Rent caught fire

Started by DavidE10 • 21 replies • 2231 views

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DavidE10 (Georgia)
Posts: 2

Posted:

Here is my situation we have 3 phases to our neighborhood you can rent your homes in the first 2 phases but when they built the 3rd phase they wrote a new covenant for it stating that home owners could not rent/lease their homes. Now that being said in the 3rd phase there are 4-5 homes that are being rented and the HOA company that over sees our neighborhood has never inforced the fact that homes are being rented that aren't supposed to be and even with notice that the homes are being rented. Last week my neighbor house that is being rented caught on fire due to a his truck catching fire and parked to close to the house. Now the owners of the home had homeowners insurance but not landlords insurance. So their claim got denied and now have a half burnt house next to mine. Now that being said my house has been up for sale for 2 months with 2-4 family's looking at it a week and now after the fire I haven't even got a call on my house and my real-estate agent is telling me that if I have any hope in selling my home that I need drop price 10-15k and that's not going to happen. I just need to know what I need to do or be working on to get this problem solved with the renting that's going on that shouldn't be so that this never happens again. Any thoughts would be greatly appreciated. Thx

JohnC46 (South Carolina)
Posts: 14,265

Posted:

I am no insurance expert but renters insurance is typically what a renter carries it and cover contents, not the structure. The homeowner carries the structure insurance.

Somewhere in your Covenants might well be some information about rebuilding. Ours say repair and/or replacement must commence within 30 days. See if yours do and get the HOA to put some pressure on the owner.

Ours also name the HOA as a Co-payee so one cannot take insurance money and run.

LarryB13 (Arizona)
Posts: 4,099

Posted:

David,

Contact an attorney. You may have to drop the price to get it sold if you cannot wait. The attorney should be able to advise you whether you have grounds for a lawsuit for the loss you will suffer. The good news is that you have no shortage of defendants: the dumb-butt tenant, the illicit landlord, the blind HOA, and the negligent management company.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By JohnC46 on 08/12/2015 1:01 PM
I am no insurance expert but renters insurance is typically what a renter carries it and cover contents, not the structure. The homeowner carries the structure insurance.

Somewhere in your Covenants might well be some information about rebuilding. Ours say repair and/or replacement must commence within 30 days. See if yours do and get the HOA to put some pressure on the owner.

Ours also name the HOA as a Co-payee so one cannot take insurance money and run.

I am no insurance expert either but my understanding is that if you are renting out your home you need landlord's insurance and not just the standard homeowners insurance that you would have on your owner-occupied home.

RichardP13 (California)
Posts: 3,868

Posted:

I have to assume that your homes are detached and that the owners, per their mortgage, have to carry homeowner insurance.

I am not in the insurance business, but my understanding is that the owners insurance, again based on the clause in the Deed of Trust, would require the house be rebuilt according to the specifics of the policy. A landlord policy, which I have one with my rental property covers only the building, not the contents belonging to the renter, which would be the responsibility of the renters. My rental lease including a clause requiring the renter to obtain renters insurance with 30 days of moving in and provide the landlord a copy.

PitA
Posts: 1,416

Posted:

homeowner insurance will NOT, repeat NOT, cover a rented out structure

only COMMERCIAL landlord insurance will cover

cheat and rent out your house at your own peril

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Guys

Thanks for the clarification. Now I know.

PitA
Posts: 1,416

Posted:

john,

evidently the owner HAD an HO-6 policy which denied coverage since the structure was being rented out (used in a commercial capacity)

the owner's insurance may, or may not, have had the HOA as a 'co-insured'

moot point as the claim was (rightfully) denied

another reason for having AND ENFORCING the no rental clause in the CCRs

same principle would apply if an unpermitted alteration were to 'total', or cause to be 'totaled', the home ~ claim denied

laws, rules, regulations may not be enforced by the HOA

they WILL be used by the insurer (as per the contract signed by the ensured, otherwise known as the policy)

.... this is western 'business as usual' + Caveat Emptor ....

