Rental property fires: The 10 steps landlords need to follow

Last year, the Ghost Ship fire in Oakland gripped the nation’s attention. 36 people were killed after a fire broke out in an artists’ collective in a warehouse building, which was being used illegally as a living and event space, but was riddled with fire code violations.

Just a few weeks ago, the Grenfell Tower fire ravaged a 24-story apartment building in London. Residents had been complaining about dangerous conditions in the building for years, but to no avail; and the recent addition of combustible insulation panels may explain why the fire spread so quickly. The death toll is currently at 80, but it’s still climbing.

More often than not, however, a rental property fire happens without much fanfare. Just because we don’t hear about them often doesn’t mean that they don’t happen on a regular basis. There are an estimated 100,000 rental property fires in any given year, causing billions of dollars’ worth of property damage along the way, according to the National Fire Prevention Association.

Rental property fires tend to fall pretty low on the list of things that owners worry about. Most owners are preoccupied with more immediate concerns, like filling vacancies and dealing with problem tenants. Nevertheless, rental property fires do occur—and when they do, a property owner may feel at a loss about how to respond.

We’ve put together the following guide for landlords in the event of a rental property fire. Hopefully, most landlords won’t need to use this guide, but it’s better to be prepared just in case.

Collect Details About Your Rental Property Fire ASAP

Have an honest conversation with your tenants to see whether they understand the cause of the fire. Sometimes, tenants will try to cover up the cause of a rental property fire; perhaps they were smoking in the unit against the provisions of the lease, or maybe they hosted a party and someone accidentally knocked over a candle. These things happen; but it’s also entirely likely that the fire was caused by an electrical problem. In any event, you need to figure out what happened as quickly as possible, and collect details while the information is still fresh in people’s minds. The fire department will likely conduct its own investigation of your rental property fire, which will corroborate your tenants’ story (or not). It goes without saying that you should cooperate with the fire department’s investigation every step of the way. Be sure to collect a copy of the department’s final report.

Help Your Tenants Find New Housing

Depending on the extent of the fire, tenants may need to find temporary or permanent housing. There are a number of agencies that assist tenants who have been displaced by rental property fires, most notably the Red Cross. There are countless others, most of which operate at the local level. Contact your local officials to see what other support organizations might be able to assist. Depending on the cause of the rental property fire, the terms of your lease, and local housing regulations, you may be required to front the cost of relocating your tenants. These costs are usually reimbursed by your insurance company, assuming that the fire was not a result of owner negligence or known code violations. This is also a good time to remind tenants to file a claim with their renters insurance provider, if they have applicable coverage.

Contact Your Insurance Company Immediately

It can take time for insurance companies to process claims. Some insurance providers are certainly better than others. Nonetheless, you’ll want to file a claim for casualty loss as soon as possible to get the ball rolling. The hallmark of casualty loss claims is damage that’s caused suddenly. A rental property fire is one of the most common types of casualty losses faced by property owners, and it’s a loss that is almost universally covered by providers.

Set Up Appointments with Fire Restoration Companies

Each day that a rental property sits vacant is a day that a landlord foregoes revenue. As such, it is important to get the property back online and in habitable condition as quickly as possible. The best way to do so is by contacting fire restoration companies. Set up appointments and start getting quotes. Confirm with your insurance company that the fire restoration companies you’ve contacted are approved vendors; if not, request a list of those that are to save yourself time.

Document the Rental Property Fire Damage

As long as the fire department has given you the all-clear to enter the property, begin taking pictures to document any damage caused by the fire. Take an inventory of anything that was damaged (both interior and exterior); note specific makes and models of appliances, equipment, and other items when possible. Don’t forget to document structural elements as well, including kitchen cabinets and countertops. All of this information will be valuable for the insurance claim process, in addition to any lawsuits that might come as a result of the rental property fire.

Secure the Rental Property

Of course, you’ll want to repair or rebuild your property as soon as possible. However, this can take time to set in motion. In the meantime, secure the property to prevent any trespassers from entering. The last thing you want is to take on a new claim in the event that someone is injured on the property. Board up doors and windows that have been damaged. Cover any exposed area with heavy-duty plastic. Consider installing a temporary but secure fence around the property as well.

Determine Liability

After speaking with tenants and evaluating the fire department’s report, the likely cause of the rental property fire should be evident. The cause of the fire will determine who is liable for the damages. The landlord will always be responsible for fixing structural damages and returning the property to habitable condition—but that does not necessarily mean you are financially responsible for doing so. If the fire happened because of faulty structural elements (electrical, HVAC, etc.), then you are considered liable. Your homeowners insurance should bear the brunt of the costs on your behalf, but expect premiums to go up as a result. If your tenants (or their guests) caused the fire, then your insurance company may pursue their renters insurance company. If your tenants don’t have renters insurance, your provider may seek compensation from the tenants directly.

Your homeowners policy will not cover the costs of tenants’ belongings, nor are you responsible for replacing them. In cases of extreme negligence, tenants may file a lawsuit against the landlord to recover costs of their personal belongings; but otherwise, these damages are only covered by renters insurance. This is a good reminder as to why some landlords may want to include a lease provision requiring tenants to obtain renters insurance. At a minimum, include language in the lease that requires tenants to cover the costs of landlord’s deductible in the event of a rental property fire that is deemed to be caused by the tenants.

Begin Repair & Restoration Efforts As Quickly As Possible

An important caveat: DO NOT try to take on this work yourself. Damage caused by a rental property fire is unlike typical property damage. Water, smoke, and fire can create unsuspecting structural damages that weaken the entire building. It is best to hire a professional to complete the repair and restoration process after a rental property fire.

Have the City Re-Inspect the Rental Property

You’ll most likely need the fire department or inspections department to walk through and re-inspect the property prior to granting a certificate of occupancy, which is the certificate needed to release the property.

Write Off Uninsured Losses

Any damage that was not covered by the insurance company results in a deductible loss that you can write off on your taxes that year. The deductible amount will depend on whether the property is considered a partial or total loss. The deductible amount must be reduced by any payments the tenant makes to you for repairs associated with the fire; any court awards paid out to you because of the fire; and the value of any services provided by relief organizations after the fire.

A rental property fire is one of a landlord’s worst nightmares. Because it happens so infrequently relative to other issues, like the eviction of a tenant for non-payment of rent, most landlords panic and don’t know how to respond in the aftermath of a fire. If the unimaginable happens to you, follow these procedures to remain levelheaded during this period of extreme stress. And remember: as long as everyone is safe, this too shall pass. Investment properties are valuable and mean a lot to their owners, but they can be rebuilt, and losses will be recovered in due time.