What To Do If the Security Deposit Doesn't Cover the Damages

By Madison White on September 30, 2019

Being a landlord comes with a host of challenges when new tenants move in, but what if the real issues happen after they move out? The easiest way to prevent being owed more money from happening is to take preventative steps before your tenants move out. There are various things that you can do that will ease your and your tenants’ peace of mind before the security deposit dilemma may happen.

What to do to prevent this situation

1. Choose good tenants

By having a thorough screening process, you will hopefully be able to find tenants that are trustworthy. You reduce the odds of a situation like this arising if you only rent to responsible people.

2. Collect evidence

While it may seem like a tedious process, if anything should need to go to court, is essential that you have evidence to prove the damage that your tenant may have caused. This usually comes in the form of pictures, but can also take the form of maintenance sheets and damage agreements. Make sure that you are taking pictures of the space before they move in and immediately after they move out. If you have someone else moving in quickly after they vacate the premises, then you should be prepared to take the move-out pictures as soon as possible. If you wait until someone else has already moved in, they could blame the damages on the new tenants.

Also, be sure that your agreements are thorough and specific. It should be clear what the tenants are and are not required to fix themselves. It may seem obvious to you that they should replace a broken microwave, but they might not think that expense was listed in their contract.

2. Do a walk-through a month before they move out

Most tenants are required to give at least 30 days notice before vacating their apartment. This month before move-out is a crucial time for you so that you won’t be tasked with chasing down the money that you’re owed.

Schedule a walk-through with them once they’ve given their 30-day notice. It doesn’t need to be anything scary or formal, just some time for you to check out their space and see if any glaring issues might have risen up in the time they’ve been living there. If you are going to be taking pictures, you should warn the tenants beforehand so that they are not leaving private things out in the open. Otherwise, you will probably be fine just taking notes.

This is especially crucial because if you have noticed something that needs to be fixed, you can allow the tenants time to fix it before moving out. This way, you won’t have to go through the process of finding the issue, calculating the expense, sending them a demand form, and much more. You can nip it in the bud and save yourself a lot of time and money.

What to do if this situation arises

1. Communicate

If the event happens where you need to withhold a security deposit, you must notify your tenant immediately. This should happen in the form of a letter and detail exactly what the deposit will be used to cover. If you do not have your tenant’s new address, you should be able to contact them via email or phone number. Be persistent in making sure that they know about the situation, otherwise they can claim that they did not know about the issue.

2. Send a demand letter

Additionally, if your tenant needs to pay more than their security deposit, you will have to send a demand letter for more money. Again, be specific about what the damages are and how much they will need to pay to cover them. If there are multiple damages, be sure to detail each one with a specific cost. Also, do your research on how much things will actually cost. Do not make up random numbers or overcharge because you think you can get away with it.

Demand letters are often very formal and should use proper grammar and letter formatting. Make sure that you include information about where they should send the money and when you expect it to be due. If the due date passes and you have yet to hear from your tenant, send a second demand letter along with a copy of the initial letter. You may want to add that you will consider taking the issue to small claims court if the fee goes unpaid.

3. Small Claims Court

If the issue is still unresolved, you may need to take it to small claims court. There are many procedures based on your state that you will have to follow. You should consider the following before doing this: how much you plan to get from your tenant, how much fees may cost, if you have proper evidence, if your tenant is broke or not. You may decide that the process is not worth it and just have to cut your losses.

Hopefully, these options have offered some clarity on how to rectify the uncomfortable situation that you may find yourself in.

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