What Happens when the Tenant Burns Down the House?
What Happens when the Tenant Burns Down the House?
blog1.jpg

Aug 26,2019

What Happens when the Tenant Burns Down the House?

In Georgia, the tenant is statutorily obligated to cover the rents up until the property is reoccupied. The legislative mindset on this is that a tenant in possession of a property with an obligation to pay rent is akin to a home owner with mortgage and tax payment obligations. If the house becomes uninhabitable, the mortgage and taxes must still be paid. That's why it is a very smart idea for tenants to obtain renter's insurance.

In reality, most judges will deem that rent due will abate at some point or other during the recovery period, depending upon fault, often times effective the date of the event, when the tenant can no longer enjoy the full use of the property. In essence, what the law accomplishes is establishing legal responsibility for the loss. The insurance companies will turn to the law to ascertain which carrier will carry the cost burden. 

Most leases, including ours, also provide that at-fault tenants will owe rent up until the day the property is either reoccupied by them or someone else starts paying the rent. But I have never heard of a case wherein the tenants paid a single dime for rents due after the property became uninhabitable. A colleague of mine told me that he remembered a case where the tenants caused the fire, paid no rent, were later sued by the landlord's insurance company, and won a sizeable settlement, but that money went to the insurance company, not the landlord.

If the at-fault tenants have renter's insurance, in the long run, their carrier will probably pick up the tab, but it will most likely be settled behind the scenes through subrogation. In that case, the carrier judged to have the liability will compensate the other. You'll probably never know about that outcome. If your tenants have no insurance, your carrier will still cover your losses and they might sue the tenants, if they think it's worth their time and money to pursue it. In that case, you might learn about that outcome because you could be subpoenaed as a witness for the plaintiff (your carrier).

Regardless of law or contract, in practicality, I would be very surprised if a tenant would actually pay rent to a landlord when they aren't able to live there. Not that they have the legal right not to, I just don't see it happening. In fact, since a move-out inventory would be baseless, since the property has been destroyed, the at-fault or even not-at-fault tenants would even be entitled to get their security deposit back, less your carrier's deductible. They might even try to make a case for being refunded pre-paid rent. If it came right down to it, a lot of judges would probably support that demand. This is why you definitely need landlord's insurance with a rent payment rider, if it's not an integral part of the policy.

Do you need a reliable property management company in your area? Contact 3 Options now.

 

Daniel R. Wilhelm
Master Property Manager
3 Options Realty, LLC., CRMC®
555 Sun Valley Dr, STE B4
Roswell, GA 30076
678-397-1282
dan@3OptionsRealty.com

Recent Blogs

small1
Jan 21,2022
What to Expect as a…

Here at 3 Options Realty, January is a month…

Read More
small1
Jan 18,2022
Benefits of Hiring a Local…

If you own a rental space is an excellent…

Read More
small1
Jul 21,2020
Pros and Cons of Landlord…

The main purpose for writing this BLOG is to…

Read More

Landlord Options

small1
Owner Portal

In appreciation for your continued patronage we are pleased to offer you a management fee rebate equal to 2 months of management fees for any…

Read More
small1
Leasing & Management

If you are interested in professional property management services, you probably have some questions about the process and we have a few questions we…

Read More
small1
Rent Disbursement

Standard Rental Proceeds Disbursement Policy. It is the standard policy of 3 Options Realty to disburse monthly rental proceeds to property owners between the 15th…

Read More

We Are Ready to
Take Your Call

lander1

If you have been rummaging through web results for “property management companies near me,” then you are at the right place. 3 Options Realty’s property managers in Atlanta are experienced and trained to deliver top-tier service. Call 3 Options Realty to speak with a friendly representative today to learn more about our property management & real estate services. We are ready to take your call.

Buy, Sell & Rent with 3 Options Realty

lander1

We use professional market research to determine fair-market rent, and we use broad market advertising to reach a large audience. Our agents will also help you prepare your property and skillfully present your property. Prospective tenants will undergo comprehensive interviews and background screening before we negotiate with them the rental agreement using our proprietary, attorney-reviewed forms.