Posted by JohnBoy on August 01, 2005 at 22:13:59:
Does your insurance pay for moving expenses due to damage from a hurricane? And if so, do they pay these expenses for a tenant renting the property? Doubtful! But if they do and they did pay you for the tenant’s moving expenses then I would say they would be entitled to that. But I doubt they pay for anything like that. They should have obtained their own renters policy.
As for any damages to the property, they are not entitled to anything! They do NOT own the property! YOU do! They are only RENTING. They are merely a TENANT. Only the OWNER is entitled to any insurance money for any damages to the property. Until they exercise their option and BUY the property where they become the OWNER, then, and only then, would they be entitled to any insurance money paid for any damages to the property! Which means it would have to be THEIR insurance policy!
Your only obligation is to repair the damages so you they can be provided with a place to live in as your TENANT! If you fail to repair the property then they would be entitled to move out and cancel their lease and should be refunded any option money they paid since you failed to repair the property back to the condition it was in when they rented it from you and purchased an option to buy it.
As long as you repair the property to the condition it was in when they entered into the contract with you then they are not entitled to anything more! Their only entitlement at that point is they have the right to exercise their option and buy the property or let the option expire and lose their right to buy it!
You said you offered to sell for $5k less for repairs needed. Which would they rather have? The $5k credit or have you just repair the property to the way it was before it was damaged? That is the only choice they have in the matter. Take the $5k credit or have you repair the damage! They are not entitled to any money from YOUR insurance company for YOUR property. YOU are the only one entitled to that unless you would rather give them that money in lieu of repairing the damages yourself and they agree to that. Otherwise your obligation is to repair the damages and their obligation is to keep paying their RENT as agreed or be evicted. As for their option they are only entitled to the right to buy the property or decide to not buy it.
If they don’t want the credit then you need to repair the damage or refund their option money since the property is damaged and you were compemsated for that by your insurance company. Under no circumstances would I give them any money! I would only offer them the choice of getting paid for the damages in the form of a price reduction on the option to compensate for the cost of the repairs if they still want to buy it or the choice of having you pay to repair the damages. But no money! They are not entitled to that unless they exercise the option first and pay the option price where you then pay them any money that was paid by the insurance company to cover the cost of any repairs. Otherwise they get nothing!