I'm in the process of purchasing a 4-plex that had a fire in one of the units; the structure is fine but it got me thinking. If a fire happens in a multi unit property and forces all the tenants to move, what is the landlord required to do? Does the owner have to pay to relocate all the tenants? Does insurance have to? Or is it up to the tenants?
I tried to find information on this but didn't have any luck. If you have any input or know of any articles it would be much appreciated.
First and foremost, it would highly depend on local and state laws as far as your obligations to the tenant.
In my state with that situation, my only obligation is to return the deposit to the tenants. As a matter of "housekeeping" for the paperwork, I would have the tenant sign a mutual agreement to terminate the lease when I hand over the deposit. There may be a case where the tenant doesn't want to move (permanently) and will wait for repairs. In that case, I would sign an agreement with them to only be responsible for the rent of the days they actually occupy the apartment.
No landlord insurance policy that I know of pays for relocation of the tenants. That is usually a feature on owner/occupant policies. There may be rider that you could purchase for that? As far as your insurance, I would make sure you have "loss of rents," in which the insurance company pays you your missed rent while repairs are ongoing. Also, it should have a liability portion as well.
@David S. great information especially about the "loss of rents" coverage through insurance. I am going to have to do some research on what is required up here in Canada for the landlord in circumstances like that. It would be even more interesting to deal with in the dead of winter up here.
You should have a line item in your lease that basically states that if the property becomes uninhabitable for any reason, their rent wold be abated at that time that they cannot occupy the property, or a total loss, lease would end.
The next piece is that depending on the amount if loss, you would file an insurance claim. If the tenant has a renters policy and they were at fault, your insurance would look to their policy to help recover the cost of damage. We now require all tenants to carry a renters or liability policy
Make the tenants have renters insurance which will cover their belongings and temporary lodging in the event of a disaster.
The lease I use has the following clause that addresses such a situation:
DAMAGE TO PREMISES: If, by no fault of Tenant, Premises are totally or partially damaged or destroyed by fire, earthquake, accident or other casualty that render Premises totally or partially uninhabitable, either Landlord or Tenant may terminate this Agreement by giving the other written notice. Rent shall be abated as of the date Premises become totally or partially uninhabitable. The abated amount shall be the current monthly Rent prorated on a 30-day period. If the Agreement is not terminated, Landlord shall promptly repair the damage, and Rent shall be reduced based on the extent to which the damage interferes with Tenant’s reasonable use of Premises. If damage occurs as a result of an act of Tenant or Tenant’s guests, only Landlord shall have the right of termination, and no reduction in Rent shall be made.
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