Fire Starter

Q: DEAR BOB: I rent an apartment in a large complex. About six months ago, I accidentally left my dinner cooking on the stove and it overheated. It caused a fire that resulted in about $15,000 damage to my apartment. Fortunately, nobody was injured. The landlord's insurance company paid to have my apartment restored. Now the insurer is suing me for the $15,000. I don't have renter's insurance. Do I have to pay? -- Sarah T.

A: DEAR SARAH: It sounds as if you were negligent in allowing your cooking to overheat, causing a fire, which resulted in the $15,000 damage.

The landlord could have sued you for negligence damages. Instead, the insurer paid the $15,000 repair costs. By doing so, the insurer became subrogated to the landlord's right to sue you for damages due to your negligence.

Your situation is a classic example of why tenants always need a renters insurance policy. If you had such insurance, your insurer would have paid this claim. Renters insurance pays for loss due to fire, theft and other situations.

DEAR BOB: I'm the manager of a large real estate brokerage office, and I usually agree with you. But I must take issue with some of your recent advice. While it may not be legally required for a home seller to disclose past home repairs, at our firm we take the position that our sellers can never "overdisclose," and we probe for disclosure information. Any and all inspection reports that have been done on a property and are in the seller's possession are presented to buyers in our disclosure packages. Great care is taken so a buyer can be fully informed before making a purchase offer on our listings. -- Rick LeD.

DEAR RICK: Although your policy is commendable, please be very careful that you don't harm your home sellers. Home sales disclosure laws require sellers to reveal current defects and problems that have a material effect on the market value or desirability of a residence.

If a past problem with a house has been repaired, and there is no need for additional repairs, why bring it up and possibly kill a sale?

For example, shortly after I bought my current home, my new neighbor came over to get acquainted. As we were chatting, he said, "I suppose the seller told you about when the hill in back of your house slid a few years ago and there was about three feet of mud against the house." When I said I was not aware of that problem, he quickly pointed out the drains, which the seller installed to prevent future problems.

That was 28 years ago. The hill has been stable ever since. If I had known about that event, I might not have bought my home. Would I have to disclose that neighbor's comment about a past problem if I sold my house today? I think not.

DEAR BOB: Can I make a Starker tax-deferred exchange of my rental property and reinvest in a real estate investment trust instead of another rental property? -- Thomas C.

DEAR THOMAS: No. That's because you would be selling real property held for investment or use in a trade or business and acquiring REIT stock, which is personal property. That is clearly not an Internal Revenue Code 1031 tax-deferred "like kind" exchange.

DEAR BOB: We are selling our house, which has been vacant since we moved out about two months ago. The buyers are obtaining a Veterans Affairs mortgage. It will take another 30 days until the closing. Meanwhile, they are living in a motel nearby. They offered to pay us rent if they can move into the house now. Our listing agent says "no." What do you advise? -- Loren H.