Reflecting on a Fatal House Fire

Preface: I thought I’d share an experience my parents had with their investment a few years back but more-so how this has impacted my own thinking about my own investment. The story is far longer than most of you would be interested to read so keeping it brief and high level. Details about people involved, suburb, PM / Insurance Company / etc will not be discussed. Importantly, this is intended to be reflective on lessons learnt – not interested in blaming any parties for anything.

Background
My parents owned a 1950’s post war home that was rented out to a family. Some health issues with the tenants meant that the house was cluttered beyond what most of us would deem reasonable – there were concerns about this from the first inspection but over time there was seemingly very little that could be done to encourage a clean-up. On one afternoon, one of the adult tenants went outside to smoke a cigarette on an outside couch. The adult went back inside but unfortunately the cigarette fell down the side of the couch and lit the couch on fire. With the couch pressed up against the outside of the house, the fire lit up the house too. Inside, the tenants clutter fueled the fire and within seconds two thirds of the house (at the rear) was engulfed. 3 out of the 4 tenants managed to exit to the front of the house and were inconsolable on the street as you’d appreciate while the awaited news of the whereabouts of the remaining tenant.

From the street in the pouring rain we watched and waited with baited breath for someone to tell us that the forth tenant, a young boy, had been found safe inside (unlikely) or at a neighbors house (possible). The property managers who were standing beside us, were already stressing over smoke detector inspections – when it was last done, who did it, etc. The media were circling looking for witnesses or anyone who’d care to comment. The police wouldn’t tell us anything!

After a while, we caught a glimpse of fire fighters carrying a stretcher into the house and police informed us shortly afterwards that the young boy did not survive. We were all gutted!

The community rallied behind the family and help source alternative accommodation during what I can only image to be the worst period of their lives.

From here, 18 months worth of tussles with the insurance company finally resulted in a favorable outcome but not without its fair share of health impacts on my parents along the way.

In the end, coroner found death by misadventure, the smoke detectors were fine and had been properly maintained, the house has since been demolished, and no further communication has taken place between my parents and the tenants.

 

Lessons Learnt
These are SOME of the things I learnt:

· Nothings more precious than human life – especially that of a child.

o Action for me: Go home and hug my son / wife and vow to myself to never let this happen to my own family.


· It doesn’t matter who lives in your rentals, or how they live in it, when someone dies inside of it in such a tragic way, don’t underestimate the impact on you and your own family, both emotionally and physically. As much as we all like to run our IP’s as a ‘business’, you may not be able to disconnect from the emotional side as easily or as well as you think you can.

o Action for me: Was my health insurance, income protection insurance adequate and up to date? Did I have a work sick-leave ‘buffer’ just in case I need time off to deal with physical or emotional issues?


· As landlords, we have a duty of care for providing a safe environment for our tenants. Smoke detectors, electrical / plumbing, pest control, blind cord checks, pool compliance, etc are all areas that I would personally never skimp on or manage myself given health implications to the tenants.

o Action for me: With my own IP, I am not interested in doing any of these things myself but rather source and manage these via the property manager. There is simply too much at stake for my liking to do this any other way. Keep a record of annual dates for future inspections and remind the property manager, do not sit there and expect for them to remember! We’re all human and able to forget things!


· The Insurance process took far longer than any of us imagined – more than 18 months. Case manager turnover and escalations meant having to justify and re-justify our position over and over fighting the same fights over and over again.

o Action for me: Ensure financial buffers are in place and are sufficient to cover the period between when the house is vacant until the time the rent assistance payments begin from the insurance company.


· Audit trails of email correspondence, logs of phone calls, etc are VITAL to help speed up the insurance claim process. Would have helped with the point directly above.

o Action for me: keep ALL emails from PMs, Insurance companies, etc no matter how insignificant they seem at the time.


· We sought the assistance of an insurance broker who was happy enough to give us some free advice in order to work with the insurance company. The broker was also happy to help with drafting letters to the insurance company in order to be as effective as possible. This was worth at least 30k in the end payout result. With some key arguments going our way around Insurance company delays, scope of work omissions, and general rev-up


· Try not to let an experience like this dampen your enthusiasm for continued property investment. Situations like this are hugely traumatic, but at the same time are rare and unlikely to happen twice in your portfolio – depending on the size of your portfolio!


Would be happy to take your questions or thoughts on any of this?

 

Thanks for posting this up. It's a sobering lesson for anyone with rental properties.

