Property destroyed by burst pipe. property management gone quiet

Bittern, victoria · Member since 2010 · 59 posts · 25 votes

So my insurance is deducted from my rental payments and i see it noted every year on my statements but see no documentation from them showing me insurance is in place. The water was turned off between tenants and when it was turned back on the house was completely destroyed by water. The property management co said they have lodged the claim for me but when i asked for copies of docs (reasons to be suspicious) they have gone silent. I am in Australia and the property is in ATL GA, and i dont know who to contact to support me in a legal sense or from a consumer protection aspect. help appreciated. cheers

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Originally posted by @Andrew Evans:

really looking for my legal options or consumer protection options if the insurance is not in place. Where do i go? The house is destroyed internally.

were you go is this.

IN GA a property manager must be licensed by the state as a real estate broker .. so you would lodge a complaint with them , it seems like there is a pretty good possibility that your property has been uninsured . And if there is a deduction on your pm statement to pay insurance and they have not.. then that is a violation . and it could be a trust account violation etc.

you will hope the PM has E and O insurance and they may step in.

lastly if they took money for your rent to pay insurance and did not then that is theft and you can litigate it.. and or file a complaint with other regulators.. but this type of thing probably wont get anyone but the department of real estate interested.

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Edward L lauckern
Auburn NY · Member since 2019 · 97 posts · 56 votes
6y
Terrible situation! Never rely on a *managment company* its obvious that your water was never turned on when you purchased the property! Your situation is evident of neglect and only neglect.. always do pressure test on plumbing with vacant properties!
2 Reply
Michael King
Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
6y
Mate sorry to hear about that. I'd help a fellow Aussie out if it was close enough to me.
Have you contacted your insurance company? Or is there some weird deal where you are paying the PM to pay for insurance??
Is this a turnkey property? And if so, who did you buy it from? Please don't say Morris Invest.
1 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
@Andrew Evans Do you know who the insurance is with, so you can call them? Is there someone in the area you know who could meet the PM or go to the home? They could show up at the PM's office. Last thing you want is the place sitting there with water everywhere. Other option is threaten to get a lawyer involved.
0 Reply
John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
Originally posted by @Edward L lauckern:
Terrible situation! Never rely on a *managment company* its obvious that your water was never turned on when you purchased the property! Your situation is evident of neglect and only neglect.. always do pressure test on plumbing with vacant properties!

It's helpful to read the post before replying. This was between tenants, not the first time it was turned on after purchase. And I've never had a pressure test done on a property unless it was new construction. Is that even a thing?
9 Reply
Edward L lauckern
Auburn NY · Member since 2019 · 97 posts · 56 votes
6y
Only saying this because of the situation described is evidence of water hammers .. in my experience when the dwelling is left unused for a period of time. If a tenant was in the property and zero issues were reported and water was turned off at the time current tenants left said property .. poor plumbin(or some other factor) but water hammers at the joints is what I am hearing from what i can read from what is said ... and yes pressure test is a true thing I use them on all vacant usually.forclosed properties ... it's usually the only test I require on vacant properties
1 Reply
Andrew Evans
OP
Bittern, victoria · Member since 2010 · 59 posts · 25 votes
6y
Originally posted by @Edward L lauckern:
Terrible situation! Never rely on a *managment company* its obvious that your water was never turned on when you purchased the property! Your situation is evident of neglect and only neglect.. always do pressure test on plumbing with vacant properties!

it wasnt vacant for a very long time. i went to the property friday and there was no sign of a problem although i couldnt get inside and then the water company reconnected on friday night and by monday it was destroyed. Neighbours turned off the water for us.

0 Reply
Andrew Evans
OP
Bittern, victoria · Member since 2010 · 59 posts · 25 votes
6y
Originally posted by @Michael King:
Mate sorry to hear about that. I'd help a fellow Aussie out if it was close enough to me.
Have you contacted your insurance company? Or is there some weird deal where you are paying the PM to pay for insurance??
Is this a turnkey property? And if so, who did you buy it from? Please don't say Morris Invest.

i have owned it about 7 or 8 years now. it was just in between tenants. no its not morris invest. The property manager is deducting the money from the rent to pay the insurance. I can check which insurance company it is, there are two for the two properties they manage. My question is what to do if they havent been paying the insurance and im being scammed?
0 Reply
Andrew Evans
OP
Bittern, victoria · Member since 2010 · 59 posts · 25 votes
6y
really looking for my legal options or consumer protection options if the insurance is not in place. Where do i go? The house is destroyed internally.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Andrew Evans:
really looking for my legal options or consumer protection options if the insurance is not in place. Where do i go? The house is destroyed internally.
were you go is this.
IN GA a property manager must be licensed by the state as a real estate broker .. so you would lodge a complaint with them , it seems like there is a pretty good possibility that your property has been uninsured . And if there is a deduction on your pm statement to pay insurance and they have not.. then that is a violation . and it could be a trust account violation etc.
you will hope the PM has E and O insurance and they may step in.
lastly if they took money for your rent to pay insurance and did not then that is theft and you can litigate it.. and or file a complaint with other regulators.. but this type of thing probably wont get anyone but the department of real estate interested.

Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
13 Reply
Andrew Evans
OP
Bittern, victoria · Member since 2010 · 59 posts · 25 votes
6y
that the type of information i am looking for Jay thank you. so i contact the real estate assocation? cheers andrew
0 Reply
Brian M.
Phoenix, AZ · Member since 2016 · 61 posts · 105 votes
6y
@Andrew Evans Are you sure the insurance line you saw on the statement was actual Homeowners insurance and not some sort of vacancy insurance?
0 Reply
Russell CazeaultPro Member
Contractor · Osterville, MA · Member since 2018 · 41 posts · 30 votes
6y
@Andrew Evans
Contact a public insurance adjuster who will work on your behalf and probably get more covered that if you just rely on the insurance company.
Also once the dust settles, it’s best to have a good insurance agent who can understand your situation and needs and properly insure you. Like everything else, the cheapest price isn’t always the best option
0 Reply
Sarah Brown
Real Estate Agent · Nampa, ID · Member since 2017 · 439 posts · 361 votes
6y
Two questions. 1. Why was the water shut off between tenants? When I have a vacant unit I switch the water to my name and then pay the bill from the owner deducting it from the next rent on the next tenant. Obviously we have a few more issues here because of the cold, but there are fees for turning water on and off.
2. Why were you dependent on the property manager for insurance? You don't have standard homeowners insurance? I am not sure how Florida law works, but I require ALL homeowners to carry insurance on their properties. This isn't a state law for Idaho, just me covering every ones buns.
Sounds like it might be a good time to get an attorney. Good luck!
5 Reply
John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
6y
If you haven't already, take whatever steps YOU need to take to get the property dried out.
The water got turned on when no one was occupying the structure?
Here in Georgia, there's usually a shut off at the meter box by the street. I have the municipality unlock the meter valve but I turn it on myself so I can check things out and make sure all the water devices are working properly. I never have the water turned off between tenants. Was there a long vacancy? And what does "destroyed" mean? Water got 2 feet deep in the house? Did you get the pipe fixed? What "broke"?
1 Reply
James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
6y
Originally posted by @Andrew Evans:
So my insurance is deducted from my rental payments and i see it noted every year on my statements but see no documentation from them showing me insurance is in place. The water was turned off between tenants and when it was turned back on the house was completely destroyed by water. The property management co said they have lodged the claim for me but when i asked for copies of docs (reasons to be suspicious) they have gone silent. I am in Australia and the property is in ATL GA, and i dont know who to contact to support me in a legal sense or from a consumer protection aspect. help appreciated. cheers

Bummer man. This is why it's important for both parties for the owner to be the one who pays for insurance and utilities directly. Most Property Management companies who've been in the game are smart enough to push that responsibility onto the owner so that they don't end up on the hook when something extreme like this happens. If a Property Management company is managing enough properties it's only a matter of time before one insurance bill falls through the cracks and boom of course Murphy's Law will kick in and that'll be the one that has a no heat in the winter or something of that nature causing uninsured damage.
Going forward I'd vet your PM's more carefully to see that they are more established. If I had to guess I'd say this is a newer or smaller operation who didn't have all the necessary processes in place yet. In addition it's probably not something you may even want to file the claim on. How much damage are we really talking here? If it's only like $10k or something sometimes it's best to pay out of pocket. The dirty secret in the Insurance game is that these Insurance companies don't really want rental properties on their books. They are much higher risk than owner occupied properties and they can and will drop a client for filing too many claims. It's best to keep a policy in place as a safety net for when you get a total loss.
6 Reply
Rc Morris
Investor · Cleveland, GA · Member since 2016 · 31 posts · 20 votes
6y
@Andrew Evans Would you care to name the PM company?
3 Reply
Dan H.Pro Member
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
6y
You do not state if you have a mortgage on the property. On our properties, the holder of the loan verifies that the unit has insurance. I would think this would be a national level practice.

So you may be able to check with the holder of your mortgage to see if they have any insurance information.

If this does not work and the PM is not responsive, @Jay Hinrichs is a great source of info and provided good advice if the unit is really uninsured or you cannot verify that the unit is insured.

Good luck
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6y
Originally posted by @Dan H.:
You do not state if you have a mortgage on the property. On our properties, the holder of the loan verifies that the unit has insurance. I would think this would be a national level practice.

