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Posts: 3
Reply with quote  #1 
I own a rental unit in a town house in Orange County, California.  Last week the unit next to the rental had a major fire, and there was damage to my rental unit.  No injuries, fortunately, but the messy process of cleaning up (legally and otherwise) begins. 

Here are some details:

The fire next door was caused by an overturned lamp/light.  The damage to my rental unit included a hole in the ceiling from the firefighters, flooded carpet, damaged wood floors, broken windows, and 2 ruined computers. 

There was coverage from the homeowners' association for external damage.  The renters did not have renters' insurance, and I did not have any additional coverage.  The owner of the neighbor's unit does have coverage; I am assuming his renters do not.

I am afraid I do not know much about my rights and responsibilities at this point.  The renters have been living in a hotel since the fire, and they are expecting me to pay for the following expenses:

-computer repair (x2)
-moving expenses
-return their deposit (I'm prepared to do this, of course!)
-an additional month's rental

A total of $14,000!

The fire happened 10 days ago.  According to the lease agreement, the lease terminates immediately if the house is not inhabitable. 

I am looking for suggestions from here.  Am I responsible for the former tenants' expenses listed above?  How will I recover the repair costs of the unit so it is ready to be rented again soon?


Posts: 3,817
Reply with quote  #2 
Are you saying that you had no insurance coverage for this unit?  Was there a mortage on it?  Almost every mortgage bank requires rental insurance coverage by you on the unit.  If you have insurance, turn this into the insurance.  They will consider the renter's request, and then decide if they should pay it.  They will then pursue the gulity party for reimbursement.  Always have rental insurance on any unit to cover emergencies such as this.  Pay a little extra for rent recovery, which would pay your rent if the unit was uninhabitable like this.

If the neighbor's were the ones to cause this fire, your tenants should be requesting reimbursement from them.  You should give them prorated credit for any rent left in the month of the fire and return that to them with the deposit.  If the neighbors who are at fault are also tenants, then they should request reimbursement from the owner of that unit.  You did not cause this fire and should not be liable to make repairs to your tenant's belongings or pay for their things.  (In any event, how are you responsible for their food?  They would have to eat no matter where they lived.)

Is the fire investigator done with his report?  That should say who was at fault here, even if it was accidental.  That person or the owner of that unit should pay for everything.  See an attorney to determine your rights and responsibilities.  He can make sure the correct person pays for all damages here and can represent you in a suit if needed.  Call one who has dealt with fire claims.

I just went through this in September myself.  A tenant caused $94K of damage to the duplex, destroying his unit and making the other tenants homeless.  I kept his deposit to put towards the insurance deductible since he was at fault, and the insurance company is pursuing him for the rest.  He left the state trying to avoid this, but it will probably not work since I know the area he is in.  I'm sure the insurance company is chasing him down.  Nearly every wall in this building had to be stripped to the studs and rebuilt.  BTW - The fire in my unit was not without casulties.  A girl died in the fire.  Be glad the fire there caused so little damage.  My duplex is still not livable yet.

Posts: 3
Reply with quote  #3 
Thank you, OHLandlord, for your thorough reply.

I own the unit outright and, unfortunately, thought that the homeowners' association had coverage for the unit . . . I now know that this only covers exterior damage. 

Since I have no insurance, it seems that I am on my own to hire a lawyer to seek payment for the repairs.  The lease with my tenants was through August of this year; is there any chance that the lost income can be a part of the claim?

Thanks again for the help--I've learned quite a bit (the hard way) in the short time since this happened.


Posts: 3,817
Reply with quote  #4 
I wouldn't see why your attorney couldn't include lost income in the claim against the tenants who caused the fire, their insurance company, the owner of that unit, and his insurance company.  (Let their insurance companies fight it out who should pay you.)  Your business suffered a loss of income because of their actions.  You should seek repair costs and lost income.  Your tenants should also sue them (perhaps in the same suit) for loss of their property and their expenses they suffered because of the fire.  An attorney can lead you in the correct direction.

And please get a rental insurance policy for that unit once the place is repaired.  Make tenants get renters' insurance and list you as a co-beneficiary on their policy so that it will pay them for their losses in an emergency and pay you for losses should they do something like this.

Posts: 3
Reply with quote  #5 

Thanks so much!!!  You have been very helpful during a stressful time!


Posts: 13
Reply with quote  #6 
When you bought your rental home so your plans did not involve a fire so you should  prepare documents.
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