otherwise should be asked which provision they mean.

There are routes that depend on the paperwork rather than the statute: being named on the policy, or a term in the contract dealing with the proceeds. Both are things to raise with a lawyer, early.

One myth to put down while we are here. You will see it written that the standard contract puts insurance proceeds in trust for buyer and seller according to their interests. That wording belongs to the standard commercial contract, not the residential one. If an article aimed at house buyers tells you the proceeds are held in trust for you, it has borrowed a sentence from the wrong form.

What actually collapses these deals: the lender, not the law

In practice, most of these transactions do not fall apart in a courtroom. They fall apart in a funding department, and the sequence is depressingly consistent.

The BC Financial Services Authority regulates real estate licensees in this province. It has described the chain in more than one publication. Insurers withdraw their approval to insure the property, and then, in its words, “the lenders may also withdraw their approval for funding of the mortgage”. Its news release on natural catastrophes and real estate transactions warns that buyers “could be at risk of losing the property, their deposit, and face potential legal action against them”. It tells them to contact their insurance company and lender, consider requesting an extension of completion, and seek legal advice.

Why does insurance decide it? Because the mortgage will not fund without it. The association states it flatly in its conveyancing guidance of 1 April 2025: “Property insurance is required in order for the buyer’s mortgage to be funded.” People’s Law School, the legal-education charity, says the same to consumers: “Most lenders require proof of insurance before they’ll provide any funds for the sale.”

There is a further layer most buyers never see. Some of this sits with Canada Mortgage and Housing Corporation. The version of its Master Loan Insurance Policy that the corporation currently publishes is dated 1 September 2016. Where it insures a mortgage, the lender must tell it about a material change to the information submitted with the application. That expressly includes information about the property, and the notice is required before any advance is made. The policy then reserves the right to modify or terminate the commitment.

Two cautions on that, because it is easy to overstate. It is a rule between the insurer and the lender, not a power to cancel your mortgage. And the same section provides that where the lender learns of the change only after advancing funds, and has complied with the policy, the coverage on those advances is maintained. The point is simply that a damaged house is a material change, and the machinery exists to act on it before your money moves.

So the first two calls on the day you hear about the damage are the insurance broker and the mortgage lender, in that order. Not because they decide your legal rights, but because they decide whether you can complete at all.

What happens to your deposit while this is argued about

Nothing, is the honest answer, and that is by design. This is the part of the subject that almost nobody writes about, and it is the part buyers worry about most.

Your deposit is normally held in a brokerage’s trust account. Section 28 of BC’s Real Estate Services Act applies where the parties have an agreement for the acquisition and disposition of the real estate. In that case the brokerage “holds that money as a stakeholder and not as agent for one of the parties to the trade in real estate”, unless the parties agree otherwise in writing.

That phrase does a lot of work. Your agent’s brokerage is not on your side of the deposit. It is holding the money for both of you.

Section 30 then limits how it can come out. Stakeholder money “may be withdrawn only” in the narrow cases listed in section 30(1)(a) to (f), which include money paid in accordance with a court order. The other two routes are “in accordance with a written agreement of the parties to the trade in real estate”, or as the regulations allow.

And if the two of you cannot agree, section 33 gives the brokerage a way out rather than a way to decide. Where it appears to the brokerage that there are “adverse claimants to the money”, it “may apply to the Supreme Court for an order for payment of the money into court”. That application can be made without notice. Paying the money in discharges the brokerage, and once it is in court the money “must not be paid out of court except by order of the court”.

Who wants the deposit released	Can the brokerage do it?	Authority
You alone say the deal is dead	No	Real Estate Services Act, section 30(2)
The seller alone says you defaulted	No	Real Estate Services Act, section 30(2)
Both of you sign a release	Yes	Section 30(2)(b), written agreement of the parties
A court orders it	Yes	Section 30(1)(f), money paid under a court order
Neither of you will sign	It can apply to pay the money into the Supreme Court	Section 33. Permissive, not automatic

The practical consequence is worth saying out loud. In a standoff after a fire, your deposit sits still. It is released when you and the seller both sign, or when a judge says so. Budget your time and your patience accordingly, and do not plan on that money being available for another purchase.

If it is a condo or townhouse, most of this is not your fight

Strata property works differently, and the difference is mostly in your favour. The rules are in Part 9 of the Strata Property Act.

