According to the National Fire Protection Agency, there were close to 370,000 home fires in 2013. They resulted in $6.8 Billion in damages. A substantial number of these fires occurred in rental homes. Do you own a rental property in southern California? Do you know how to deal with fire damage in a rental home?
The first step is to determine that your tenants are okay and assess the extent of the damage. It is highly recommended that you take a video or a lot of photos in order to record the damage to the rental property. Once you have proof of the damage, protect the property. You may need to get a tarp over roof damage (or a hole in the roof). You may need to reinforce burnt walls. Complete any temporary repairs needed to prevent additional damage. This is the moment at which you should contact your insurance agent to advise them of the situation (unless the damage is so negligible that you want to take care of it yourself outside of insurance).
Many property owners worry about how they determine the cause of the fire. If a claim is filed on the fire damage with an insurance company, it is normal for them to send out their own investigator to determine the cause of the fire. This same individual will often generate a scope of work to summarize the damages and prioritize where attention needs to be focused. This is the list that will be used by the contractor who makes the repairs to the property.
If you don’t go through your insurance by filing a claim for damages and decide to manage the repairs yourself, you should consider hiring a fire investigator (3rd party) in order to determine the cause of the fire. The fire department investigation is often limited to determining whether there was a criminal act of arson or not. Once arson is ruled out, the fire department’s investigation is usually concluded.
In most lease agreements, the “Destruction of Premises” clause or a similarly worded clause terminates the lease in the event that it becomes uninhabitable due to fire, flood, etc. The renter’s obligation to pay rent terminates with the lease. At this point, the property owner should negotiate whether or not the lease will continue with the renter directly. Determine whether or not the tenants would like to stay, whether or not you wish to continue leasing to the tenants, the necessary repairs to make the house livable, the time frame necessary for repairs to be completed, etc. prior to coming to an agreement including temporary arrangements while repairs are completed. Each case will be slightly different depending on the extent of the damage, what caused the fire, and the attitudes of all the various people involved.
Liability for the damage is determined by the fire investigator’s report. If the investigator indicates the fire was caused by tenant negligence or abuse, they are liable for damages. In this case, the tenant’s renter’s insurance would cover the damages. The property owner’s insurance company will often work directly with the tenant’s renter’s insurance company when this is the case. In the event that the renter is found liable, but they don’t have renter’s insurance, the landlord can charge the tenant for the amount of their deductible on top of any other financial obligations that are permitted according to the lease.
If you have a southern California rental property that has recent fire damage and you are unsure who is liable, or whether or not the situation is covered according to the lease agreement, please get in touch with the experience real estate attorneys at The Law Office of Retz & Aldover LLP as soon as possible.