So you may be able to check with the holder of your mortgage to see if they have any insurance information.

If this does not work and the PM is not responsive, @Jay Hinrichs is a great source of info and provided good advice if the unit is really uninsured or you cannot verify that the unit is insured.

Good luck
Dan being that the OP is in OZ most of those investors paid cash for their units as financing can be very difficult for them to get without being in the US or a US presence.. unless its owner finance or some sort of private financing..

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3 Reply
Michael King
Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes
6y
@Andrew Evans Andrew it sounds like it's going to cost a lot no matter what happens here. Unless you can get hold of say a house flipper on BP that is in that area, you are probably gonna have to buy a flight to get over here to fix it or supervise fixing it; and certainly surveying the damage. You are in a tough position.

Here's what I would do - hire a building inspector to go in and document the damage. With the building inspection you will at least have the scope of the work and you can go about contacting contractors to get bids. How would you get any payments to them?
Another alternative, and bad possibility, would be to try to sell it. But selling a flooded house is going to cost you a lot in depreciation no doubt. Sorry mate.
Surely there's a PM company on BP based near your property that can take over. I'm in the process of firing mine for lack of answers to my questions. Good ones are out there, finding them is hard.
0 Reply
Mitch Messer
Lender · Playa del Carmen, México · Member since 2014 · 2k+ posts · 1k+ votes
6y
Hi @Andrew Evans, I hate to hear that this happened to you. We had a similar mishap a few years back due to a rapid drop in temperature on a vacant property.
Where exactly in Atlanta is your property located? Depending on the area, I might be able to suggest some resources (water remediation, public insurance adjuster, attorney) to help you get on the road to recovery as swiftly as possible.
0 Reply
Account Closed
Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
6y
Contact a new property management company that is not criminal/incompetent.
Pay your own insurance takes 5 minutes once a year.
1 Reply
Irina Belkofer
Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
6y
Originally posted by @Andrew Evans:
Originally posted by @Edward L lauckern:
Terrible situation!

it wasnt vacant for a very long time. i went to the property friday and there was no sign of a problem although i couldnt get inside and then the water company reconnected on friday night and by monday it was destroyed. Neighbours turned off the water for us.

If you have access to the property and in the area, you have to first and foremost mitigate the damages.
Take pictures and start drying property out, put dehumidifiers, fix the problems.
Insurance is a way to pay for the damages and you’ll give them receipts IF you have insurance after all.
I know my insurance company (State Farm) doesn’t let PM get policy on behave of the owner - they all call the agent. I can do the payments but not get them the insurance. Maybe it’s in Ohio only, idk
Anyway, it’s your property and you have to take care of it now and then figure out who is going to pay for the damages, how it happened to prevent such cases in future.
Flooding, bursting pipes, sewer back up could happen any time without anyone’s fault.
The longer you wait to fix it - the more income you lose. Fix it, re rent and then get all the paperwork in the order.
You can call to everyone right now but first calls should be to the clean up team

0 Reply
Anthony Rosa
Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
6y
If your property has an existing mortgage - Typically, the insurance & taxes is rolled into the mortgage payments and the lender holds the insurance and tax money in escrow until payment is due and then sends them a check. If your lender doesn't roll the insurance and taxes into your monthly mortgage payment you would receive calls and letters from the lender demanding that you get insurance immediately because you can't have a mortgage without insurance. Before making any legal calls you may be okay and not know it. Check your latest mortgage bill and call your insurance carrier to make sure you're in good standing then proceed with the claim. When that's done, Dump your good for nothing PM!! That insurance noted on your PM bill may be for something else altogether. Good luck man!
1 Reply
Timothy W.
Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
6y
Hi Andrew,

Do you have a declarations page for the policy? I handle property claims for out of state owners (I'm retained by carriers or law firms - usually not property owners) and this time of year it takes a long time to get property managers to contact me and set appointments. It takes a long time year round but this time of year it is especially out of whack.
If you have the dec page, skip contacting the property manager and call the insurance carrier directly. They will have a claim number and claim status for you. You can monitor its progress that way.

Tim
1 Reply
Andrew Evans
OP
Bittern, victoria · Member since 2010 · 59 posts · 25 votes
6y
Originally posted by @Mitch Messer:
Hi @Andrew Evans, I hate to hear that this happened to you. We had a similar mishap a few years back due to a rapid drop in temperature on a vacant property.
Where exactly in Atlanta is your property located? Depending on the area, I might be able to suggest some resources (water remediation, public insurance adjuster, attorney) to help you get on the road to recovery as swiftly as possible.

Hi mitch, my property is in college park GA.
0 Reply

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