Tenant Damaged Property while house hacking
Hello BP Community,
I am currently house hacking a duplex that I purchased last year. When I purchased the property, there was already a tenant in place in one of the units and I moved into the first level unit. The tenant was signed on with a management company and they had high praise for this tenant. The management company provided me with a lease and also a payment record. Everything was good and the tenant has been on-time with rent every month and so I approved a 16 month renewal in February.
Fast forward to last month, my tenant was cleaning and she was washing a few items in the bathtub. She left the bathtub running as she worked on other things and forgot to shut off the water to the tub which then overflowed onto the floor and into the my unit below. I was pulling in the driveway when this happened and my girlfriend called me frantically trying to catch the water in buckets before it did any damage. I ran upstairs to find my tenant outside on her deck and told her what was going on and she ran inside to shut it off. However, at that point the damage was done and water continued to flow out into the lower unit and so I opened up a claim with my insurance company to repair the extensive damage. At the time of the incident, my tenant advised that she was clearly responsible and would cover my deductible, however her commitment changed when she started to get an idea of the cost associated with water removal and repair. Furthermore, she then went on to say that the reason the tub overflowed was due to a blocked overflow and so she was only partially responsible, (there was an overflow in the tub but it looks like it was tampered with and caulked over, possibly as a way to dodge responsibility but I can't prove this.) However, my insurance adjuster advised me to not collect any money directly from her and that because the damage was caused by the negligence of a 3rd party that they would need to file a claim against her renter's policy for the loss. I sent over a copy of the lease which had her insurance information and they told me they were taking care of it and that I didn't have a choice on whether or not I wanted to go after her for the damage.
When my insurance company reached out to the company shown on her lease, it turns out that she either canceled the policy or never had one at all. My insurance company said that they then tried to contact her directly but she would not return their calls and so they have turned over the claim to a collections company.
At this point, I am not sure what to do. I am very disappointed in my management company for not verifying her information but I am more worried about what I should do now with my tenant. I have not spoken with her since I have found out about the insurance and collections agency. She paid her rent this month on time but I am worried that this claim will either bankrupt her or cause her to take her frustration out on my property. She still has a lease going until June of 2018, but she has also violated her lease by not having active renters insurance.
Has this ever happened to anyone else? Should I keep her on as a tenant or should I start looking into the eviction process? Should I reach out to her to clarify that I did not ask the insurance company to file suit against her?
Any help at this point would be appreciated. Thank you all in advance.
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I would start eviction proceedings against her for not having renters insurance per the lease agreement and also causing damage that she refuses to pay for. You may have to go in front of a judge and argue your case but this tenant needs to go. Most reasonable people don't just leave the water running in a bathtub and go off and do other stuff.
I looked it up as I have tenants and it's happened to me in the past. How bad and expensive is the damage? We had water dripping from the ceiling in the unit below, no big damage in our case, so we didn't go after the tenant.
To be fair though, who ever checks to see if the overflow plumbing works?
There's an earlier thread on this site regarding this subject, and an insurance agent answered, mentioned renter's insurance doesn't cover, which surprised me. See: Insurance coverage
Hi Frank,
The damage was fairly significant, there was a lot of water and it came out onto a laminate floor. The water needed to be removed and dried out and then the effected areas needed to be replaced. The insurance company paid about 2k out for the water removal and the replacement cost was valued at $5900. When I told my insurance company what happened, they did not give me a choice on whether I wanted to charge the tenant or not because they wanted to get their money back.
In regards to the plumbing, that is strange because I could clearly see all the pipes and drains and it looks like the plumbing was done professionally but the overflow looked to be pushed in and caulked over. It does not make sense to me that a plumber would do all of the harder work completely right and give up on the final detail. My suspicion is that my tenants boyfriend, who is a contractor came in shortly after the incident happened and attempted to save the day for his girlfriend by placing caulk over the drain. The color on the caulk suggests that it was relatively new and I have not had anyone in to redo the caulk since I purchased the property. There was also no note about this in my inspection and I watched the inspector go through all of the sinks and drains. However, even if the overflow was wide open, I do not think it would have the capacity to drain at the same rate that it was filling if the tap was fully open. I will have everything corrected now that I am aware of it.
However, I am not sure what to do with my tenant at this point. If my insurance company takes her to collections for this, what assurance do I have that she will not take it out on the property in some way?
I would start eviction proceedings against her for not having renters insurance per the lease agreement and also causing damage that she refuses to pay for. You may have to go in front of a judge and argue your case but this tenant needs to go. Most reasonable people don't just leave the water running in a bathtub and go off and do other stuff.
