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About a month ago, our rental home caught fire. There was extensive structural damage to the garage, attic and portions of the house. It was determined to be uninhabitable by the building department. We are currently in the process of getting the final estimate from our contractor, working with the insurance company, etc. Fortunately, the tenants did have a place to go and were due to move out within a few weeks anyway.
My question is, do we need to return the security deposit? It’s $2500.
Our deductible with our insurance company is $1000. There is going to be upwards of $100,000 in damages when it’s all said and done.
A final determination of cause has not been found yet, but the fire started in a garage that has no electricity, so it’s thought to be accidentally caused by the tenant.
Do I have to await the final cause of the fire? Shouldn’t I notify the tenant by letter within 30 days if keeping the deposit? I can’t put together an itemized list of damages because I don’t have that from the insurance company yet. I also, as I said, don’t have a determination that it’s their fault. According to our lease, they were supposed to have renter’s insurance, but not sure they did. From what I understand, my insurance company can go after theirs for damages, if they do.
My thought is to send them a letter and tell them we are awaiting determination of cause and until we do, will be holding their deposit. Keep in mind, these were very good tenants, with the recent exception of burning our house down.
About a month ago, our rental home caught fire. There was extensive structural damage to the garage, attic and portions of the house. It was determined to be uninhabitable by the building department. We are currently in the process of getting the final estimate from our contractor, working with the insurance company, etc. Fortunately, the tenants did have a place to go and were due to move out within a few weeks anyway.
My question is, do we need to return the security deposit? It’s $2500.
Our deductible with our insurance company is $1000. There is going to be upwards of $100,000 in damages when it’s all said and done.
A final determination of cause has not been found yet, but the fire started in a garage that has no electricity, so it’s thought to be accidentally caused by the tenant.
Do I have to await the final cause of the fire? Shouldn’t I notify the tenant by letter within 30 days if keeping the deposit? I can’t put together an itemized list of damages because I don’t have that from the insurance company yet. I also, as I said, don’t have a determination that it’s their fault. According to our lease, they were supposed to have renter’s insurance, but not sure they did. From what I understand, my insurance company can go after theirs for damages, if they do.
My thought is to send them a letter and tell them we are awaiting determination of cause and until we do, will be holding their deposit. Keep in mind, these were very good tenants, with the recent exception of burning our house down.
~Melissa
Wow, by the last statement, looks like you already have the blame put on them.
No, but the fire inspectors said the fire was unusual and it started in a room without electricity...so, if they were at fault, I suspect it was accidental. I'm certainly not "blaming" anyone. I'm waiting for someone else to make that determination. My question is about the security deposit and how to handle it.
CA law pertaining to security deposits doesn't cover this exact situation, but it does address damages caused by the tenant where the cost of repairs is yet to be determined. See California Civil Code Section 1950.5 (g) (3).
At any rate, in order to sue you successfully, the tenant would have to show that you had retained the deposit in bad faith, which does not appear to be the case.
Keep in mind, these were very good tenants, with the recent exception of burning our house down.
~Melissa
Best line ever on this forum!!
Actually, we had a somewhat similar situation. We had a unit we managed (not one we own) that the small child of the tenant was playing with matches, started a fire and burned part of the unit down. It was in a 4 plex and SOMEHOW didn't spread to the other units.
The tenant did not have renter's insurance and moved out of the country after this happened, so we had absolutely no way to collect, or even to send them an itemized list of damages or collect the deductible.
After consulting an attorney, the owner decided that since there really was no way to collect, there was nothing they could do. The owner had to pay the deductible, and the insurance company ate all the costs. The owner got to keep the security deposit, which was less than the deductible on the insurance claim.
As for your situation, I would definitely suggest consulting an attorney in this case. Beyond that, unless the attorney tells you differently, you probably should send a certified letter stating that the situation is still under investigation and the security deposit will be processed once the fire department issues their determination.
I would imagine with the tenants loss of some or most of their things , and likely no renters insurance that they are hoping you will give them back their deposit of $2,500.
Sounds like you have thoughts of keeping it...
Where is your Mercy ?
Whether they did or didn't carry Renters Insurance , and whether they accidentally caused a fire , you will be REIMBURSED , yes , by your insurance company ?
Why even fathom keeping their deposit ?
I can see if they had a Meth Lab and blew up your house.
Or if one of the tenants was an arsonist and just wanted to see your house burn.
I would imagine with the tenants loss of some or most of their things , and likely no renters insurance that they are hoping you will give them back their deposit of $2,500.
Sounds like you have thoughts of keeping it...
Where is your Mercy ?
Whether they did or didn't carry Renters Insurance , and whether they accidentally caused a fire , you will be REIMBURSED , yes , by your insurance company ?
Why even fathom keeping their deposit ?
I can see if they had a Meth Lab and blew up your house.
Or if one of the tenants was an arsonist and just wanted to see your house burn.
But an accident ?? come on...
Yes and no. They won't be fully reimbursed. They have to pay the $1000 deductible, which should be the tenant's expense. In addition, the insurance company may choose to drop insurance on the property after doing the repairs, or could substantially raise the rates. The LL is already not charging the tenant for everything they will be out, since they will very probably have an increased rate for YEARS.
I think keeping the amount of the deductible is VERY fair on the part of the LL, if the tenants caused the fire. An arguement can easily made that the entire deposit should be forfeit, and I think a judge would likely agree. Leave it up to the insurance company to go after more than that if they can. If the tenants were arsonists or had a Meth Lab, then there would be criminal charges involved instead of only civil.
Look at it this way. Let's say I rent a property and have a $2000 deposit on it. I have a big party and wake up the next morning realizing that now there is $5000 worth of damage to the property. I can cough up the $3000 deficit, or I can "accidentally" burn the house down and get my original $2000 back in full. If I'm irresponsible enough to have a party that destroys the house in the first place, then I am probably stupid enough to burn the house down. Looking at it that way, can you see why, if it worked the way you would like, all irresponsible tenants would have "accidents" the day before moving out?
I would imagine with the tenants loss of some or most of their things , and likely no renters insurance that they are hoping you will give them back their deposit of $2,500.
That is why tenants should always have insurance.
Mercy doesn't enter into this...it is a business tranaction.
A final determination of cause has not been found yet, but the fire started in a garage that has no electricity, so it’s thought to be accidentally caused by the tenant.
~Melissa
Quote:
Originally Posted by backandforth83
CA law pertaining to security deposits doesn't cover this exact situation, but it does address damages caused by the tenant where the cost of repairs is yet to be determined. See California Civil Code Section 1950.5 (g) (3).
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Agree with the above^^^ until determination is made to the cause, the outcome is up in the air, however, state law still has to be followed. Another thought, if the fire determined tenants fault, the damages may exceed security deposit and require you to retain an attorney to recover the monies.
In the future, a requirement for proof of insurance on the tenants part should be mandatory in the rental processes for their protection as well as yours.
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