 

+1
Thanks for taking the time to share @Steven_S.
Sounds like you did everything correct according to regulations, you can control 99% of things but the 1% is just out of your control.
Sad it went up so quickly and the boy couldn't get out in time.

I appreciate the tips to you provided. Especially items like keeping all email correspondence. You never know when it may be needed.

And I'm glad the insurance did pay up even though it took so long.

Now with the cluttered house... I think it's a good reason to enforce tenants to keep a uncluttered house. No ifs nor buts. If you put in efforts to keep a house safe, then this aspect has to be one of the simplest fixes.

 

Not sure how you could enforce this. It seems at odds with a tenants right to quiet enjoyment of the property.

And who would define what amount of possessions would be unacceptable?

Obviously those places with every room packed to the ceilings with old junk with only narrow tunnels to walk down that feature on TV news may be a different matter.
Marg

 

Yeah its a tough situation for property owners. The clutter in the house was brought on by illness so unfortunately, hands were tied and limited things could be done in order to encourage a clean-up.

During the time the tenants lived at the property, numerous inspections were held, more often than not the tenants would refuse entry or use delay tactics - also symptomatic of this illness. I guess they knew that the state of the house was unacceptable.

From time to time, you'd utter under your breath to yourself....one day they'll burn the house down! But never in a million years did we think they actually ever would!

 

The sad thing is that in this case, you're not far off the money. Rubbish packed to the ceiling. General waste and household junk blocking exits (rear door). The house stunk.

As a side note: Before demolition could begin, household possessions had to be removed - requirement set by the insurance company. Tenants had no interest in visiting the site again (as you'd expect given the tragic outcome) and legally you cannot remove the possessions yourselves until a period of time (30 days?) whereby the possessions are now legally classed as abandoned.

 

Wow.
See, I used to work at a department store and there was always a temptation at the end of the night to leave tubs of stuff in front of the fire exits because it would take time to put things elsewhere. There was no incidents that I'm aware of that resulted in negative outcomes, but imagine if something happened like a bomb or fire and stuff was in the way impending the safe exit of staff and customers. Store management would be up for manslaughter.

 

Wow sounds like your family had done the right things along the way and what a great reminder to be vigilent in your management ,thanks a lot Steven and I hope you are getting over it ok

 

Safety is the responsibility of everyone. Staff taking shortcuts like this put everyone at risk, particularly themselves.

Management is often unaware of actions by night staff as they are often not on the premises. I would hope a staff member would alert management to a safety issue breach.

Our son was employed in night fill in a big department store. As he was tall, he was asked to work in high places without safety equipment. As he was studying WHS he understood the risks and felt he had no option but to resign before he fell and was injured. With his consent I phoned head office and spoke to the relevant person who was incredibly concerned. Head office staff visited the store the next day and found the relevant safety lifts and other safety aids stored with junk in a back room. The nightfall manager had no knowledge of its existence.

All staff underwent immediate training in when and how to use it. Son continued in his job and all staff were much happier.
Marg

 

Agree 100%. It's everybody's responsibility. But also consider the majority of night fill staffers are 17-20 year olds finishing high school or studying at uni. They don't think about others so much (lets face it, older people tend to be more aware and more responsible in this regard) and unless they get specific training they mightn't do the right thing

 

Of course, most are young. But it only takes one person to identify a potential hazard and possibly prevent a tragedy.

Fire exits are clearly marked with signs of their purpose and notices to keep the exit clear. Surely it doesn't take much intelligence to figure out that blocking the area is not a good idea......
Marg

 

For the last ten years or so, WHS is drummed into all high school kids year after year before they go on Work Experience. Safety is also drummed into them across several curriculum areas, such as HPE, Science, Hospitality, ITD(Shop) and IT.

 

Steven,

It is a obviously a very difficult situation when one reads something like:-

On one afternoon, one of the adult tenants went outside to smoke a cigarette on an outside couch. The adult went back inside but unfortunately the cigarette fell down the side of the couch and lit the couch on fire. With the couch pressed up against the outside of the house, the fire lit up the house too. Inside, the tenants clutter fueled the fire and within seconds two thirds of the house (at the rear) was engulfed.

I'm not sure how your parents, as landlords, or their agent, could have prevented such an outcome, tragic as it is, given inspections are generally bi-annual, without some proactivity from the tenants.

My view does not in any way detract from the outcome being just terrible.

 

A comment on emergency exits....
Humans of New York