Just wanted to throw some things out there for you guys. Its actually been an interesting course of events since we bought the house. Might be helpful information for anyone. Plus you guys have a ton of different angles that you see the problem from and every comment helps in deciding the best route to take.
She's not living there currently, the HPD has issued a vacate order on the apartment since its unlivable due to damages. She legally doesn't pay rent while the damages/renovations are going on since she can't live there. Thats fine because the insurance covers income lost on the apartment due to damages so we're getting paid regardless although at 70-80% because realistically thats how much insurance will cover. Her lease is up in October, and we have to give her a renewal in August and her first payment would be when she moves back in.
She had plans on moving although i've been hearing that since we got the building a year and a half ago. She has three flights of stairs to walk and its been getting to her she keeps telling us. She recently asked us if we would allow her daughter to be the next signer for the new lease while she moved out to a place with less stairs. A few weird things can happen in that situation that would by law allow her daughter to move in, keep the old lease amount and leave us with a tenant that wouldn't likely leave for a long time. Before the fire we had an old apartment to use as leverage and the renovations needed to increase payment just in case we got stiffed with her daughter. She slipped and told us that her daughter had issues with getting an apartment due to landlord problems from before which is something we don't want at all. Her moving into a newly renovated apartment complicates things. We also always had the legal route to go if she moved out and her daughter started living there under her mothers lease but it would have been a long hard legal fight to break the lease.
We will lose a legal battle for negligence, she's been in the building for 40 years and there hasn't been an issue with her documented, without documentation it won't matter. The apartment is a mess, has a roach problem regardless of how much the exterminator is there due to uncleanliness and long overdue of a renovation but that won't matter when we present the case since the system is heavily on the tenants side. The most we can take her to court for is that she pay for any extra work needed to be done to the building that insurance won't cover but it would only be a small percentage of the actual costs once we go through the court system. That wouldn't even cover the lawyer fee's. She would still have a low rent lease and she would still be living there.
So yeah, everything is for the tenants benefit. If the fire had been the buildings fault, wiring that failed in the wall, outlet that burnt out, ect then I would have a few lawsuits on my hands that I would have to pay dearly for.
Anyways, her daughter and her BF told us that she might accept a buyout for the right price. We just don't know what the right price is yet for them. We don't want to take it to court. I would rather our money go to her and her money stay in her pocket instead of a lawyer, and my time to myself instead of spending it in court and i'm sure she'll feel the same way.
Financially it makes sense to buy her out, the increase isn't small, average rent in the area is 4x that she is paying, and our apartments can bring in 5-6x what her rent currently is very easily. The $$ amount of renovations the apartment needs increases the rent so high we can break rent stabilization and charge what the avg rent in the area is. The old lady that owned the building previously hasn't repaired or touched the building in 30 years and repairs add up quick.
If the newly renovated apartment gets locked into her current rent stabilized amount then we won't be able to change that for 10 years or so. Forgot the exact calculation but we are allowed to add in 1/40th of the cost of rennovation to the current rent when we get a new tenant. If that amount brings the rent past 2000 or 2500$ then the rent stabilization is broken and starts fresh with the new lease regardless if we charge less than 2500$ rent.
Everyone is a liability to everyone else in the building. When thinking about it, if this fire had happened in the middle of the night while she was gone it would have been much much worse. The apt across the hall from her has 5 kids, god forbid it was worse and spread to that apartment when they were sleeping and didn't get up in time.
