While no landlord likes to think that it can happen to them, sometimes a rental property will require such extensive repairs than the tenants will have to be relocated while the repairs are being made. If that’s the case for your rental, read on below. This is a guide for how to handle this situation in the best way possible
Check your state and local ordinances for provisions about tenant relocation assistance
Once you realize that your repairs are extensive enough to require relocating your tenants, your first step should be to check for any state and local ordinances on the subject. Many states and municipalities have specific guidelines that need to be followed in regard to how much notice must be given to the tenant before relocation and which expenses must be covered.
Generally, if there are specific guidelines in place, they will determine the best course of action to follow. In some states, for example, you may be obligated to give the tenants a certain amount of money in a stipend, depending on the size of their unit. In that case, it’s likely easier to just pay the stipend upfront than to worry about making arrangements on the tenant’s behalf.
Additionally, your level of financial responsibility may vary, depending on who is ultimately at fault for the repairs. If the need for a repair was caused by tenant negligence, you may have to shoulder less of the cost than if the work is simply necessary to maintain a safe and hospitable living environment.
For shorter repairs, offer to make arrangements or to give a per-diem stipend
If your area doesn’t offer any specific guidance to follow on the subject, think about going this route: For shorter repairs, or those lasting less than 30 days, it may be easiest to simply make arrangements for the tenant to stay in a hotel and agree to foot the bill at the end of their stay.
If, however, the tenants are uncomfortable with that arrangement or are unhappy with the accommodations you’ve offered to provide, consider giving them a daily stipend for the number of days they’re required to be out of the unit. In that case, you’ll want to come up with a fair number that allows for decent accommodations in your area.
For longer repairs, think about making fixed payments toward relocation costs
With longer repairs, or those lasting longer than one month, it can often become difficult to keep track of a daily stipend. In this scenario, it may be easier just to make fixed payments for the costs associated with relocation, including moving costs, storage costs, a rent differential allowance, and potentially a dislocation allowance.
You can also simply offer to reimburse the tenants for these costs. However, if you decide to go this route, ask them to get estimates beforehand so you don’t end up surprised by the final bill. You should also ask the tenants for receipts for all of their related expenses.
Your best bet is to make sure you’re properly insured
Fortunately, if you’ve taken the time to make sure you’re properly insured, you may not have to cover all of the above costs out of pocket. Some landlord insurance policies cover these costs, either as part of the core policy or as an additional rider. You may be eligible to claim loss of rental income under your policy.
If your costs are covered under your policy, you’ll only be responsible for paying the deductible.
The bottom line
Like it or not, sometimes you’ll need to do repairs on your rental property and sometimes the necessary work will be so extensive that you’ll need to relocate your tenants for the duration of the project. If you’re in that situation right now, use the tips mentioned above to handle the relocation in a way that’s as painless as possible for both and your tenants.