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Risk of loss is on buyer during the executory period. Title transfers at closing when the deed is delivered (obvi should record). IMO should contract for risk of loss to be on the seller since they should have insurance on the property. But if not an option should def contract to get the insurance/award proceeds if the default risk of loss stays in
From a buyer’s perspective, it rarely makes sense. If payment is in arrears, the buyer already has beneficial use and ownership for a period of time before title transfers. That assumes UCC-2 limitations on delayed title transfer don’t apply, because if they do any reservation of title is reduced to a UCC-9 security interest. If payment is in advance based on milestones, the buyer doesn’t have the have goods yet but also doesn’t have pre-acceptance rejection remedies anymore. Obviously the converse is true for sellers, who presumably want maximum payment protections and minimal rejection remedies.
It’s often split because it’s a compromise between the buyer and the seller. From a non-RE perspective, the buyer may want to delay title until acceptance or deemed acceptance, which may take place after delivery. The buyer can outright reject before acceptance, and likely has stronger remedies. Once they accept, all that’s left is the warranty.
Between delivery and acceptance the goods are still in the buyer’s possession and control though, so the seller isn’t going to want to bear the risk of loss while it’s out of their control. That all assumes the seller is responsible for delivery. Now add in a third party carrier and different shipping terms (INCOTERMS or UCC), and the seller isn’t going to want to retain risk of loss after it leaves their control point. But the buyer still isn’t in control either, so you are probably going to see an even larger difference between title and risk of loss transferring.
Pro
Some ppl are talking about real property while others are talking about article 2.
OP, some clarity on your question please?
I presume by risk of loss you are referring to destruction of the property being sold, say by fire or storm on a real estate deal? If so, normally there will be a specific detailed provision in the contract to cover this. Almost exclusively the risk is with the seller through closing, but you need to look at the contract. Normally the contract says that the buyer will close subject to minor damage and seller will provide insurance proceeds. Buyer usually has a right to terminate if there is major damage. The contract should include a flat dollar number to differentiate major and minor. (Say, above and below 10% of the contract price). Buyer should be sure that if it takes subject to damage it gets full reimbursement- including any deductible or self-insurance and regardless of whether seller actually collects.
Rising Star
The right to walk for casualty can be structured in lots of ways.
As you note, a dollar valuation is clean, easy, and common. But it’s not always a great indicator of the impact of a casualty event on a transaction.
As a result, sometimes you’ll see other standards.
I’ve seen and used: number of square feet impacted; the right of tenants to terminate their leases at the property as a result of the casualty; loss of access or parking (more in a condemnation setting, but still a risk of loss issue); even a vague “would result in it being economically impracticable for the buyer to use the property for their intended use.”