FredS7 (Arizona)
Posts: 927

Posted:

> homeowner insurance will NOT, repeat NOT, cover a rented out structure

Yup

Oddly enough I did once rent a house that I had previously occupied

and insurance for a rental was LESS than homeowner's

(I suppose because there were no possessions to be insured)

So the owner may not have even been saving money. Ironic.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

First off, a HOA technically can not prevent rentals or put in rental restrictions. Only California has any type of enforceable law on the matter and that just came about in 2012. Your HOA may state no rentals or etc... but it does not include a punishment to do so. So what teeth does that hold?

Anyways, the HOA CC&R's should dictate the responsibility of who is responsible for removing the debris and/or if they have to replace. They may be allowed to just leave the lot empty instead of rebuilding. Otherwise, they may be responsible for removing the debris and returning the house to a similar floor plan. Without money to cover the expense, you can imagine that is not going to happen for awhile.

Lowering your price may not even be related to this situation. You simply may have your house sale price set too high. You can't just set your house sales price and expect to get it. It has to be in the same range of other homes of similar size/features are selling for in the area. I can always price my house at $150K but my neighbor's house sold at $100K. I am never going to get the bank to approve an appraisal for $150K if our houses are identical. Even if I put in marble flooring and Corinthian leather on the walls.

Former HOA President

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By MelissaP1 on 08/12/2015 2:43 PM
First off, a HOA technically can not prevent rentals or put in rental restrictions. Only California has any type of enforceable law on the matter and that just came about in 2012. Your HOA may state no rentals or etc... but it does not include a punishment to do so. So what teeth does that hold?

Anyways, the HOA CC&R's should dictate the responsibility of who is responsible for removing the debris and/or if they have to replace. They may be allowed to just leave the lot empty instead of rebuilding. Otherwise, they may be responsible for removing the debris and returning the house to a similar floor plan. Without money to cover the expense, you can imagine that is not going to happen for awhile.

Lowering your price may not even be related to this situation. You simply may have your house sale price set too high. You can't just set your house sales price and expect to get it. It has to be in the same range of other homes of similar size/features are selling for in the area. I can always price my house at $150K but my neighbor's house sold at $100K. I am never going to get the bank to approve an appraisal for $150K if our houses are identical. Even if I put in marble flooring and Corinthian leather on the walls.

That was the last straw. You are officially out of your mind!

DavidE10 (Georgia)
Posts: 2

Posted:

FYI this is the 2nd house that's caught fire in our neighborhood the first one was a total loss and got torn down by the ins. The problem with this house is that the owners didn't have the right coverage (landlord not homeowners)on their home there fore they don't have the money to fix/rebuild or tear it down. the county will have to tear it down at the cost of the tax payers but that's after it sits there for 6 months. My HOA policy states that as a peanlty for not paying dues and following rules/bylaws that they have the right to put a lean on the home. Now for the price of my home I set the price in the middle of al the comps that were in my neighborhood and same floor plan and was also less then what I paid for it 10yrs ago new. My main problem is the fact the we still have homes renting and another that just went up for rent with big sign in front yard these people that are renting homes just don't care. When I bought my home I had to sign to obey the rules and bylaws of the HOA witch is a contract now normally if you break rules of a contract you have to pay fees etc. I didn't want to live in a neighborhood where I have new neighbors every 6 months to a year therefore the reason me and others like me like the no renting but it's pointless if no one that breaks rules don't have any fines or some inforced on them

BobD4 (up north)
Posts: 1,002

Posted:

DavidE10 (Georgia) :

You state above that your MAIN concern is not about having next door an insurance-refused fire debris site. Your home is listed for sale next to “a half burnt house”, and showings you say have died after the fire less than 10 days ago.

Rather you state : “My main problem is the fact we still have homes renting and another that just went up for rent with big sign in front yard”.

Respectfully, in your shoes my priority would have to be pressure - along with neighbours / municipal property standards / association - to get restoration ordered underway next door asap and hopefully not 6 months away.

It would not be to challenge an overwhelming treatment of property ownership rights as including the right to lease ( albeit not merely ‘boutique’ leasing /short term quickies ).

Would your home’s potential buyers understand how really tough to restrict leasing rights ?

