The recent mudslide in Oso, Washington left at least 39 people dead and caused property damage in the millions of dollars. But that slide, like many other natural disasters before it, also sparked new debate about the rights and obligations of homeowners in the aftermath of catastrophic events. And landlords as well as residential property owners must grapple with a long list of issues related to dealing with nature’s twists and turns.
If a mudslide sweeps away your property, or a tornado rips off your roof, it’s essential to have a good property owner policy in place – not a standard homeowner’s policy. Insurance designed for landlords and investors covers provisions for the property itself and protects property owners from liability in case of an injury or accident on the property. It doesn’t cover a resident’s property inside the house – that’s for renters to handle.
But some owners of investment property are finding – far too late – that their insurance doesn’t cover every possible scenario. Flood and earthquake insurance, for example, aren’t automatically a part of every policy – and there may be riders for other kinds of events as well. It’s important to read policies carefully and consult with local agents about options for the kinds of events that are typical in a given area.
Some events just aren’t typical at all. 2012’s Hurricane Sandy, for example cut an unprecedented swath of damage and left homeowners in affected areas with long delays in resolving issues related to the repair of their properties.
But repairing or rebuilding a damaged house may not be easy. In some areas, property rights – the right of an owner to rebuild in the same location after disaster – collide with public safety concerns, and it can be harder to get funds to rebuild. After Hurricane Sandy, authorities in some areas pledged to help homeowners restore heir properties, while in other areas, owners of hard-hit properties are encouraged to relocate to safer areas.
Investors facing disaster damage to rental properties have other concerns, too. Landlord-tenant issues surface, raising questions about a landlords’ obligation to rebuild and what happens to leases and rental agreements when tenants are forced to evacuate or find other accommodations for long periods when a property is uninhabitable. Some states allow tenants to file suit against a landlord who doesn’t make the dwelling habitable again in a reasonable amount of time.
As Jason Hartman says, everybody needs a place to live – and that means real estate investing is a sound long-term way to build wealth. Knowing your options before disaster strikes is a smart way to protect that investment, whatever nature sends your way. (Top image;F;lickr/ankakay)
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The Jason Hartman Team