from Port Washington, New York
My first investment property has become a victim of Superstorm Sandy.The one family house is now without electric, heat, or hot water.It will likely be months until essential services are restored.My tenant believes that this excuses her from any further rent payments until the house is repaired.
How do I calculate what percentage of the monthly rent is owed?
Thank you in advance for any assistance,
Updated: 01:48PM, 11/16/2012
The lower level was completely submerged and the furnace, breaker box, hot water heater and A/C condensers will all need replacing.
Edited Nov 16 2012, 13:48
Accountant from Kingwood, Texas
That does suck! Having said that, I am not sure you have any duty to discount the rent. (I am no lawyer) Does your lease require that you procure any of those services? I would love to have a lawyer comment here... I don't think they could demand a reduction on the basis of the home no longer being inhabitable (as you are not able to remedy this), although I wonder if the lease has some sort of force majeure clause available to the tenant under the law. I would say that you can be a nice guy here, but I am not sure that you a liable for the non-performance of local utility companies.
from Naugatuck, Connecticut
I am by no means any expert here but I do know that in my standard state lease it says that I am responsible for providing working hot water and electrical services and basic things like that. I would think if those things aren't going to be restored for a long time and you can't provide them with things like a generator they will have grounds to move out. How can they be expected to live for months without electric, heat or hot water?
Accountant from Kingwood, Texas
Check your property code and see if you agreed in your lease to provide the utilities to the tennant. In Texas (clearly not your State), Chapter 92 of the code, Subchapter G says that the landlord is not required to furnish utilities from a utility company if the utility lines are not reasonably available. Upon request, you are required to make repairs... you are not required (in Texas) to provide 3rd Party services to the location. I may be thought cruel, but are we also on the hook if a city bus stop gets moved and we are no longer providing that city service?
Commercial Real Estate Broker from Canton, Georgia
Based on my experience you do not have a safe and habitable structure to live in for a tenant at this time.
If you force the tenants to live there and they get sick they could sue you for those conditions.
Will the insurance company consider the place a total loss??
Is your lender offering a moratorium on your loan for victims of hurricane Sandy??
The tenant could call the health department and have the place deemed uninhabitable upon inspection. A judge will usually tell the tenant if they chose to stay there why didn't they move if it was dangerous?
If they say they didn't have any money etc. they will generally lose.
Another aspect is if you make the tenant leave and the property sits vacant it might incur more damage.
Maybe you could offer a partial credit while the repairs are ongoing.
Joel Owens, All World Realty
E-Mail: [email protected]
www.AWcommercial.com 678-779-2798 [email protected]
SFR Investor from Phoenix, Arizona
Does your landlord insurance cover lost rents? I'd tell the tenant to leave, so you can fix the place properly. No way I'd get into the defects=discounts game, you can't win that one.
Without heat or electricity, the tenants are likely to kill themselves or damage the property further with candles for light & space heaters for heat.
SFR Investor from Houston, Texas
If the place is unihabitable, how can you expect her to continue to pay rent if she's not living there? You want her to pay your rent and then pay for somewhere else to stay too. No way.
Real Estate Investor from El Dorado Hills, California
I am guessing you don't have proper insurance if you are even considering looking to your tenant to pay rent on a property that is uninhabitable. Good luck in court on this issue.
I can't imagine you being able to collect rent if there's no heat/electricity.
I thought at least electricity, heat, and running water were required of landlords? It's not minor damage here-- we're talking no electricity. I don't believe that's safe or habitable. I think the solution is for them to move, you to repair place. Discounts in rent are always a bad idea in my opinion, and you don't have a habitable place. I can't imagine you winning a court case if you try to evict this person for not paying rent.
You have no electricity and no heat... for months. We're not talking a week of outage,... months in winter with no heat.