Gotta be less than those fearing months ( ? years ? ) of a debris scene next door without insurance, with few remedies if it drives the price down. Can you afford to wait the 6 months or more ?

WayneN (Florida)
Posts: 35

Posted:

I'm not an insurance expert but our HOA has been going thru a review of all 500 plus owners insurance policies to assure everyone has current coverage and it's the correct coverage
HO-3 is for owner occupied homes , you can't have a HO-3 policy and rent out your home , the insurance will deny coverage
DP-3 is a policy for an owner who is renting out his home/unit it covers dwelling
HO-6 policy is a condo insurance policy and covers structure from the drywall In

Quote:

Posted By PitA on 08/12/2015 1:33 PM
john,

evidently the owner HAD an HO-6 policy which denied coverage since the structure was being rented out (used in a commercial capacity)

the owner's insurance may, or may not, have had the HOA as a 'co-insured'

moot point as the claim was (rightfully) denied

another reason for having AND ENFORCING the no rental clause in the CCRs

same principle would apply if an unpermitted alteration were to 'total', or cause to be 'totaled', the home ~ claim denied

laws, rules, regulations may not be enforced by the HOA

they WILL be used by the insurer (as per the contract signed by the ensured, otherwise known as the policy)

.... this is western 'business as usual' + Caveat Emptor ....

JohnC46 (South Carolina)
Posts: 14,265

Posted:

DP3 refers to an insurance policy on a residential building, usually rented to others. The HO3 is reserved for homeowners, but not exclusively for single-family homes.

If you own a multi family (2-4 family) property and live in one of the units, then you can usually use the tried, true, and tested HO-3 homeowners policy to cover the entire building, your contents, and your own personal liability exposure.

However, if the owner does not live at the property, a homeowners policy won't work; use a "Dwelling Fire Policy" to protect your interests properly. The most popular dwelling fire policy is the DP-3.

The DP-3 is popular because it is an “Open Peril” policy that covers losses to the home’s structure, loss of use or rental coverage, and usually personal liability. Contents (also known as personal property, such as furniture or appliances) are NOT automatically included the same way as in the homeowners policy, but can be added.

ValK2 (Tennessee)
Posts: 65

Posted:

I am assuming that your house, OP, and the house which burned, are in Phase Three, where renting is "prohibited"?

I am curious about the HOA's liability.

If they have a covenant, and don't enforce it, are they liable, for example, for the loss in value to your house should you have to sell it for, say, $20,000 less than what it was "worth" before the fire?

I ask more in a different context where we have a number of covenants which are not enforced. For example, our CCR's say that a home must be completed in one year from the start of construction. For over two years there has been a pile of stacked cinderblocks at the end of the driveway where the homeowner evidently intends to construct an entry way pillar, or similar. If a kid climbs up there, falls, and the blocks tumble on him and crush his skull, is there any liability to the HOA for failing to enforce their own covenant?

If an HOA doesn't enforce their own covenants, are they liable for damages as a result of their...for lack if a better word...negligence?

MarkM31 (Washington)
Posts: 556

Posted:

Quote:

Posted By LarryB13 on 08/12/2015 1:06 PM
David,

Contact an attorney. You may have to drop the price to get it sold if you cannot wait. The attorney should be able to advise you whether you have grounds for a lawsuit for the loss you will suffer. The good news is that you have no shortage of defendants: the dumb-butt tenant, the illicit landlord, the blind HOA, and the negligent management company.

Not a chance

Quote:

Posted By MelissaP1 on 08/12/2015 2:43 PM

Lowering your price may not even be related to this situation. You simply may have your house sale price set too high. You can't just set your house sales price and expect to get it. It has to be in the same range of other homes of similar size/features are selling for in the area. I can always price my house at $150K but my neighbor's house sold at $100K. I am never going to get the bank to approve an appraisal for $150K if our houses are identical. Even if I put in marble flooring and Corinthian leather on the walls.

Correct. Any lawsuit is a no go.

Quote:

Posted By ValK2 on 08/13/2015 7:01 AM
I am assuming that your house, OP, and the house which burned, are in Phase Three, where renting is "prohibited"?

