Investment Property Fire: How to Cope With Tenants?

by annbailey on January 4, 2013

  • SumoMe

(US commercial property laws) Investors make investment decisions by weighing the risk against the potential reward. Owners of investment properties are often at risk of property damage whether through negligence, vandalism, or acts of God. Relationships between property owners and tenants can be controversial if damage to the property occurs; repairs to an office can be expensive and the tenant will usually demand that the property owner fix the property. In many cases, that is not necessary. A property owner’s duties to his or her tenants depend largely upon the terms of a lease and how the damage to the property occurred.

Landlords have relatively few duties to commercial tenants. If the property owner breaches the lease, the tenant may sue for breach of contract. A certain type of breach may constitute a constructive eviction. If the property is damaged, then the party at fault for the damage will bear the burden of repairing the property. This is the case regardless of whether the damage was accidental or intentional; whether the damage was deliberate or unintentional has ramifications for criminal law, but not for civil law.

Property Owner at Fault

If the property owner was at fault for the damage, the property owner will bear the burden of the loss. If the property owner was responsible for the fire damage, then his or her actions may constitute a constructive eviction of the tenant. Property owners shall not take any action that makes the premises substantially unsuitable for the purposes for which they are leased or that interfere with the tenant’s interest in the quiet enjoyment of the property.

Such actions would constitute a constructive eviction of the tenant. In the event of a constructive eviction, the tenant will be forced to seek alternative commercial space. The tenant may seek damages for both the moving expenses and the difference between the cost of leasing the new space and the cost of the old space for the duration of the prior lease agreement. In the event of a fire that is caused by the landlord, the tenant may also seek damages for any lost inventory or equipment damage suffered due to the landlord’s negligent or intentional acts.


Property owners will not usually burn down an asset that is generating revenue. As a result, most fires will be caused either by tenants or by vandals. In the event that a vandal is at fault, the tenant may expect the property owner to pay for all of the damage. Courts generally refuse to extend the implied warranty of habitability inherent in residential leases and rental agreements to commercial leases.

However, some courts find an implied warranty of suitability in commercial leases that is analogous to the implied warranty of habitability. This obligation is usually limited to the building’s structural integrity, security, and safety. If the tenant was not at fault for the damage, then the landlord may be forced to make the repairs and either sue the vandal or turn the matter over to property damage lawyers to file their insurance.

Tenant at Fault

If the tenant was at fault, regardless of whether the damage was intentional or accidental, then the tenant must pay for the repairs to the building. Depending upon the extent of the damage and the wording of the lease agreement, causing extensive damage to the property may constitute a breach of the lease agreement. The property owner will usually incur the cost of fixing the building initially and bill the tenant. The tenant is liable for the damage.

Any commercial property owner with property damaged by a tenant should seek legal counsel if the tenant refuses to pay for the repairs. The law distinguishes residential and commercial property. Commercial property owners may be under a duty to repair the property depending upon the jurisdiction. Depending upon the lease agreement, the property owner may be able to evict the tenant.

Ann Bailey has formerly reported on landlord issues for various news outlets, now listing these scenarios for commercial building owners.  The property damage lawyers at the LLP of Doyle Raizner, based in Texas, assist clients with any issues with damages, loss, liability or insurance filing.





Ann Bailey formerly worked in television news and currently writes articles in the arts and law fields.

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