Can I keep tenant security deposit for insurance deductible?
Property Manager · Spring Valley IL · Member since 2018 · 6 posts · 4 votes
So my renter of 7 months called me up and said that her son and her nephew was playing with a lighter and fire started in the bedroom. She called the fire department and it's all under control. Everyone was fine except for my house. I told her she can move out because I don't know how long it will take to fix it. She prepaid until January. I will give her back the rent she prepaid. I would not charge her rent for Aug since that is the day of the fire. I also told her that I would keep $500 of the deposit if she moves. She seems to think that she is entitled to the full refund. She keeps saying that it was God doing. I am stressing out over this. The law to my understanding said that they are entitled to a full refund unless they are responsible for the fire. This rental is in Illinois, if anyone is familiar with Illinois law please help me.
The fire dept will say the house in uninhabitable until the smoke damage can be remediated anyway. That is what happened to me. It wasn't up to me whether or not they could live in the home. My tenants did not have renters insurance as it happened on the day they moved in. So they were basically out of luck. I was trying to be nice and offered to help them with a hotel room until the guy helping them move in demanded that I had to pay for his hotel room also. I went home and called my insurance rep and figured out where I stood as a landlord trying to help out my tenants. I learned a lot.
This is exactly what renters insurance is for and I tell the story to all my tenants that question the need for it. By the way, the Red Cross usually has hotel rooms blocked out specifically for this reason. The tenants can call them to find out. I think your tenant is using the "act of god" terminology like an insurance company would use it for something like a flood or hurricane.
It took about 3 months for all the work to be done on the home and I ended up letting my tenants out of their lease and had them sign a termination of lease agreement and gave them their money back. I had to listen to this very large man verbally attack me with his crazy "old lady" egging him on the whole time while I was standing there with a pen and a piece of paper and a wad of cash. I went alone because it was during business hours and no friends could go with me and I wasn't going to bring my wife.
In the end I gave them their deposit back because they did not start the fire so I am not sure what to say about your deposit but thought I would just give you some insight into my experience. I ended up with a much nicer house almost completely remodeled but had to suffer through a 3 month vacancy period that ate up all my reserves at the time. I would talk to a lawyer and your insurance rep if I were you to get piece of mind on where you stand. Let this tenant go because all they will do is cause problems waiting to move back in and no one can really tell you how long it will take. My tenant wanted to sleep in the house while the work was being done but smoke damage can cause a lot of health problems as you can imagine. My tenants drug the process out much longer than it needed to be by calling the county and harassing the restoration crew almost daily. It was ridiculous and in hindsight I realize I dodged a bullet with these crazy people. I even told them they could park a camper in the driveway because I felt responsible for the fire, but it was just one of those things that happened. It was no ones fault and it taught me to be a better landlord.
Oh, and the tenant didn't even call the fire dept. He called me and said "your house is on fire". I responded "did you call the fire dept?" When he said no, I immediately hung up the phone and had to call them myself.
Sorry for happened to you. Might want to pay for about a half hour of legal consultation while the lawyer reads your lease an insurance. just to CYA
You were very nice to let her off the hook but in her head you were kicking her out, so now she wants to find a way to think that its all now your fault. People can get weird when it comes to money, particularly if its more than they can pay.
Its a state law thing for Florida (and I am not from there and glad not to be a lawyer) but you kind of answered your own question, its not you that started the fire. Also I am quite sure God was not there playing with lighter as well. There is some kind of arson or fire department opinion you can access about your event. They can see the origin of how it started
Pretty sure your insurance company is going after her too.
Tenants like that can stress you if you let them. Your kindness back fired so may be you need to knock her back on her heels just enough (not too much then you got her lawyer to deal with) just enough to back off and pay you a settlement or sign something to get any portion of her deposit back. get her gone in an agreed manner
Did you ask for renters insurance in your lease?
I think this and the prepaid rent should be discussed with your insurance agent before anything is done with those funds as they may want it placed in escrow in case they go after her for damages. After all, she states it was her son's fault, and in my leases, at least, tenant is responsible for damage caused by tenant, other occupants or their guests. In the states I've had rentals, most say something like that you have to let them out of lease if it's not able to be occupied unless they were the cause of the damage, which this sounds like it would meet that requirement. I also make tenant have a renter's policy with liability insurance with me as additional interest, so if she has that, you'd have a copy of the policy and your insurance should be addressing this issue with her insurance, likely covering your deductible. At least contact your state office handling landlord/tenant laws and explain the issue and whether you can retain the deposit until a decision is reached on damages.
