After looking through our options it seems that the condo insurance covers part of the damage and our landlord's insurance covers much of the rest. What's not covered? The tenant's personal property and the cost of their alternative living while we made it livable again (7 days or so). Why is it not covered? We had a standard lease that leave it up to the tenant's rental insurance. The tenant has no renter's insurance. They have no legal recourse and they know it.
So when it came time to discuss what to do, we gave them a couple of options. We happened to find a cheaper place that they could move into while we remodel. We'd simply all agree to break the lease and keep the relationship cordial, so that they may come back when renovations are complete. Alternatively, we could let them live there during the renovations (it will still be livable).
My friend who is a real estate lawyer in MA, said the best idea would try to get them to break the lease give them back some money for damages and try to rent out a fixed up place in September. That sounds like a lot of loss on our side (months without rent, giving them money for their lack of insurance) that we shouldn't have to take in my opinion. His thought was that it's probably worth it to resolve the situation and move on. I didn't really buy it because when you barely break even on the rent, it's painful to go into the negatives. (Regular long-time readers may know that we intended for these to be our primary residence long ago, but we met each other, found much better job opportunities. Breaking even is much better than a big loss in the current market.)
The resolution seemed pretty simple. We went through the section of the lease (fire and causality) with the tenant and outlined the responsibilities of each party. We showed how we were doing our part, but that their part was going to have to be to take care of their possessions as outlined. They saw it our way. They didn't want to go through the hassle of moving (who can blame them?) and said that they'd stay through the renovations. They even offered to help let in the contractor for the renovations. They did request asked for July's rent back and we decided it was probably worth that to move on. It seems reasonable to me that they should get something back for not having the place they were expecting and having gone through this inconvenience as well. Maybe we are just a little too nice.
What would you have done?
Photo Credit: Todd Quinn
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