I am curious about the HOA's liability.

If they have a covenant, and don't enforce it, are they liable, for example, for the loss in value to your house should you have to sell it for, say, $20,000 less than what it was "worth" before the fire?

I ask more in a different context where we have a number of covenants which are not enforced. For example, our CCR's say that a home must be completed in one year from the start of construction. For over two years there has been a pile of stacked cinderblocks at the end of the driveway where the homeowner evidently intends to construct an entry way pillar, or similar. If a kid climbs up there, falls, and the blocks tumble on him and crush his skull, is there any liability to the HOA for failing to enforce their own covenant?

If an HOA doesn't enforce their own covenants, are they liable for damages as a result of their...for lack if a better word...negligence?

Why would the HOA be responsible for an injury to the kid? Just because it happened in Year 2? It could have happened in Year 1, or Week 1.

ValK2 (Tennessee)
Posts: 65

Posted:

Why would the HOA be responsible for an injury to the kid? Just because it happened in Year 2? It could have happened in Year 1, or Week 1.

If it happened before the one year prohibition, the HOA would bear no responsibility.

If the HOA should have enforced their covenants, after one year the blocks would not have been there, and the child would not have been killed.

So...I am not arguing one way or the other, just trying to get clarification. Failure to enforce a covenant implies no responsibility to the HOA? So, in the OP's original case, the HOA bears no responsibility for the loss of value to her home because the HOA allowed a renter, in violation of the covenants, to rent a home...and by happenstance, violate the terms of the owners insurance policy such that they now have an abandoned property, half burned out, and no one with any funds willing to effect repairs (or at least demolition).

Then, why have covenants if they have no "teeth"?

MarkM31 (Washington)
Posts: 556

Posted:

Quote:

Posted By ValK2 on 08/13/2015 7:46 AM

Why would the HOA be responsible for an injury to the kid? Just because it happened in Year 2? It could have happened in Year 1, or Week 1.

You have covenants to protect property values and maintain common areas and systems. CC&Rs also maintain a certain level of "decorum" and the such. What they do not do is protect individuals from third party negligence on non-HOA property. By your argument, the childs parent could argue that the CC&Rs should only allow a 6 month window for construction, and not a one year window, and any injuries to third parties are due to HOA negligence for not instituting this short and safer construction time period.

The courts just don't work that way

MarkM31 (Washington)
Posts: 556

Posted:

Quote:

Posted By ValK2 on 08/13/2015 7:46 AM

If the HOA should have enforced their covenants, after one year the blocks would not have been there, and the child would not have been killed.

So...I am not arguing one way or the other, just trying to get clarification. Failure to enforce a covenant implies no responsibility to the HOA? So, in the OP's original case, the HOA bears no responsibility for the loss of value to her home because the HOA allowed a renter, in violation of the covenants, to rent a home...and by happenstance, violate the terms of the owners insurance policy such that they now have an abandoned property, half burned out, and no one with any funds willing to effect repairs (or at least demolition).

Then, why have covenants if they have no "teeth"?

ValK2 (Tennessee)
Posts: 65

Posted:

Quote:

Posted By MarkM31 on 08/13/2015 9:05 AM

Posted By ValK2 on 08/13/2015 7:46 AM

You have covenants to protect property values and maintain common areas and systems. CC&Rs also maintain a certain level of "decorum" and the such. What they do not do is protect individuals from third party negligence on non-HOA property. By your argument, the childs parent could argue that the CC&Rs should only allow a 6 month window for construction, and not a one year window, and any injuries to third parties are due to HOA negligence for not instituting this short and safer construction time period.

The courts just don't work that way

I think we are talking about two different things: Enforcement/liability of existing covenants.....

And in your response, what the liability might be if the plaintiff could argue that the covenants were "different".

In any event, thanks for the response.

MarkM31 (Washington)
Posts: 556

Posted:

In either case, the HOA would be negligent because they either did not enforce the one year window, or did not have a six month window, either of which would have saved the now dead brat.

Both are non starters.

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