What is a chimney fire and how does it happen?

Chimney fires happen when products of incomplete combustion (soot) build up in a chimney for a fireplace or wood stove. The build-up is called creosote. Creosote is usually black or dark brown and is readily combustible. When creosote burns in a chimney it can be explosive. Often you will see flames shooting out of the top of the chimney. Creosote can also burn slowly with no exterior visible flame and put out tremendous heat. Either form of chimney fire can spread to structural members of the house through loose mortar or by the warping of metal chimneys or just from the extreme heat radiating from the fire in a metal chimney.

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1. What is a chimney fire and how does it happen?
2. How can I prevent creosote from building up in my chimney?
3. What are the signs that a chimney fire is happening or that is has happened?
4. What do I do if I have an active chimney fire?