Fire in an investment property leaves unanswered questions

The experience of a house fire is traumatic for anyone, but what happens when you are a tenant? Who do you call? What do you do?

The first point of call is usually the property manager.  But if you read the legislation there isn’t anything in there about fire, or what the process is.  It doesn’t outline the steps the property manager needs to take. Does the property form part of an owners’ corporation or is it a stand-alone house? Does the owner have insurance? If the property is inhabitable, where do you relocate the tenant to?  Who pays?

There are so many questions, so what’s the process?

Well, recently we had a fire, so I thought it would be an ideal topic.

Our situation is a unit within a development. Therefore the building insurance is taken out by the owners’ corporation.

We made the call to the corporation, and the people there advised they would notify the insurance company.

While our tenant was safe and uninjured, he was shaken up and there was some damage caused to his belongings. The fire brigade advised us the property was no longer habitable.

The next morning we inspected the damage. There was severe smoke damage throughout, a window had been blown out, the kitchen was destroyed and the carpets need replacement due to water, as did the gas ducted heating throughout.  All walls and ceilings throughout the house will need to be washed down and then repainted. All the electrical wiring will also need to be inspected. And the list goes on.

The building insurance policy will cover the rebuilding costs and provide the owner with rental assistance/income during the reconstruction. But did you know that that the carpet forms part of a landlord insurance policy and isn’t part of the building insurance policy? I bet there are lots of property managers and owners who don’t know this!

We meet with the tenant, who as you would imagine was still in a daze about the events of the past 12 hours. As he didn’t have anywhere to live, we reviewed what other properties we had available in the same area and showed him a property just around the corner. We obtained approval from that owner, we prepared all the required paperwork and done – the tenant had a new home.

We did what needed to be done. We did it quickly and with as little further stress or inconvenience to him as possible.

But what totally surprised me from the events of the past 12 hours was the seeming lack of care or interest from people at the owners’ corporation strata managers. They simply advised they would ring me on Monday and let me know what the insurance process was. They never offered once to call the tenant to see if he was OK. They never offered to assist either the tenant or us in finding another property. It was simply expected we would fix things. Someone had just lost his home, and they simply seemed to not care. It was almost like, “Well, Leah will sort things out. She will know what to do,” – but what about if I hadn’t known what to do? Where would this have left the tenant?

So the next time you are at an owners’ corporation meeting, perhaps ask your strata manager what steps they will you undertake if there is a fire at your investment property. If your property burns down or is inhabitable, what will they do to assist your tenant and property manager in this situation?

Their reply may determine if they continue to be the owners’ corporation for your property in the future.

Leah Calnan is the director of Metro Property Management in Victoria and is the chairwoman of the REIV Property Management Chapter.