I had a case almost similar, though it's not an overflow valve.
Tenants left their windows open, went out, a heavy rainstorm came through. Bedroom got flooded, carpeting at drenched, wooden floor below damaged, as well as the walls. Normally, I don't file a claim to keep premiums low. In this case though, to dry out the carpet, fix the damage, was close to $10,000, as I recall. My insurance covered and handled it, though I'm stuck with the deductible.
Obviously, it's the tenant's fault, but as far as I know, my insurance never got after the tenant. My lease requires renter's insurance, so he got the certificate of insurance, gave me a copy, then cancelled the policy the week after he got the insurance. I was new with this at the time, didn't know to add myself as an additional insured so I'll be notified when it's cancelled.
My plan was to file a claim directly against his insurance.
I was mad he pulled a fast one on me and threatened to evict him. But it was November and was in no mood to evict and re-rent. So I warned him he's on thin ice, and trying something else like this, we'll evict. He moved out a few months after, in the spring, thankfully, when it's easier to re-rent.
Can't suggest to you what to do, as I don't know your tenant and don't know how tight your rental market is. If you have a security deposit, notify her it will be deducted from it, though it seems the damage amount probably exceeds the deposit.
In my case, I never got after the tenant. It was a case of good riddance.
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Since you require it as part of your lease, you should move to have that violation remedied. Chances are you have to give them the opportunity to remedy the violation rather than just proceeding to boot them, which doesn't help you now. I would leave it in the hands of my insurance company. They will abrogate against the tenant, either by suing their insurance (non-existent) or by suing the tenant directly. If the tenant has to declare bankruptcy because of the claim (I wouldn't count on this being the case), it may be an opportunity to have the lease cancelled legally and let you find a new tenant. They're not going to be able to just not pay you rent and stay because of bankruptcy (check your state/local laws) any more than they could do similar with a house with a mortgage. Certain debts have to either be reaffirmed (not washed out by bankruptcy) or the person has to walk, i.e. with a house they can't have the mortgage cancelled and keep the house.
You have no assurances she won't take it out on the property. Have/take good pictures and go from there.
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Justin Scull - sorry this happened to you. Next lesson is to not talk to your insurance in detail about what happened (i.e. Third party). They're probably still going to ding you for having a claim. (I heard that in a condo if you get water damage from the unit above then your homeowners insurance pays, not theirs. Not sure.)
Send her the invoice for reasonable repairs with a payment plan option? Laminate and other flooring gets depreciated over time so if I have 10 year old perfect condition carpet and my tenant trashes it, I theoretically cannot charge her security deposit because I've already depreciated its value to 0. So maybe she pays half since it'll be nicer than before??
Or evict her for neglect and damages and take it out of her security deposit and risk x months without rent and/or re rental fees.
Hi everyone, thank you for your comments. I guess its a lesson learned type of situation. At this point, she has paid her rent and has not given me any problems prior to this so I will wait a little bit to see what happens with the insurance. If things start getting messy I will initiate the process then. This is my first property and first tenant so everything is uncharted territory at this point...
Thank you all for your help!
@Justin Scull In the future put in your lease that you are to be listed as an Additional Interest on the renters insurance (I believe that's the term) so you get notified by the insurance company if the policy is cancelled.
@Justin Scull If the overflow was installed properly and your water pressure is normal, even if you leave it on, the water should not overflow the tub. So in a way, she was right. If she agrees to pay 50% of the deductible, I think you should settle.
I suggest you talk to an attorney where your property is. I'm personally against long leases, and like month to month agreements only, because you just never know when you're going to want to get rid of a tenant. It's keeps all control in your hands - you can change terms with 30 days (or 60 or 90 depending where you live), or kick them out.
I agree with the posters above, though, that if you had it in your lease that the tenant was to have insurance, then you can get out of the lease. Even if you think you might want to keep them, I'd still use that as your negotiation power. I'd give them a pay or quit notice. Then, when they freak out, you can negotiate anything you might want. Such as, agree to not make them pay, as long as they sign a new month to month agreement, and provide you with proof of insurance going forward, etc. It would give you the opportunity to re-write your agreement with them by scaring them into the possibility of eviction.
I just think you need to take your power back here. And a month to month agreement gives you the power to learn without the consequences that can happen with a long lease. Leases only benefit the tenant, as tenants can always break a lease - but landlords can't. Sure, you might have the right to sue them if they breach, but good luck collecting. In the meantime, they have you by the short....wait, was I really going to say that? LOL...