A client recently called our office immediately after learning that her condominium unit was completely destroyed by a fire. She was understandably upset about the loss and concerned about her rights, obligations and liabilities. She knew that the fire started in her unit and spread to others, but she was unaware of what caused the fire. Before she can take any action, she needs to determine what caused the fire – that will determine what steps she can take.
Two main issues legal issues arise regarding a fire. First, relates to fixing the unit, replacement of the belongings inside and potential liability regarding neighboring units. While many condominium associations carry insurance, that insurance will usually only pay to fix and replace the outside “shell” of a unit and not repair anything inside the four walls of the unit. Therefore, a landlord would be wise to have additional insurance to protect their belongings inside the unit and to protect against any personal injury claims that may arise. (It’s also suggested that landlords advise tenants to have insurance for their personal property and the premises). While the condominium association will likely rebuild parts of the property damaged by the fire, it will not provide complete protection to return the property to its original condition. A landlord needs to learn whether the tenant caused the fire or whether it was because of a problem in the unit. If the tenant caused the fire, they may be liable for damage to other people’s property, while if it was a problem in the unit a landlord (or the builder) could be liable. As this liability could get expensive, it’s important for the fire department to determine the cause of the fire, if possible.
Second, as a landlord, the person must know what to do with a tenant. A.R.S. § 33-1366 provides that if a rental unit is destroyed by fire, a tenant can either: (1) immediately vacate and notify the landlord within 14 days that they are terminating the lease; or (2) if the whole property is not destroyed, the tenant can vacate the destroyed portion and reduce their rent proportionally. Interestingly, the Court of Appeals has held that when the tenant stays and reduces their rent, a landlord is not under an obligation to fix the damaged portion of the premises. Thomas v. Goudreault, 163 Ariz. 159, 172, 786 P.2d 1010, 1023 (Ct. App. 1989).
If it is found that the tenant started the fire, even if done so accidentally, the landlord should serve an Immediate and Irreparable Notice of Termination and proceed with an eviction to lawfully terminate the lease based upon the tenant’s actions. A landlord should not assume that just because a fire occurred that the lease is legally terminated; she must take steps to minimize potential liability.