More often than not, house fires happen without much fanfare. Just because we don’t hear about them often doesn’t mean they don’t occur regularly. There are an estimated 100,000 apartment fires in any given year, causing cause billions of dollars’ worth of property damage along the way, according to the National Fire Prevention Association. “Fires kill more Americans each year than all natural disasters combined, and affect people from all backgrounds and geographic locations.”
House or apartment fires tend to fall pretty low on the list of things rental property owners worry about. Most are preoccupied with filling vacancies and dealing with problem residents. Nonetheless, 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 house fire. Hopefully, most property owners won’t need to use this guide, but it’s better to be prepared just in case.
Collect details about the fire ASAP. Have an honest conversation with your residents to see how they understand the cause of the fire. Sometimes residents will try to cover up the reason; perhaps they were smoking in the unit against the provisions of the lease. Alternatively, maybe they hosted a party, and someone accidentally knocked over a candle. These things happen. An electrical problem could have easily caused the fire. In any event, you need to figure out what happened as soon as possible and collect details while the information is still fresh in people’s minds. The fire department will likely conduct its investigation, which will help corroborate your tenants’ story (or not).
Help your residents find new housing. Depending on the extent of the fire, tenants may need to find temporary or permanent new housing. Several agencies assist tenants displaced by 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 fire, the terms of your lease, and local housing regulations, you may be required to front the cost of relocating tenants. These costs are usually reimbursed by your insurance company, assuming the fire was not a result of owner negligence or known code violations. This is also an excellent time to remind tenants to file a claim with their renters’ insurance provider if they have appropriate 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. Fire is one of the most common types of casualty losses faced by rental property owners and 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 an owner foregoes revenue. As such, it is crucial 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 contact are approved vendors; if not, request a list of those that are to save yourself time.
Document damages. As long as the fire department has given you the all-clear to enter the property, begin taking pictures to document damages caused by the fire. Take an inventory of anything that was damaged (both in the 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 fire.
Secure the property. Of course, you’ll want to repair or rebuild your property as soon as possible. In the meantime, secure the property to prevent any trespassers from entering. 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, 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 (electrical, HVAC, etcetera), then you are considered liable. Your homeowners’ or landlord insurance should bear the brunt of the costs on your behalf but expect premiums to go up as a result. If your residents (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.
Begin repair and restoration efforts as soon as possible. A caveat: DO NOT try to take on this work yourself. Damaged caused by a fire is unlike typical property damages. Water, smoke, and fire can create unsuspecting structural damages that weaken the building. It is best to hire a professional to complete the repair and restoration process after a fire.
Have the city re-inspect the property. You’ll most likely need the fire department or inspections services department walkthrough and re-inspect the property before granting a certificate of occupancy, the certificate needed to release the property.
Having a house fire is one of a landlord’s worst nightmares. Because it happens so infrequently relative to other issues, most property owners panic and don’t know how to respond in the aftermath of a fire. In the event of the unimaginable, follow these procedures to remain level headed during an otherwise stressful period. Moreover, 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 recovered in due time.