The fire dept will say the house in uninhabitable until the smoke damage can be remediated anyway. That is what happened to me. It wasn't up to me whether or not they could live in the home. My tenants did not have renters insurance as it happened on the day they moved in. So they were basically out of luck. I was trying to be nice and offered to help them with a hotel room until the guy helping them move in demanded that I had to pay for his hotel room also. I went home and called my insurance rep and figured out where I stood as a landlord trying to help out my tenants. I learned a lot.
This is exactly what renters insurance is for and I tell the story to all my tenants that question the need for it. By the way, the Red Cross usually has hotel rooms blocked out specifically for this reason. The tenants can call them to find out. I think your tenant is using the "act of god" terminology like an insurance company would use it for something like a flood or hurricane.
It took about 3 months for all the work to be done on the home and I ended up letting my tenants out of their lease and had them sign a termination of lease agreement and gave them their money back. I had to listen to this very large man verbally attack me with his crazy "old lady" egging him on the whole time while I was standing there with a pen and a piece of paper and a wad of cash. I went alone because it was during business hours and no friends could go with me and I wasn't going to bring my wife.
In the end I gave them their deposit back because they did not start the fire so I am not sure what to say about your deposit but thought I would just give you some insight into my experience. I ended up with a much nicer house almost completely remodeled but had to suffer through a 3 month vacancy period that ate up all my reserves at the time. I would talk to a lawyer and your insurance rep if I were you to get piece of mind on where you stand. Let this tenant go because all they will do is cause problems waiting to move back in and no one can really tell you how long it will take. My tenant wanted to sleep in the house while the work was being done but smoke damage can cause a lot of health problems as you can imagine. My tenants drug the process out much longer than it needed to be by calling the county and harassing the restoration crew almost daily. It was ridiculous and in hindsight I realize I dodged a bullet with these crazy people. I even told them they could park a camper in the driveway because I felt responsible for the fire, but it was just one of those things that happened. It was no ones fault and it taught me to be a better landlord.
Oh, and the tenant didn't even call the fire dept. He called me and said "your house is on fire". I responded "did you call the fire dept?" When he said no, I immediately hung up the phone and had to call them myself.
I'd also talk to a lawyer, see if there is one that will do a free quick consultation. I'd have her sign a termination agreement for the lease, so you aren't on the hook to rent it to her once the repairs are done.
Tell her it was not an act of God. Although it was not intentional, her son and his friend started the fire. I'd talk to your insurance company about rent. Mine will cover the rent in an event like this.
I didn't make it a mandatory thing for tenants obtain renters insurance, but surprisingly she did have one. I didn't know that we can make them get insurance. Thank you all for your input, suggestions, and sharing your personal experience with me. I talked to the insurance adjuster and told her all this, so now she's looking into it with her legal crew.
Spent the first half of my life as a claims adjuster. Been a landlord, tax preparer and insurance agent since then.
1. What does your lease say? Does it allow you to do any of the things you are considering? Consult and attorney!
2. Get estimates of the damages. Do they exceed your deductible? Talk to a lawyer.
3. Did you require your resident to get renter's insurance? If so file a claim against her company or let your company handle it through subrogation. Call your insurance company
4. Don't have an attorney go to my web site, select LegalShield and get with the program. As a Landlord you need the standard plan and the Home Based Business add on. Call me with questions.
5. Do you have an escrow account? ONLY AFTER speaking with your attorney, you should place the disputed funds in escrow and wait for the lawsuit to be settled. You will probably need to file in small claims court. Claiming uninsured damages and court costs.
6. The time frame depends on what state you are in. You have a DUTY to notify the resident, IN WRITING of what the damages are and the disposition of their damage deposit.
7. If you do not handle this correctly in say Chicago you could owe the tenant several times the deposit you witheld.
Let me know when you hear from your insurance adjuster and you still have questions after she talks to her legal crew. I can put you in touch with a local attorney in Illinois.
@Theresa Harris I wish people would stop recommending that someone find an attorney that will provide some free legal advice. I'm pretty sure no one else is working for free. There are no quick conversations or questions. If an attorney has the time to do something for free, please realize free advice is worth what you paid for it.
good luck