You can sell a house after a fire, whether you repair it or not. Before you decide, know how fire claims work in Michigan: your city may hold back part of the payout until the house is repaired or torn down.
First steps after a fire
- Make sure the house is secured and boarded up. Your city may require it.
- Report the claim to your insurance company and keep copies of everything.
- If you have a mortgage, expect the lender to be named on claim checks.
- Don’t sign repair contracts until you know whether you want to repair or sell.
Michigan’s fire insurance escrow
Michigan lets cities, villages and townships require insurers to hold back part of a fire claim. It applies only where the municipality has chosen to use it, and only when the final settlement is more than 49% of the insurance on the property.
- How much: 25% of the property’s actual cash value or 25% of the settlement, whichever is less. For a residential property, the cap for 2026 is $16,383.
- Where it goes: the municipal treasurer holds it in escrow.
- Getting it back: it’s returned when you show the damaged part was repaired, replaced or removed to code. If you don’t within 120 days, the city can use it to secure, repair or demolish the structure, and any unused money comes back to you.
- Avoiding the hold-back: no money is withheld if you file a repair contract within 15 days of the settlement and agree to have the contractor paid directly.
Who keeps the insurance money if you sell?
That depends on your policy, your mortgage and what your purchase contract says. Depending on the policy, you may keep the claim proceeds, or the contract may pass them to the buyer with the price adjusted to match. Put whatever you agree on in writing, and ask your insurer before you sign.
Disclosure
Michigan’s Seller Disclosure Act requires most sellers of 1 to 4 unit homes to give the buyer a disclosure statement. Disclose the fire and what was repaired. Selling as-is doesn’t replace the disclosure.
Getting an offer
We make offers on fire-damaged houses, including ones that aren’t livable. Let us know where the insurance claim stands and whether your city is holding an escrow. Tell us about the property.
This guide is general information, not legal or tax advice. Laws and city rules change, so check the sources below and talk to an attorney about your situation.