The strata corporation, not the seller, must insure the common property, the common assets and the buildings shown on the strata plan. The cover must be on a full replacement value basis, against the major perils set out in the regulations. So when a pipe lets go on the fourth floor, the building’s own policy is the one that responds.

Where does the money go? Not to an owner. Under section 156 the insurer “must make the payment” to the insurance trustee designated by the bylaws, or if there is none, to the strata corporation “to be held in trust until paid out under section 157”. And section 157 requires that the money “must be used to repair or replace the damaged property without delay” unless the corporation decides otherwise.

That escape hatch is section 159: by a three-quarters vote at a general meeting held no later than 60 days after receiving the money, the corporation can decide not to repair. The money is then held in trust for everyone with an interest in it, “including the holder of a registered charge” — which means the lenders get paid out of it too.

Then the deductible, which is where a strata buyer can actually get hurt. Section 158 makes paying it a common expense contributed to through strata fees. It also preserves the corporation’s capacity to sue an owner who is responsible for the loss. And section 158(3) removes the need for strata approval for a special levy or a draw on the contingency reserve fund to cover it, so a levy can land without a vote.

Question	In a strata	Section
Who insures the building?	The strata corporation, at full replacement value, against the major perils in the regulations	149
Who gets the cheque?	The insurance trustee, or the strata corporation in trust. Not an owner	156
What must it be spent on?	Repair or replacement, without delay	157
Can they decide not to repair?	Yes, by a three-quarters vote within 60 days of receiving the money	159
Who pays the deductible?	A common expense. A levy for it needs no owner vote, and a responsible owner can be sued for it	158

One more thing, and it is a point we have not seen made anywhere. Section 155 says that “despite the terms of the insurance policy”, the named insureds in a strata corporation’s policy include three groups. They are the corporation, “the owners and tenants from time to time of the strata lots shown on the strata plan”, and the people who normally occupy them.

It is tempting to read yourself into that as the incoming buyer. The Act’s own definitions make that hard. An “owner” is defined as a person shown in the land title office register as the owner of a freehold estate in a strata lot. A “purchaser” is separately defined as someone who has entered into an agreement to buy “but to whom the strata lot or strata lot lease has not yet been conveyed or assigned”.

Before completion you are the second of those, not the first. On the face of the definitions, a buyer who has not completed is not a named insured. We could find no decision addressing it either way. So treat that as a careful reading of the statute, not as settled law. Treat it also as a reason to organise your own coverage rather than assume the building’s policy covers you.

The wildfire clause is not the answer to a damaged house

Since wildfire seasons began interfering with completions, there is an optional clause in circulation, and it is widely misunderstood. It is worth being precise, because the regulator has been.

In Advisory 24-013, dated 15 May 2024, the BC Financial Services Authority explains what the clause does. It allows one extension of the completion, adjustment and possession dates, up to a maximum of 30 days. The trigger is a wildfire preventing the buyer from obtaining fire insurance. It does not automatically release the buyer.

Then it says this, in two consecutive sentences: “The clause does not address damage to the property from wildfires. Damage to the property is addressed through other CPS terms as well as the common law.”

That is the regulator telling you, in its own words, that this clause is about not being able to buy insurance, not about a burnt house. If your property has actually been damaged, the clause is the wrong tool and the sections above are the right ones.

What to do in the first day or two

This is where the useful part is. The order matters more than people expect.

1. Do not enter the property. The Insurance Bureau of Canada’s guidance is blunt about fire-damaged buildings: “you should not enter your home until emergency officials say it is safe to do so.” It is not yours yet in any case.
2. Tell your lawyer or notary today, in writing. Every regulator and association publication on this subject says the same thing, and it is the one step that is never wrong. You have a decision to make with a clock on it.
3. Call your insurance broker. Find out whether your own cover can still be bound for the completion date, and what the insurer now knows.
4. Call your lender or mortgage broker. Ask directly whether funding still stands given the damage, and get the answer in writing. This is the step that decides whether completing is even possible.
5. Ask the seller’s side, in writing, for the facts. What happened, when, what the insurer has said, what the repair estimate is, and whether a claim has been opened.
6. Do not remove anything, sign anything or waive anything until you have advice. You are entitled to a reasonable opportunity to assess the damage. Use it, and do not sit on it.
7. Write down the dates. When you learned of the damage, who told you, what you were told, and every call you made. If this ends in an argument about whether you acted reasonably, the record is the argument.
8. Expect the completion date to need moving, and understand that any change to the dates is a change to the contract. Do not agree to one casually.

