On house decay.

[Agith]

If you are sleeping inside of a house and it decays to nothing what happens to all the things inside of it including yourself?

[Orpheus]

Lol, I have wondered the same thing, especially with people sleeping outside in dark-red beds.

[Zamte]

When sleeping in a bed, all it does is record your character as being asleep, and changes the bed graphic to be occupied. You are not actually in the bed, nor logged on at all. There's no danger of animal, players, or decay.

When a house decays, or a boat, wagon, or cart, or any sort of container, whatever was/is in it spills out onto the ground. This would include your bed, likely with you still in it. If you are logged in when a house decays or is otherwise destroyed, you end up outside as well, however you will be knocked out.