Electrical Fire, House Inhabitable - What have you experienced?
Hi all!
The house is a 2-family I own that I was planning on occupying in the spring once the tenants left (through legal owner-occupy channels). I get a call from the local police department at 4:30am that there was a fire! Thankfully everyone got out unharmed, but it looks like the house will need a gut and is inhabitable. So far I have been told by the fire investigators that it looks purely accidental and it was an electrical fire behind sheet rock.
Meanwhile, I have one set of the tenants that is extremely unhappy (understandably so!) - but I am beginning to get the impression they are going to fight tooth and nail on getting back into the house once rehabbed. According to the adjusters and others, this is probably a 1 year rehab to turnkey. Its an awful situation to begin with, but it looks like there are going to be added stresses with these people.
Anyone else have an experience like this ? Or any similar to share? I have been a landlord for 15+ years and never dealt with a fire before.
Tania
@Tania Patch - Glad everyone is ok! I had one a few years ago on a 3 unit. The adjuster said it was borderline and the offer they gave me put me in a situation where I had to choose the better of two bad options. So I hired a public adjuster to negotiate for me and he almost doubled my claim, so it was well worth it for me to use one and I tore the building down.
As far as the tenants, do they have renters insurance? I would tell them the house will be condemned for the next 12 months and you will assist them in finding new housing
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Tania,
Regarding the tenants who you think will fight to get back in. If you intention is to occupy the house after rehab, you should review the lease with your lawyer. Often, the situation where the house is not habitable will trigger certain actions. The attorney can counsel you best on how to use the lease to set up the situation you want for after the rehab.
If possible, during rehab, address some things that will help you insurance wise later:
- full upgrade of the electical
- full upgrade of the plumbing
- removal of any sheetrock, trim, etc with lead paint
- new roof
- address any drainage/leaky basement issues
- hardwire smoke and CO detectors
I know not all will be able to be done but most are cheaper during a big reno and will make you a better risk for the insurance companies. That can save you on the homeowners Insurance for years.
Typically insurance will help with the cost of relocating the occupant of the house that is no longer habitable. That could be motel cost and/or moving cost to a new rental. I would have the tenant speak to their insurance agent and talk to yours before giving them anything out of your pocket.
Thank you all for responding and the advice! My lease has a clause that I have the option to terminate if the property is inhabitable for more then 90 days (which it will be)- but the town has an ordinance that says I must re-offer the units for rent. So I am not sure which has more weight.
Everything is going to be brand new from the sounds of things. Ideally the space needs to be reconfigured to make better use of it as well.
One of the tenants had renters insurance, the other did not. There is no way I am offering anything out of pocket as both are behind in rents as it is.