How to set this up so it is survivable next time

The fix is not clever drafting. It is overlapping insurance, deliberately arranged, and it costs very little.

The British Columbia Real Estate Association’s recommended practice is that the buyer obtain insurance “commencing at 12:01 am on the completion date” and that the seller “keep existing insurance policies in place until after the possession date”. In its words, “This results in an overlap of insurance policies for the property”. That overlap is the whole point. It covers the gap between risk passing and the keys changing hands.

People’s Law School gives consumers the same instruction: “A buyer should purchase “all risk” home insurance that covers them for property damage starting at 12:01am on the completion date.”

Three further habits worth building, all drawn from the regulator’s own consumer guidance:

• Get a quote before you make the offer, not after subject removal. The authority’s advice is to secure a fire insurance quote before making an offer.
• Get a binder, not a quote, before you remove subjects. A binder means the policy has been issued. A quote means nothing has.
• If the dates move, tell the insurer. A bound policy has an effective date, and it needs to follow the new completion date.

And one point that may be the most useful sentence on this page. The best plain-language consumer explanation of the BC purchase contract, at People’s Law School, correctly tells readers who bears the risk and when it passes. Reviewed in May 2024, it does not use the word “destroyed” anywhere, and it says nothing about what to do if the home is actually damaged. Buyers are being told the rule and nothing about how to use it. That gap is why this page exists.

What we could not find out, stated plainly

Honesty about the edges of the research is part of the job, so here are the limits of this page.

• We did not read any BC court judgment. The courts’ decision databases are not reachable for this kind of research. Every case reference here comes from a published comment by the association or the regulator, and is named so your lawyer can look it up.
• We never saw the contract form itself. Everything about sections 16, 8 and 9 comes from the association’s and the regulator’s published descriptions of it, which agree with each other. Read your own copy.
• We cannot tell you whether a BC court has ever held a residential sale contract frustrated by destruction of the house. We could not search the case law to find out. Nobody should tell you it has never happened, including us.
• There is an argument, based on an eighteenth-century English statute received into BC law, that a person interested in a fire-damaged building can require the insurer to spend the money on rebuilding. We could not verify that it survives BC’s current Insurance Act, and it would give rebuilding rather than cash, for fire only. We have left it out of the advice above for that reason, and mention it only so that nobody tells you a buyer has no possible interest in the proceeds at all. Ask a lawyer.
• Whether a pre-completion buyer is a named insured under a strata policy is, as far as we could find, undecided. Our reading of the definitions says no.

Who to call

For anything about your own transaction, your conveyancing lawyer or notary is the first call, and this page is not a substitute for that advice.

For questions about what a licensee must do, the BC Financial Services Authority regulates real estate licensees in this province and publishes its guidance at bcfsa.ca. For plain-language background on the purchase contract, People’s Law School publishes a free consumer guide at peopleslawschool.ca.

If the damage involves a building permit, an unsafe structure or a fire investigation, that is a municipal matter and the municipality changes its processes without notice. In the City of North Vancouver, call 604-985-7761, or the fire department at 604-980-5021. In the District of North Vancouver, call 604-990-2311. In West Vancouver, call 604-925-7000. Confirm anything municipal with them directly, both at the start and again before you commit money.

Read next

• From accepted offer to completion day in BC: what actually happens
• What happens to your deposit if a BC home deal falls apart
• What the strata insurance deductible means for a buyer
• Title insurance in BC: what it covers, and what it will not pay for
• Lawyer or notary for a BC home purchase?
• All of Tom’s North Shore buying and selling guides
• این مقاله به فارسی — read this article in Farsi

General information, not advice on a specific property. This page explains how the standard contract, the statutes named and the published guidance of regulators and associations generally work in British Columbia. It is not legal, insurance, tax or financial advice, and it is not advice about your transaction. Statutory text was read at the King’s Printer, current to 3 November 2026. Every figure, section number and quotation was verified at its primary source on 6 November 2026 and checked again in a separate pass. Numbers, rules, clause numbers and contract forms change, and the published descriptions of a contract form can lag behind the form itself. Confirm the current position with the authority that owns it — the municipality, the Province, the BC Financial Services Authority, your strata corporation, your insurer or your lender — and take professional advice from a lawyer or notary before committing money or deciding whether to complete. Last reviewed: November 2026.

Written by Tom Jahed, licensed REALTOR®, Vanak Realty, North Vancouver.