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Real Estate Investing Forums | Real Estate Investing | Rehabbing, Landlording Forum (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas) | Topic: Rent reduction for loss of use during a remodel?
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IRO
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« on: July 12, 2017, 04:22:29 AM »

     A rental house had a water leak, and by the time it was found, mold had developed behind a kitchen cabinet.
     The pipe was repaired, but mold abatement required removal of base cabinets, counters and sink.
     The tenant wife is a new mother and was paranoid about the mold.  I gave the tenants a couple of hepa filters and put a dehumidifier in the affected cabinet. 
     My initial plan was to wait for the end of their lease agreement (which was 60 days away) and just have them move out so I could remodel.
     The tenants explained that moving would cause a financial burden, and they have family in the neighborhood, and wanted to stay during the remodel.
     I explained that it would probably take 10 to 12 weeks to do the remodel.  They agreed to tolerate the noise, ect.
     We used a ZipWall dust barrier, and things have worked pretty well.
It's going to take 8 - 10 weeks. 
     The tenants are now asking for a reduction in their rent for loss of use of the kitchen.  She described an incident of her older daughter tripping over a box of kitchen items an suffering "small knee fracture, hurt tendons and  soft tissue swelling on her ankle."
     I'm torn.  These tenants are pretty good.  They take care of the place, and pay their rent promptly.  That's really the only reason I let them convince me to permit them to stay during the remodel.
Previously, I've had crazy tenants turn completely demanding to the point that I just ultimately convinced them to move out; I don't want to go through that again.
What do you folks think I should do?
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Steve
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« Reply #1 on: July 12, 2017, 12:13:46 PM »

I have never successfully remodeled anything with a tenant in place. 

It's like brushing your teeth while eating a peanut butter and jelly sandwich.

You have to choose which thing you want to do.

Does your insurance cover this damage?  If so, does it cover lost rental income?  If so, it's even more prudent to evacuate the tenants before doing any work.

Meantime, this is a catastrophic lack of property management.  For mold to become so bad that you have to demolish your kitchen, just tells me that you are not paying enough attention to your rental.  Worse, the rents obviously are not at market rate, otherwise the tenant would have complained earlier about the dampness under the sink.

Of course your tenant doesn't want to move, and is willing to breathe mold spores, dirt, and feign injuries to lure you into letting them stay.  They've got a steal deal going on, and they don't want to upset their candy cart.

Nonetheless, you're creating a HUGE liability for yourself, trying to do construction with someone occupying the premises.

1)  Remove the tenants.
2)  Repair the house.
3)  Re-rent it at market value.
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« Reply #2 on: July 15, 2017, 07:20:16 PM »

I agree with Javipa about liability and market value (if that is your situation). 

I have a similar situation going on right now.  But this was due sewer backup from clog in the yard between house and street. Letting my insurance co handle it all.  Poop backing up into the house involved a mitigation company cleaning up the mess and now a general contractor going in to put it all back together.

I have discussed the subject of removing tenants from the property during renovation with an attorney.  In Texas law there is nothing that says I have the right to remove the tentants or that they can be forced to leave for a while.  The attorney encouraged me to keep relationship pleasant as possible with the tenants. 

If I were you I would be concerned about the health of the tenants and them coming back to me later with liability, however, if you gave option to leave and offered to give the month's prorated rent back and they decided not to take it then it may be their risk.  However, living in a construction mess can turn even the nicest people into disagreeable nightmares.  There are crazy attorneys out there that take crazy cases.

Also, my lease says that tenant has RESPONSIBILITY to tell me if there are any problem especially pertaining to water leaks and damage.  Not saying anything can cause them to be liable for further damage.

You might want to check what your signed lease says, ask an attorney in your state, maybe even get a property manager if you don't already have one.

Fortunately I have loss of rent insurance and have offered to reimburse up to the prorated daily amount.  However, in this case the tenants are 2 single professional guys and they prefer to stay in the property during renovation and know they are expected to pay the entire rent on time, and cooperate with the contractors.  My property manager is handling everything for me beautifully and I sleep at night.

I hope you are able to work it out without it getting worse.
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Real Estate Investing Forums | Real Estate Investing | Rehabbing, Landlording Forum (Moderators: $Cash$, Bluemoon06, kdhastedt, Mdhaas) | Topic: Rent reduction for loss of use during a remodel?
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