We lost our home in the Eaton Fire last year. A family member owns a property that we would like to purchase as our replacement home. This property is similar to what we lost. Is it allowed to purchase a replacement home from a family member?
Kathy Goddard asked 1 month ago 1 Answers
Hi Kathy,
Yes, a family member is allowed to sell you a property as your replacement home. We recommend that you engage a licensed real estate professional in your area and consider the following with regard to your insurance claim:
To qualify for replacement cost benefits (and extended replacement cost, if applicable), the purchase must meet these criteria:
Fair market value: The purchase price must reflect reasonable market value. It cannot be a symbolic or heavily discounted sale unless the policy explicitly allows it.
Like kind and quality: The replacement home must be similar in size, function, and use to the home that was lost. It does not need to be identical, but it must be reasonably comparable.
Actual transfer of ownership: There must be a bona fide sale
Proper documentation: This includes the purchase contract and closing statement (HUD-1 or equivalent).
Proof of payment: Evidence of payment and the recorded deed.
Policy time limits: You must complete the purchase within the timeframe required by your policy or any applicable California extensions (often 24–36 months, sometimes longer due to declared disasters).
Kind regards,
UP Staff
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