Slow repair from water damage - tenants asking for reduced rent

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Slow repair from water damage - tenants asking for reduced rent

Peter Burnside
Member since 2019 · 9 posts · 0 votes

Had a pipe blowout almost three months ago. Kitchen and basement are torn up from the water remediation and the insurance company has not yet given the go-ahead for the repairs.  Tenants have put rent in escrow until the repairs are done and are asking for a reduction in rent for the duration of the incident.  Insurance will cover lost rent if the house is not livable, but will not cover an inconvenience loss/ reduction in rent.  What would your next step be?

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Richard F.
Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
3y

Aloha,

What's the holdup? Code enforcement would probably call it uninhabitable and the Tenants need to go now, and insurance will pay the rent. If they really want to stay, then yes, deduct rent based on the LIVABLE square footage they rented, minus what is no longer livable. 

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  • Richard F.
    Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes
    3y

    Aloha,

    What's the holdup? Code enforcement would probably call it uninhabitable and the Tenants need to go now, and insurance will pay the rent. If they really want to stay, then yes, deduct rent based on the LIVABLE square footage they rented, minus what is no longer livable. 

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    3y

    I'd call the insurance company and tell them that they need to get moving on it or they will also have to pay for lost rent as the tenant is not paying rent and the house is not livable without a kitchen.  It should not take 3 months.

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  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    3y

    AFTER this is finished and paid off. Switch insurance companies the next day. 

    I don’t know if you chose the worst insurance company in America, or Allstate is the best, or something in between. But I’ve had to FLOODS from broken toilet supply lines. Serv-pro was there the same day removing drywall and carpet.  2 days later they started replacing drywall and replacing carpet pad. 4 days after flood they were done and painters/cabinet/baseboard people were in and out in 2 days. Within a week it was better than new. Ps. I called my agent to report the problem. He emailed  me a week later asking for a credit card for the deductible and invoices/receipts  for work done. 

    If I had rent guarantee insurance I would tell tenants they are right. They shouldn’t have to live like this and you’re letting them break the lease because you don’t know how long it will take and you’ll get full rent from insurance company. 

    Ps.  Tenants stayed in the unit and seemed to appreciate the fast work and how much it would suck if it had happened at a home they owned. Never asked how much longer or for a discount. 

    4Reply
  • Jonathan R McLaughlin
    Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
    3y

    No usable kitchen for three months?  Yea I would say they have a point. Your insurance coverage is beside the point and between you and that company. Your responsibilities to the tenant exist separately. I think  @Richard F. has it right too.

    Yea let them go and allow them to get the escrow money back. You won’t lose. If you decide (or it’s decided for you) they should stay/If they want to stay give them one month free and half off till it’s repaired. Not really cool to be made completely whole while they suffer. 

    3Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    3y
    Quote from @Peter Burnside:

    Had a pipe blowout almost three months ago. Kitchen and basement are torn up from the water remediation and the insurance company has not yet given the go-ahead for the repairs.  Tenants have put rent in escrow until the repairs are done and are asking for a reduction in rent for the duration of the incident.  Insurance will cover lost rent if the house is not livable, but will not cover an inconvenience loss/ reduction in rent.  What would your next step be?

    Yeah, I'd reduce the rent. Your tenants are not responsible for the fact that "the insurance company" or any other entity is slow off the blocks to the tune of a quarter of a year. It's your responsibility to keep up the place, not to shrug helplessly and say, "But the insurance..."

    Fix it and move on.
    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Peter Burnside:

    This is an unreasonable delay and you should be riding this insurance company every day until they get it fixed. This should have been done in a few weeks, tops.

    I would consider declaring the rental uninhabitable and moving the Tenants out. If that's not an option, talk to the insurance company about compensating the Tenant due to the delays. If they won't pay, then consider something reasonable out of your pocket.


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  • Peter TverdovBusiness Member
    Developer · New Brunswick, NJ · Member since 2015 · 1k+ posts · 2k+ votes
    3y

    Your tenants should have moved out a long time ago. I would let them break the lease although some tenants will claim they have no where else to go. Terrible situation but tread lightly. 

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  • Judy Parker
    Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes
    3y

    This whole situation makes no sense. A pipe burst and no one saw the water leak until the property was destroyed? Regardless of the insurance delays, Landlord must get this damage fixed immediately. How long does Landlord intend on letting this situation continue? Just fix it, even if you need to take out a loan. Get it fixed!

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    3y

    @Peter Burnside  A basement maybe but no kitchen. Release them. No kitchen is not habitable, it is not an inconvenience.

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