Mediating Disaster Rental for 96 Year Old Relative outside ATL

4 Replies

I've recently been asked to help mitigate a very troubling rental scenario for a 96 year old relative. I've been reading up on real estate and BP for my own future investments, but this is such a cluster that I'd like to verify a couple of things:

Situation: Relative is a single, 96 year old woman with a fully-paid for primary residence, and a few hundred thousand in investments, plus social security and pension. Rental income would be nice--although not necessary--but this property has been a money loser for years.

Property is a 2 or 3 bedroom single family in a rural suburb 1 hour+ of Atlanta on about 2 acres of land; valuation guess is $40k. Property was probably built in the 50's, and has had virtually no maintenance since an overhaul around 1980. Tenets are a couple in their 60's, along with a grandchild, and have been there for about 20+ years. The man is intermittently employed, and they pay the very low rent ($450/ month) sporadically, and often have to pay several months at a time. Rent is always made through money order as earlier checks bounced. As best we can tell, there was never a lease, or it expired about 18 years ago.

Lots of deferred maintenance on the house (e.g., needs new roof, and just found out from the tenant that the electrical heater -- not sure if this is furnace, or space heaters -- haven't worked for a while, so they've been using a gas heater). Also just found out from the relative that they had a limb puncture the original roof "a few days ago" and water leaked into the living room. They have a tarp on it, but haven't had a roofer inspect, etc. The insurance company that insured the house has also said that they're pulling out of this area, and are planning on not renewing the existing policy that expires in November.

Of course, there's no umbrella insurance on the property, and no family member has visited it in at least 15 years.


Since the relative doesn't really need the money, she should immediately reduce the liability (e.g., danger of gas heater) by offering the tenants cash for keys, and forgiving past-due rent (they'll never pay, she'll never sue, and she would never collect even if she did)? Tenants should also be asked to stop using gas heater immediately. Any idea what a reasonable timeline and amount would be? I was thinking $300 if out in 30 days). 

If they don't want to accept, should she go forward with an eviction -- again, more so just to reduce her liability than anything else? 

She would consider selling it to them, but they'd likely fall behind on payments, and I can't imagine that they'd be able to do bank financing. So it seems morally questionable to do owner-financing, and then reposes it, and there are still all of the concerns about potential liability on the property?

Should she file a claim with the existing insurance company for the roof (although I imagine that it's unlikely to be paid given the age)? Any chance that they might pay for any water damage that occurred? Any reason not to file a claim? Any suggestion on finding a replacement insurance company (e.g., go with a broker, or just search insurers' websites?)

Only after they're out does it make sense to figure out whether it makes sense to rehab/rent or sell to someone else.

Please let me know what else you need to know. Thanks in advance for your help with this nightmare.

@Michael Herndon , The property is really worth $40K and in theory bringing in $450/mo?

This is a way out of the box idea and I'm not intellectually or ethically attached to it but it came to mind as what might be a good option for all.  

Your relative and your family have no attachment to that property.  It's sale or rental or disappearance will have no impact on your family at all.

The rentors are obviously hard luck folk with a few issues (grandchild, employment situation etc) who have (and I may be reading into this) tried to be good rentors over the years.  They must have succeeded since they've made it 20 years.  And have paid over the 20 years way more than the property is worth.  This is institutionalized poverty and victimology at it's worst.  Not your family's fault but wow.

What if your relative sold the property to them with a downpayment that they can come up with (not nothing so it has value) as is before the repairs.  The insurance check and down payment go to her.  The rentors have something that is theirs now and I'll bet they'd find a way to fix things in an acceptable manner to them.  

If your relative never got another penny that is still probably going to equal several years of rent in one payment from the insurance co.  She can send a letter for payment once in a while but never collect.  And my guess is that those rentors would continue paying on their terms and on their time forever.  

The only loser in this are the heirs of your relative.  But this one pulls at my compassion strings for some reason.


Thanks for your thoughts. I'm the (ultimate) heir, and I want these folks to be ok. As far as I know, they've tried to be good tenants, and my relative would want to be compassionate.

The practical side of me asks--can you talk through the end-game on this? Assuming that they make a few minor payments over the years, my understanding is that my relative's estate (effectively me) would end up owning the property. If they don't make the payments, I'd be happy to give them a "pay rent until you're gone" payment scheme, and I wouldn't be upset about missing a few month's payments--I just don't want to be exposed to the liability that may be in that place. I want to be good to these folks, but I don't want to risk losing everything I've worked for because they used a hack to get at the natural gas, for instance.

Everyone jumps straight to eviction.  If there is not an active lease it is likely a month to month agreement, since most convert to that when they expire. You can give notice according to tenant-landlord law and end the contract.  Eviction only happens if they refuse to move out.  So serve them notice for end of November move out, and offer them $300-$500 if they can get out in one to two weeks instead.

Fixing the heat or not is dependent on what you plan on doing with the property once the tenants move out.  In any option other than demolish it will need to be fixed, so get on it.

Finding a new insurance policy depends on how bad off it really is.  Most will not insure a property in poor shape, at any price.  I'd ask for some price quotes though, choose the cheapest, then re-shop rates a few months after repairs are made.  If the value is in the land and a fire or event would be blessing to just start over, just get some coverage in case someone gets hurt on the property.

File insurance claim immediately for roof to prevent further damage that would not be covered due to homeowner neglect. View property, see what kind of work it needs to get it habitable. If you can spend a few grand and get it habitable and get insurance to pay for a portion of roof, then take over management or ownership of property, let the tenants know that they can stay but they must pay their rent on time. Keep it month to month for a few months to see if they can shape up paying rent regularly. If they don't, give them 30 day notice to vacate and evict if necessary, then rent it to someone else. If property is too far for you and you don't want to deal with it, then give them notice to vacate and sell house as is (but still file insurance claim)

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