Need Advice now! New home rental had builder warranty issues causing 3 way crisis

Need Advice now! New home rental had builder warranty issues causing 3 way crisis

Rental Property Investor · Forest Knolls, CA · Member since 2015 · 6 posts · 0 votes

I just joined this forum because I'm in need of a "tribe" who  has wisdom and experience to offer. This is mine and my partners second investment rental property. We sold a condo and bought a brand new townhouse in December 2014  in Bend Oregon.  Our real estate agent did the walk-through for us while we were out of the country on business and we were told that everything looked good. 

Long story short, I hired a property management company to find tenants and after they moved in February 13, 2015-- I took over.  That's when the warranty repair nightmares began... The builder then requested direct communications with our tenant to make scheduling easy. All 3 parties agreed.  To date there have been 14 warranty appointments with 1 more in the pipeline!!!!  

As the number of poor workmanship repairs mounted and our tenant grew frustrated, she blasted the builder's workmanship in person and by email and we almost got our warranty dropped.    I empathize with my tenants however, t twice because of their communications, I've come close to my warranty being dumped by the builder who's problem stems from the inability to hire talented, qualified contractors due to a building boom in the area.

The builder wrote an email requesting that they only deal with me and my partner. We all agreed and asked our tenant not to discuss any repairs, or the quality of work with the builders.   Last week after the tenant complained to us of being unable to use the house for 1/2 day due to toxic paint fumes and asthma she asked us for compensation for all the inconveniences.

After letting the builder know about her health situation caused by their toxic paint that apparently takes 30-45 days to cure, my partner and I requested a non paint fix.  Get a granite guy in and install a nice mantle.  Instead,  the builder's warranty rep showed up and for another repair (a bedroom door that would not shut... t goes on and on...) and once again he talked directly to my tenant about doing painting repairs-- it's like the tenant forgot her dramatic health issue from last week and now it seems that both parties are working against my request to the builder for a non paint solution--granite.  

Today,  the tenant has flip flopped and wants it painted and admitted that the builders rep mentioned granite and how complicated it is to install.  That news by the builder was designed to piss off the tenant so they won't have to pay for an upgrade.  Now, my tenant is threatening an early exit from the lease  if we want granite--which is intended as a precaution for her health.  I know our tenants very inconvenienced -- we have too and I have no idea of whats fair in this situation. I'm thinking of a one time one week rental reduction for the inconveniences.  Now that the fixes are complete it should be the hassle free new house we bought.

Please help!  What sort of fair compensation should we offer our tenants?  We'd like to make them happy but we cannot afford to lose money.  Do we offer compensation to stay or easy exit from the lease?

Thank you, your help is greatly appreciated.

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  • Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
    11y

    @Debra A. Welcome to Bigger Pockets! Reading your post makes me pause....

    There are some forum threads about how to repair/upgrade properties occupied by tenants, how to coordinate this with tenants, and what kind of compensation might be appropriate.  Use the BP "search the site" feature to look for some of those.

    If I were you, I would be doing my own evaluation of the property and it's needs. I would make sure I, or one of my representatives, is present while the repair work was being done. I would also be documenting everything said and done.

    Keep your communications about the work to be done with the builder (general contractor) and not with his sub-contractors or the tenant. Ask the GC about using paint with low VOCs. Be clear about the time frame in which the work needs to be completed, the scope of the project, access to the work site, and the conduct of the contractors while they are on the premises.

    Keep your communications about your product (the home you have offered to rent) and the rental agreement, with the tenant. I would not involve myself too deeply in discussions with the tenant about her real or perceived health issues. Instead, if it were a great inconvenience or she felt her health was in danger, I would offer her hotel lodging while the work is being done or a release from the lease without penalty. You don't want her to stay while the work is being done and then come back with clear or ambiguous health claims. If it is a minor inconvenience for the tenant and she had to leave her home to stay elsewhere during that time (for example with friends or family) give her a rent credit for the days she did not have full use of her home.

  • Rental Property Investor · Forest Knolls, CA · Member since 2015 · 6 posts · 0 votes
    11y

    Hi Marcia,

    Wow, thanks!  So far we've done everything you suggested above to a tee!  The problem is we are working at a distance from California. 

    I just spoke to a realtor pal who gave me some good council as well.  I'm leaning towards a two option approach. Option #1 offer my tenants a one time loss of use rent credit for the actual time the tenant could not use the home + a little extra for their inconvenience during the other 13 repair appointments.  Or, option #2.  Terminate the lease without penalty and they move in 30 days. 

    Debra Amerson, 

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