Selling a House After Fire or Water Damage

What the Department of Insurance Says About a Damaged Home

If the house isn't livable, the 'loss of use' part of a homeowners policy may cover additional living expenses such as temporary housing, food and utility installation, the homeowner has to keep the bills and receipts, and any advances count toward the final settlement. The Department's insurance guide says this coverage is normally limited to 20 percent of the dwelling coverage.

Those payments can be offset by costs the household would have had anyway, so they don't pay the mortgage, but the Department's tips for wildfire claimants say the household is entitled to the same standard of living it had before the fire. When a homeowner claims additional living expenses, the insurer has to provide a list of items it believes may be covered (Insurance Code 2060(a)). The Department also says the insurer must provide a complete copy of the policy, declarations page included, free within 30 days of a request.

After a loss, a policy may not cover further damage if the owner hasn't taken reasonable steps to secure the property, and the Department says insurers reimburse reasonable protection costs when receipts are kept. If the home has a mortgage, the repair check is generally made out to both the owner and the lender, which generally holds the money in an escrow account and releases it as the work is completed.

On water, the Department draws a line: homeowners policies don't cover flood damage, which takes a separate flood policy, but generally do cover other water damage, such as rain coming through a hole made by wind; its guide lists sudden and accidental water damage as commonly covered and damage from seepage or leaks as generally not covered. Mold damage caused by a covered peril may be covered, though mold appears on its list of perils generally not covered, and the Department warns that delay in cleanup can lead to mold.

Your own policy controls, so a California attorney who handles insurance claims can read it with you.

Deadlines for an Everyday Fire or Leak

California's standard fire policy form requires written notice of a loss without unnecessary delay, protecting the property from further damage, and a sworn proof of loss within 60 days unless the insurer extends that in writing, and a lawsuit on the policy has to start within 12 months of the loss (Insurance Code 2071). Insurers may use other wording when their fire coverage, viewed as a whole, is substantially equivalent to or more favorable than the standard form (Insurance Code 2070), so real policies differ.

The Fair Claims Settlement Practices Regulations give an insurer 15 calendar days after notice of a claim to acknowledge it, provide forms and start investigating, 40 calendar days after proof of claim to accept or deny it, or explain in writing why it needs more time and repeat that every 30 days, and 30 calendar days after accepting to pay.

A replacement cost policy pays what it costs to repair, rebuild or replace without subtracting depreciation, up to the limit; if the policy requires rebuilding first, the insurer pays actual cash value until the work is done and then the difference (Insurance Code 2051.5(a)). The insurer can't give the homeowner less than 12 months from the first actual-cash-value payment to collect full replacement cost, and it has to grant six-month extensions for good cause, such as permit delays, material shortages or contractor unavailability.

After a total loss, a policy can't deny replacement cost or building-code-upgrade benefits because the owner decides to rebuild somewhere else or buy an existing home elsewhere; the payment is capped at what rebuilding on the original site would cost, and no reduction is allowed for the value of the land at the new location (Insurance Code 2051.5(c)). How selling the damaged property affects the rest of a claim is a question for a California attorney who has read your policy.

This is general information about how the process works, not legal or tax advice. Every situation is different — talk with a California attorney (and a tax professional) about yours.

Extra Protections After a Declared State of Emergency

Several Insurance Code rules apply only when a loss is tied to a declared state of emergency. Here is what they add:

• Living expenses for at least 24 months from the loss, subject to the policy's other terms and limits, with extensions of up to 12 more months (36 in all) for delays beyond the homeowner's control (Insurance Code 2060(b)); the Department notes the time is extended but the amount of coverage isn't increased.
• At least two weeks of living expenses when a civil authority order bars access to the home because of a covered peril, with two-week extensions for good cause (Insurance Code 2060(c)).
• For a total loss, an advance of at least four months of living expenses on request, and acceptance of a contents inventory that groups categories of items instead of listing each one (Insurance Code 2061).
• For a total loss of a furnished primary home, an offer of at least 60% of the personal property limit, up to $350,000, without an itemized claim; this version took effect January 1, 2026, and policy forms must comply from July 1, 2026 (Insurance Code 10103.7).
• The option to combine the dwelling and other-structures limits when the dwelling limit alone won't pay to rebuild or replace the home (Insurance Code 10103.7(a)).
• At least 36 months to collect replacement cost, and no proof-of-loss deadline sooner than 100 days after the loss (Insurance Code 2051.5(b)).
• 24 months, instead of 12, to bring a lawsuit under the standard fire policy (Insurance Code 2071).
• For a tax-defaulted home damaged in a declared disaster area and not substantially repaired, a pause in the five-year wait before a county tax sale until five years after the damage (R&T 3691).

This is general information about how the process works, not legal or tax advice. Every situation is different — talk with a California attorney (and a tax professional) about yours.

What You Disclose About Fire and Water Damage

Sellers of homes with one to four units have to give the buyer the Real Estate Transfer Disclosure Statement as soon as practicable before title transfers (Civil Code 1102 and 1102.3). The form asks whether the seller is aware of flooding, drainage or grading problems and of major damage to the property or any structure from fire, earthquake, floods or landslides, and it states that it is not a warranty.

An 'as is' sale doesn't remove the form: the Legislature declared that its delivery may not be waived in an as-is sale, and any waiver of the disclosure article's requirements is void (Civil Code 1102.1(a) and 1102(c)). Sellers' existing duty to disclose facts materially affecting a property's value and desirability, physical condition included, stays in place alongside the form.

The form isn't required for certain transfers, including court-ordered and probate sales, foreclosure sales, sales by a fiduciary administering a trust or a decedent's estate (unless the trustee is a natural person serving as trustee of a revocable trust who is a former owner or lived in the home within the past year), transfers between co-owners and transfers to a spouse or blood relatives (Civil Code 1102.2). Separate natural-hazard rules require telling buyers when a home is in a FEMA special flood hazard area, a dam-inundation area, a very high fire hazard severity zone or a state-responsibility wildland area, when the seller or agent knows or the official maps or lists are posted (Civil Code 1103).

For mold, the Toxic Mold Protection Act's seller-disclosure provision covers only commercial and industrial property, and its disclosure duties don't apply until six months after the Department of Public Health adopts mold exposure standards; the Department says it found in 2005 that the evidence didn't support science-based exposure limits and that this remains its position. The same Act expressly leaves in place sellers' existing obligations to disclose facts materially affecting a property's value, including conditions noted on the disclosure form. A California real estate attorney can tell you what your disclosures need to cover.

This is general information about how the process works, not legal or tax advice. Every situation is different — talk with a California attorney (and a tax professional) about yours.

When Damage Becomes a Code Problem

Under the State Housing Law, dampness of habitable rooms, visible mold growth and deteriorated or ineffective waterproofing of exterior walls, roofs, foundations or floors, including broken windows or doors, are among the conditions that can make a building legally substandard when they endanger occupants or the public.

In the City of Fresno, a fire-damaged residential building that is unsafe or not legal to occupy has to be demolished or fully repaired within 90 days of the fire, unless the City grants a continuance for delays that aren't the owner's fault, and the owner has to secure it against unauthorized entry until the work is done (FMC 10-617(b)(12)). That rule is part of Fresno's vacant-building ordinance, which also requires registering a building that has been, or is expected to be, vacant for more than 30 days.

A California attorney can tell you how the 90-day deadline, and any continuance, applies to your house.

Selling a Damaged House to Spark Home Offers

We buy houses as-is, fire and water damage included, and there are no inspections or appraisals.

We walk the house with you, which takes about five minutes, then look at its condition, the repairs it needs and what similar homes nearby have recently sold for, and walk you through the numbers behind our offer. Keep what you want from the house and leave the rest behind; after closing, the cleanout and the repairs are ours to handle.

We pay the standard closing costs and close at a reputable local title company on the date you choose. Whether to claim, repair or sell is your call, and the offer is free with no obligation.