What To Do When Your Rental Property Burns Down

If you are lucky, you will never have to figure out what to do when your rental property burns down. It is one of the worst things that can happen to a property you own.

Three Scenarios

A fire can do a little damage or completely destroy the entire home. I have had to deal with several different fire scenarios and they are never fun.


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Scenario One

Once, a member of the maintenance staff showed up to repair a fence at a rental property. The tenant saw him and walked out to talk to him.  The tenants always loved this particular maintenance guy.


The problem was that she walked away from a boiling pot on the stove top.  This resulted in a fire and the entire kitchen was destroyed.   The maintenance man was able to put the fire out and save the structure.


Unfortunately, if the maintenance person had not been there, she wouldn’t have walked away from the stove!  The fire cost the landlord thousands of dollars to repair and a lot of inconvenience to the tenant.  The landlord paid for the damage in this case.


Scenario Two

In another situation, the tenant failed to call the rental office and report that his furnace had quit working. This tenant decided to use space heaters to heat the home. One of the space heaters over heated and burned the home to the ground.  This tenant had three children and one of them ended up in the ICU for several weeks.  Luckily for the family, everyone recovered.


This home was a complete loss.  The landlord rebuilt this home and sold it.  The funny thing is that the tenant never called to say the home burned down.  We didn’t find out that the home burned down until one of our contractors was working in the area and called to ask if we wanted him to board up our burned out house!  I was stunned and had no idea what he was talking about!  We were lucky we were not fined by the city. The fire happened on a Friday night and we didn’t find out until Wednesday morning.  There are rules dictating how quickly these homes have to be boarded up.


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We didn’t have any vacant homes at the time to move this family into.  So, the decision was made to refund the tenant’s security deposit so the family could move into another home.  Yes, it was the tenant’s fault technically but it was the right thing to do.  Their church rallied behind them and helped them get clothing, dishes and furniture for their new home.

Scenario Three

In another situation, a detached garage burned down.  Luckily, the main house and none of the neighboring homes were damaged.  We found out that the garage burned down as a result of the tenant installing wiring for a new light. It was done incorrectly and a fire resulted. In this case, the landlord was not going to rebuild the garage.  But, we did end up rebuilding the garage because the tenant wanted it.  The tenant agreed to pay the deductible and insurance covered the rest.


What Do You Do If Your Rental Burns Down?

Hopefully, you will be lucky enough to never have to deal with this type of situation.  But, if you do end up with a fire in one of your rentals, you need to know what to do.

  • If you are on the scene at the time of the fire, get the fire marshal’s contact information. But, you can always call the fire department that responded at a later date if you aren’t there at the time of the fire.
  • Make sure your tenants are ok and have a place to stay for the night and possibly the next few days. Family members or friends may step in and allow them to stay with them. But, be prepared to put them up in a hotel at least for a few days.
  • Contact your insurance company and report the fire to start the claims process.
  • Talk to your tenants and make sure they contact their insurance company as well. It is a good idea to require your tenants to carry renters insurance.
  • Make sure to document the property with pictures and/or videos.
  • Assuming the home was not completely destroyed, put together a written inventory of damaged items that need to be repaired/replaced.
  • List the appliances that were destroyed along with model and serial numbers. You should keep a list of these items in a file from your move in inspection.


Reparable Or Total Loss

Depending on the condition of the home, you will need to take one of two courses of action. 

  • For a home that has damage, you will need to contact a restoration company to help deal with the damage.  If the fire was contained to a small areas, the house may be able to be salvaged.  In this situation, talk to the fire marshal and ask when you and the tenant can walk through the property to determine what is salvageable.  Often times, there will be cherished items that can be saved.
  • A property that is a total loss will need to be secured until it can be torn down. That may entail boarding up where needed and having the utilities shut off. Check with your local code enforcement office as to the requirements and time frames to complete the board up so you do not get fined.


Also, make sure you can rebuild the home! Some areas have new regulations that you have to follow when you rebuild. When the entire house burned down, the contractor had to keep the foundation or the house could not be rebuilt. This created a whole new set of issues.


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The Aftermath

Initially, everyone is in shock and disbelief that the fire has occurred at all.  After the shock wears off, there will be a lot of questions as to who is responsible for paying for the repairs and restoration.

  • If the fire was the tenant’s fault, do they have to pay for fixing all of it?
    • Where do landlords find a reputable fire damage restoration company?
    • Who pays the landlord’s insurance deductible?
    • What if the fire was due to landlord negligence?
    • Does the landlord have to pay to replace the cost of lost tenant possessions?
    • Can landlords do fire damages repair themselves?
    • Do landlords have to pay for tenants to live elsewhere?
    • What about the lease agreement now?

The answers to these types of questions will factor into the way that landlords and tenants move forward after such a devastating event.


Who Pays For These Damages?

Don’t get your hopes up that the tenant will have any money to make repairs.  After all, you own the property, not the tenant.  You are going to be ultimately responsible for paying to repair everything.  Which means you, as the owner, had better have great insurance on all of your rental properties. 


Your tenant may need to be reminded that your insurance company will not pay to replace anything belonging to him and his family.  The tenant must contact his insurance company to get his renter’s insurance to pay up.  If your tenant doesn’t have renter’s insurance, it will be up to him to replace lost belongings. Often times, churches or local organizations can help the family replace some of their belongings.


Getting Your Rental Back In Shape

Depending on the damage to the rental, it may be a quick fix that only takes a few weeks or it may take months to get the home rebuilt.  The more damage there is, the longer it will take to get it back into rentable shape.


Unfortunately, not only are you going to have the cost of repairing the property, you are also going to be losing rental income while it is being restored or rebuilt.  This is a good reason to have a contingency plan and to have money put back for a rainy day.  You will need to be able to cover the cost of your deductible and the monthly mortgage payment until you can get it rented again.


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