Reason not to rent to smokers - terminate tenant w/ few options?

[Dan H.]

We no longer rent to smokers but we used to rent to smokers with the condition that they smoke outside.

We have a tenant that is a from the time that we rented to smokers.  They have been good at only smoking outside the unit but not as good at making sure their butts get properly disposed of (but not super bad).

Yesterday we had a fire at their unit.  It took out both of our units that were on that RE.  The fire department investigation determine it was not electrical.  They theorized a reflection maybe (we have dangerously low humidity right now).  The insurance investigator today determined a different (and I suspect more likely) cause.  They indicated it was the result of a discarded cigarette.  They believe that it caught the juniper tree on fire that caught the eves on fire (versus the fire department thought the eves were the original source of the fire and had burned the juniper).

Even though we had a tenant that followed our rules (our old rules that we grand fathered them in), our units are out of commission due to having smokers in one of our units.  The other unit is/was occupied by a non-smoker.  The city has tagged both units as uninhabitable, but allows entry to retrieve belongings (it has heavy damage but is not in danger of falling down).

To add to the saga, their credit is far worse than it was when we placed them in our unit due to the husband having chronic back issues that have prevented him from doing his job full time.  They also have made efficient use of the backyard using it to grow a lot of their own food.  They have little money; they sacrifice to live in our unit.  Therefore, they want to stay with us even if the repairs are to take 6 months or longer (we were told that the main support header for the 2nd story likely needs replacing and if it does the repair will likely be at least 6 months).  They could not get into a place as nice as our place with their current credit history even if we indicate they have never missed a payment (they have been late but virtually every time they let us know prior).   In addition, many places for rent do not have OK size private yards that they desire.

The issue is we really do not want them as tenants.  We no longer accept smokers, even those that indicate they will smoke outside.  Their smoking is the likely cause of a fire that is going to be a hassle to deal with (we have insurance for everything, including lost rent, so it is only the hassle).  In addition, they were rough on the property.   They have 3 kids, 2 dogs, 2? cats in a 2 BR unit.  By law we can not restrict to less than 5 in a 2 BR (law is 2 * numberOfBR + 1).  The unit is one of the units we allow pets (we allow pets in units with its own yard charging extra deposit and pet rent - We are not anti animal, we are anti animal in units where having animals can negatively impact our other tenants and believe those with service animals should find animal appropriate units) because it has its own OK size yard (it is small by standards outside of areas like San Diego but decent size for a San Diego rental yard).  The unit would rent easily at market rate in an one hour open house (I would expect multiple applicants).  Our current tenants rent is around 10% below market rent.

I feel sorry for the tenants (they are a nice family but not perfect) but I think they need to find another place.  They are the likely cause of fire, 6 months is a long time for them to be out of the unit, they are rough on the property, they really cannot afford the rent (they would not make our income threshold if trying to rent the place today), their credit would not qualify for our unit if they appied today.  I feel sorry because I know they cannot find another similar place.  They will likely need to find a smaller and cheaper place (our unit is 1150', 2/1.5/1, with decent size back yard) which will make their tight living arrangement so much tighter (no one forced them to have so many animals).