Rental Rehab after fire and tenant issues

[Todd Powell]

I'll preface this that I will be speaking with a local attorney to get their opinion on Monday but wanted to see what this group thought of my situation.

I have a duplex that had a single room and contents fire.  The fire was caused by an extension cord, coiled under a pile of clothes that was running a window air conditioner.

The tenants have lived in the unit since 1994.  I purchased the unit 3 years ago.  They have always paid like clockwork.  The unit was trashed from smoke damage throughout and minimal upkeep over the last 26 years.  I insisted they relocate so that I could rehab the unit.  I agreed that they could move back in after the rehab.

At this point we're 80 days since they moved out, 20 of which were used by the cleaning  / rehab company.  It took another 20 days to get my insurance to approve the use of my contractors for the rehab.  At this point we're about 2 days from being done and we've only been working on it for about 40 days.  The rehab has included all new attic insulation, all new windows throughout the unit.  New sheetrock, tape, texture etc. in the fire room.  New Kitchen cabinets and floor.  New bathroom floor and all fixtures.  New electrical fixtures throughout.  New Paint.  Refinished hardwoods.  A major rehab and it will ultimately be a very nice home, a dramatic improvement over what they were living in before.

Today I got my 3rd text message from the tenant ranting about how long this rehab is taking and what a hardship it has been.  They're living in temporary executive suites which are less than a mile from the apartment.  

After receiving this morning's message I immediately called the tenant.  After listening to his rant for about 30 seconds I told him to look for another place to live.  He replied "you're evicting me during covid", I replied, "you had a fire in your apartment".  He then asked "do I need to speak to my lawyer" to which I replied, "knock yourself out".  

As I said before, I plan to speak to an attorney on Monday.  Does anyone have any experience with something like this?   We live in a very good rental market.  Most likely this unit will have 20+ applications in a few days if put up for rent.

I implied they would be able to move back.  I have changed my mind based upon their actions since moving out.  We do not have a current signed lease agreement as I was planning on having them sign a new lease before moving back in.  The lease agreement they were under was drafted 7-8 years ago by previous landlords.  

I'm open to any guidance or suggestions you can offer as I move forward with this situation.

[James Mc Ree]

You told your tenant they could move back into a newly rehabbed home if they move out immediately. They did so and moved into some pricey temporary housing, based on your offer. It looks like you have a verbal agreement. Your attorney will advise if that is a contract and enforceable. You may be stuck with it or dealing with a lawsuit that could hold your property hostage. Some leverage you have is requiring the tenant to pay the cost of repairs. You could let them come back with reimbursement or let them go with discounted or no reimbursement.

It might be too late now, but I would firmly show your tenant how generous you are being. Your tenant nearly burned down your entire house with their negligence. They are out because of their own actions, even though they were accidental. Your are out money because of their actions. Your life is impacted having to manage a rehab you weren't planning on because of their recklessness. Tenant, "DON'T YOU DARE TELL ME YOU DON'T LIKE WAITING A COUPLE MONTHS!" Ok, I'm fired up for you. 8-) You want to position yourself favorably in this whole thing. They created a problem. You are fixing it and letting them come back into an awesome, like new home. Be grateful or go away, tenant.

I had a small fire in a property about a year ago. Physical damage was negligible, but smoke damage was throughout and electric/gas were shut off because wires were burned. The tenant started the fire with negligent use of a candle in the basement, which was acknowledged. Fortunately, the tenant quickly acted to put it out which is the reason damage was limited. I told the tenant she had to move out due to health concerns and my need to renovate the place. She wanted to come back, but I didn't promise anything as I didn't know if I wanted her back. Rent was generally reliable, but she was hard on the house prior to burning it.

A week before moving out, she gave me the "Why are you being so mean to me?" line while complaining I was putting her out. I firmly explained to her how she nearly burned my house down and killed her own family, risked her neighbors smoking one of them out of their house, and is causing me to spend a fortune to fix the damage she caused. I pointed out she has no renter's insurance because she chose not to buy any which puts the full financial impact on me (dumb mistake on my part). I also pointed out I was giving her damage deposit back to help her get into a new place and told Section 8 she did not owe me anything. Her voucher would have been revoked if she left owing me money. I wanted her out, but not homeless. She had no money.

I then laid out what "fair" looked like: evicted due to damage as written in the lease, loss of her voucher due to debt owed and a lawsuit for damages she couldn't possibly pay. Homeless. Those actions would be devastating to her and her family with an impact lasting years. Instead, she landed in a new home with her voucher and no lawsuit. I then asked how she could possibly ask me why I am being mean to her. She thanked me for being generous and apologized as she's just under a lot of stress.

It looks like the stress you are experiencing with your tenant is the result of a difficult situation for both of you. Apart from the fire, it looks like they are a great tenant with decades of reliable payments, according to your account. I'd try to keep them. Position yourself favorably, but firmly, helping them; get them on a new lease with market rent and require renter's insurance if you don't already. Good luck!