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What To Do If a Tenant Destroys Your Rental Property

If a tenant damages your rental property, here are a few things you should do.

What do you do if a tenant destroys your property? This is a common question, especially from first-time landlords. Everyone has the worst case scenario in their minds. Your course of action will depend on the severity of the damage and whether the tenant still lives in your property.

Handling Damage While a Tenant is in Place

If your tenant still lives in the property, you have some leverage. You should be doing routine inspections every year, and in the course of an inspection, you may see that a pet has destroyed a carpet.

Tell the tenants that per the lease agreement, they need to pay for any damage above normal wear and tear. In our leases, we have a Tenant Liability clause. It basically says the tenant shall be charged for all repairs or replacements caused by tenants, pets, guests, or licensees of the tenant excluding ordinary wear and tear.

Most leases should have something to that effect. Get a bid, and let them know how much it costs. You can ask for them to pay upfront or put the money in a reserve so you can wait and replace that carpet when the tenant moves out. If you ever need to use a security deposit during the tenancy, your lease should have a clause saying that the tenant must reimburse the security deposit.

Handling Damage After Move Out

Often times the damage is not visible until after the tenant has moved out. Most states allow you to use the security deposit to cover expenses to bring the property back to move-in conditions. In California, the security deposit can be used to repair tenant caused damage above normal wear and tear, cleaning, and the replacement of personal property (appliances, furnishings, appurtenances, etc).

Items that are usually considered as normal wear and tear are small nail holes for hanging pictures, and scratches on the walls from furniture that was placed against it. Normal wear and tear also includes the normal aging process such as fading paint or flooring or rust in areas exposed to water or moisture.

When replacing property, flooring, or repainting, most states require you factor in the useful life and pro-rate the cost passed on to the tenants. Most landlords base carpet replacement on a 5-7 year useful life, paint on a 2-3 year useful life, and large appliances such as refrigerator on a 10-15 year useful life.

Collecting From the Tenant

Should the expenses for restoring the property exceed the security deposit, there are several ways to try and recover the funds.

The first and usually most effective way is trying to reach an agreement with the tenant. This could be a payment plan or even settling on an amount less than the actual amount owed.

The second route is to settle using civil action in a small claims court (in California an individual can sue for up to $10,000 in small claims court). In this method, the judge will likely scrutinize your claims so be prepared to provide evidence (move in condition report, before/after photos). Most small claims court are tenant-friendly and the judge may award you less than your claimed amount. In some states, even if win your case, it is still up to you to enforce the judgement and collect the funds from the tenant. If going this route, be sure you followed all applicable laws in handling the security deposit–a small error could cause the judge to rule in the tenants favor and you could end up owing them money! See this article on how to handle a security deposit in California.

Lastly, you could turn the matter over to a collection agency. This is can be a long process and agencies charge a contingency typically between 40-50% of the debt collected.

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Dave

Operations Manager at Good Life Property Management

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Tagged Tenant Issues

Hi, this is Steve Welty. I’m the broker/owner of Good Life Property Management, where we manage single-family homes, condos, and apartment buildings throughout the Greater San Diego area. Today’s question is what happens if a tenant destroys my property? It’s a common question we get, especially first time landlords who haven’t been through this before. Everyone’s got the worst case scenario in their mind and what happens if that actually comes true. So, two questions I would ask first is, you know, it depends what’s the severity of the damage. So destroyed to you may be different than destroyed to me. So the answer to what you want to do is going to depend on the level of damage/severity. And two, is whether the tenant still lives there or not. So let’s take the scenario where the tenant still lives there. That’s the ideal scenario because you still have some leverage in that case. So let’s say you do a routine inspection–you should be doing them at least yearly– and let’s say you noticed the carpet’s been destroyed by the pet. You can then tell the tenant, per the lease agreement, you need to pay for any damage above normal wear and tear. We actually have a clause in our lease, it’s called tenant liability, and it basically says, I’m reading it, ‘tenant shall be charged for all repairs or replacements caused by tenants, pets, guests, or licensees of tenants excluding ordinary wear and tear’. And most leases should have something to that effect. So you can point to that, and say I’m going to need to replace this carpet, and I’m going to get a bid and it costs this much, and they should pay for it upfront to get it replaced. Or you may want to, in this case, the pet would just destroy it again, put that in a reserve to be replaced when the tenant eventually moves out. And if you ever need to use the tenant’s security deposit to repair anything, most leases should have a clause that says that the tenant needs to reimburse any used portion of the deposit during the tenancy. So, that’s one way to handle any damage that the tenant does while the tenant still lives there. Now, let’s say you go to the property after the tenants moved out and there’s just a ton of damage. So, number one, you’re going to want to use the tenant’s security deposit, which you can use for any damage above normal wear and tear as well as any cleaning. And the first thing you want to do is send them an itemized report with the photos to prove and ask for the balance due. Now, let’s say they don’t pay the balance due. Then you want to contact the tenant’s renter insurance and see if the tenant’s policy may cover some of the damage. I’ve had cases where the tenant damaged the very expensive wood flooring, and that was actually covered by the tenant’s insurance policy. Now, it’s not going to always happen that way, but that’s where I would go next- the tenant’s liability insurance. Third, I would contact my insurance. If it’s bad enough and I have low deductible and it’s several thousand dollars and it makes sense to file a claim, then I would talk to my insurance company. Now, if it’s seen as accidental damage, it may be covered. But if it’s seen as like the tenant was negligent or the tenant did it on purpose, then it probably is not going to be covered. So if you exhaust all those options, I would try to settle with the tenant to pay something, even if it’s not the full balance due. Whatever you’re comfortable with. But if you can’t get them to pay anything, then step four would be to sue them in small claims court. Now, in California you can sue up to $10,000. So I would go that route, bring your evidence, bring your lease, bring your move-in and move-out photos, and hopefully you can win the case there. But even if you get a judgment, it’s not always easy to collect, especially if the tenant doesn’t have good credit and is not ‘collectible’ what we call. So if you get a judgment, you want to hire an attorney to have them go after the tenant for the money. It’s very complex to get money from a tenant, even when you have a judgment. So it’s best to, if you’re going that far, to hire an attorney to try to get that money. And if you’re not going to do that, then at least hire a collection company that will work on some sort of contingency compensation structure where they’ll take maybe half of whatever they’re able to collect. So hope this gave you some insight on options you have when a tenant damages or destroys your property. And if we can help you with anything, please let us know, and make it a great day!