Texas Winter Storm: What to Do When Your Deal is Under Contract
TL;DR: Texas is getting hammered by extreme winter weather. Texas REALTORS® just published guidance on handling contracts when property damage occurs mid-transaction. Here's what you need to know about casualty loss provisions, lender requirements, and your clients' options.
What Happened
The recent extreme winter weather across Texas has left many transactions in limbo. Properties under contract are experiencing damage from burst pipes, power outages, and other storm-related issues. Texas REALTORS® published guidance today walking agents through the contract provisions that apply.
Every situation is different, but the TREC One to Four Family Residential Contract has specific provisions for exactly this scenario.
Why It Matters for Texas Agents
When a property under contract takes damage, both your buyer and seller clients panic. They need you to know the rules—and right now, there's a lot of confusion.
Paragraph 14 (Casualty Loss) is your friend here. It requires the seller to restore the property to its previous condition "as soon as reasonably possible." But here's the reality: after a major storm, that timeline gets murky fast.
When restoration isn't feasible, your buyer has three options:
- Terminate and get the earnest money back
- Extend the performance deadline up to 15 days (pushing the closing date)
- Accept the property as-is with an assignment of insurance proceeds (if the carrier allows it) plus a credit for the deductible
Lender complications are the sleeper issue here. If the contract is subject to the Third Party Financing Addendum, the property still needs to meet underwriting requirements. Expect lenders to require:
- Re-inspections
- Re-appraisals
- Repairs before closing
If property approval falls through, the buyer can terminate up to 3 days before closing and get their earnest money back. But communication with the lender is critical—buyers are obligated to make "every reasonable effort" to stay in contact about loan status.
Lender-required repairs get tricky. Under Paragraph 7E, neither party is obligated to pay for these unless agreed in writing. If no one agrees to pay, the contract terminates and earnest money goes back to the buyer. Also: if lender-required repairs exceed 5% of sales price, the buyer can walk.
What You Should Do
For agents with deals in limbo:
- Document everything - Photos, timestamps, written communication
- Communicate proactively - Keep the other agent, title company, lender, and attorneys in the loop
- Know the deadlines - Especially the 3-day notice window before closing
- Call the Legal Hotline - Texas REALTORS® members: 512-480-8200
For buyer clients:
- Review Paragraph 14 options with them clearly
- Check their lender requirements immediately
- Don't assume the deal is dead—there are paths forward
For seller clients:
- File insurance claims ASAP
- Be realistic about repair timelines
- Consider offering buyer credits if insurance covers the damage
The Bigger Picture
This isn't Winter Storm Uri 2.0, but it's a reminder that extreme weather events are part of doing business in Texas. The agents who handle these situations professionally—keeping deals together when possible, protecting clients when necessary—are the ones who build the referral business that lasts.
If you're not using TREC or Texas REALTORS® contracts, check whether your contract addresses casualty loss. If it doesn't, the Texas Vendor and Purchaser Risk Act kicks in automatically to protect the buyer.
Resources to share with clients: - State Bar of Texas legal hotline: 800-504-7030 (basic legal questions) - Local legal aid provider connections
Sources: - How to Handle Transactions Under Contract Affected by Extreme Weather, Texas REALTORS®, January 29, 2026
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