6 Things Landlords Should Do After a Fire in a Rental Property, Potential Losses, & Tenant Rights

If you are a property owner, your concern should not only be filling vacancies. Rental property fires can cause devastating consequences to your business and income, especially since Colorado has among the most number of homes at risk due to wildfire in addition to other causes. In fact, the Colorado Springs and Denver metro areas have the highest concentration of at-risk homes in Colorado with significant reconstruction costs.

This guide aims to help landlords and property managers with their next course of action after a fire in their rental property. It includes their responsibilities, the potential losses they need to deal with, and the tenants’ rights.

Key Takeaways

• Landlords and property managers are responsible for returning their properties to habitable condition and fixing structural damage regardless of who caused the fire. But, this does not mean you will shoulder all of the costs.
• You are not responsible for the costs of your tenants’ belongings unless the fire was caused by your negligence in which your tenants can file a lawsuit against you.
• Landlords can charge tenants for the repair costs if a tenant caused the fire.
• If the fire was an accident in which neither the landlord nor the tenant is at fault, each will be responsible for their own property.

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#1 Investigate & Document the Fire Damage

Your local fire department will most likely investigate your property (make sure to get a copy of the department’s final report), but you should do your own detailed investigation as well. This will be helpful:

• When filing an insurance claim
• In determining the rights and obligations of the landlord and tenants
• In case of potential lawsuits

Below are helpful tips you can follow when doing your own investigation and writing documentation:

• Collect details from your tenants by interviewing them to determine what may have caused the fire.
• Take pictures and include written descriptions. The descriptions should be objective and include things that you saw, heard, smelled, or felt.
• Create an inventory of damaged materials both in the interior and exterior of the building. Include structural components (walls, windows, etc.) as well as kitchen countertops and cabinets.
• If possible, include the specific models of items such as equipment or appliances.
• Document damaged personal belongings too.

#2 Determine Who Is Liable for the Damages

A full investigation is needed to determine the cause of the fire and who will be held liable.

What and who caused the fire will determine who is liable for the fire damages. Although it is your job as a landlord to maintain your rental property in habitable condition, you won’t have to shoulder all of the repair costs, especially if the fire was caused by your tenants.

NOTE: Aside from what caused the fire, the lease terms which most likely contain details about insurance and repair obligations in case of property damage can also help determine liabilities.

Landlord Negligence

Landlords and property managers are responsible for ensuring that their properties are up to code with adequate fire safety systems. They should also make sure that these systems are working properly and maintained regularly. Otherwise, this is considered landlord negligence and you could be held liable for the damages, injuries, or even deaths.

Common Landlord Negligence Examples That Could Lead to Fires

• Building code violations
• Overcrowding
• Faulty structural elements (e.g. electrical wiring and HVAC)
• Inadequate or defective smoke detectors, smoke alarms, fire extinguishers, and fire alarms
• Blocked fire exits
• Improperly stored flammable materials

If landlords knew that a dangerous condition could cause a fire and could have prevented it but did not take any action, they could be held liable.

Your insurance company will cover most of the costs depending on the type of insurance you have. These include:

• Accidental fire damage including structural damage
• Alternative accommodation for displaced tenants
• Wildfire damage
• Business personal property damage
• Legal fees, medical expenses, and property damage in case of lawsuits
• Lost of rental income
• Other potential financial losses

NOTE: Some insurance policies won’t cover intentional fire damage or if the fire was caused by inadequate property maintenance. You need to check your policy’s details.

What About the Personal Belongings of Tenants?

Landlord insurance policies do not usually cover the cost of your tenants’ personal belongings. But if the fire was caused by your extreme negligence, your tenants can file a lawsuit against you for their lost or damaged belongings.

Also Read: Things Every Property Manager Should Know About Fire Sprinkler Systems In Safeguarding Their Properties

Tenant Negligence

You can sue and charge your tenant for fire damage costs if the fire resulted due to their negligence. Some state laws may also require the tenant to keep paying their rent and stop them from discontinuing their lease or moving out. They cannot claim compensation for the loss of their belongings. Tenants are responsible for filing a claim with their renter’s insurance for their losses.

Take note that even if a tenant caused the fire, you should still file a claim with your insurance company. They may seek your tenant’s insurer to compensate for the cost of the damages.

If the tenant does not have a renter’s insurance, they may need to pay for the costs themselves. Lease agreements may also give you the right to terminate the lease after the damage.

What You Should Know About Your Tenant’s Rights

Tenants can terminate their lease if the property is significantly damaged and is no longer inhabitable. You should also check your lease agreement regarding lease provisions which may require tenants who caused the fire to shoulder your insurance deductibles. Lease provisions also contain the rights and obligations of landlord and tenants in case of property damage including fire. This includes arrangements regarding rent payments after the fire.

Tip: It is best to encourage your tenants to get renter’s insurance. This won’t cover damages to your property, but it can help with additional liabilities. 

Also Read: Top 8 Fire Safety Tips & Best Practices for Property Owners & Managers

#3 Contact Your Insurance Company Immediately & File an Insurance Claim

Processing insurance claims often takes time. Most insurance companies also have deadlines for filing claims. So, make sure to file a claim immediately. Your insurance can cover most of your losses. 

Tip: List Down Losses That Were Not Covered By Your Insurance

Rental property owners can obtain tax deductions for their losses caused by fire.

Losses that were not covered by your insurance policy can be included in your next tax deductions. Take note that the deductible amount will depend on the extent of the fire damage. Costs covered by your tenant/s and other assistance provided to you by other organizations will also impact the deductible amount.

#4 Assist in the Relocations of Your Displaced Tenants

If the fire was caused by the landlord and temporary or even permanent housing is required for the displaced tenants, the landlord may need to pay for relocations. You might also want to consult your insurance company if your policy includes relocation reimbursements. However, take note that fire due to building code violations and owner negligence may make reimbursements difficult.

There are also agencies that can help in finding new housing for tenants such as the Red Cross. You can find other organizations that can provide assistance in your local area too.

#5 Contact a Fire Restoration Company & Start the Restoration of Your Property

Set up an appointment with a fire restoration company to get your property back into a habitable condition as soon as possible to avoid prolonged loss of income. After that, secure your property first to avoid additional liabilities in case someone accidentally gets injured on your property. You can put up fences and board up windows and doors while the restoration process is not yet done.

Never perform the restoration yourself because fire damage is usually severe and can compromise the structural integrity of your property.

#6 Get Your Rental Property Reinspected

Lastly, have your property reinspected by involved city officials including your local fire department after restoration so you can get a certificate of occupancy to release your property. This will make your tenants feel safer and will help in rebuilding your public image to protect your income.

Also Read:

• What is a Fire Watch: Procedures | NFPA & OSHA Requirements
• How Much Does A Fire Watch Cost?
• 11 Benefits of Hiring 24-Hour Onsite Fire Watch Guards for Your Business

FAQ

Conclusion

Fire damage can lead to significant losses that you might end up shouldering if the fire was caused by building code violations. This includes inadequate and poorly maintained fire protection systems. It is your responsibility to keep your property in good condition and perform necessary repairs and maintenance. Installing adequate and fully functional fire protection systems is among the first things you should do.

You can rely on Scout Security’s premium fire watch guard services in the Denver Metro and Colorado Springs areas to keep watch on your property 24/7. We offer customized solutions to meet the specific needs of your rental property to ensure safety from fire hazards. Contact us now!