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What To Do When Damages Exceed The Security Deposit

A tenant is moving out! Depending on your relationship this could be cause to celebrate. Or they might have been great and you’re sad to see them go. Either way, it’s time to assess damages – if any. No matter friend or foe, a landlord still has to make an honest assessment of the apartment. You collected a security deposit at move-in, so you’re covered to a certain extent. But what if repairs are going to exceed the amount saved? Don’t freak out, you’ve got a few options.

Even if damages don’t exceed the security deposit, you must send a detailed letter outlining the dollars you are deducting and why. Make sure to have photos of everything in case a dispute arises later. You should also be an expert on the laws in your state for what you can deduct and what is your responsibility.

If the damages do exceed the security deposit, it’s time to send a demand letter. Just because it’s called a “demand letter” doesn’t mean it has to be rude or hostile. It simply lays out the additional cost you incurred and asks for payment to be sent to your office. Unfortunately, these letters are easy to ignore. If it’s been a month or so and you don’t hear, send another letter with the first attached. At this point if the correspondence is still one sided it’s time to decide next steps.

Is the amount owed worth fighting over in small claims court? If you have accurate records and photo evidence, chances are you will win. However, there are plenty of downsides that cause many landlords to just eat the cost.

One, it’s time-consuming getting all the information and attending the hearings. Two, your tenant may not have the money to pay you, in which case you’ve wasted a lot of time. There’s also a chance you’ll lose. Maybe you don’t have photo evidence of what the apartment looked like when they moved in – which could derail the whole case. Unfortunately, just because you might be right doesn’t mean you’ll win.

I know of a case where a tenant had lived in a unit for 10 years. During that time, a new management company bought the building and had everyone sign new leases. However, they didn’t do detailed inspections upon move in. So when the tenant moved about and the landlord wanted to recoup additional dollars, they didn’t have the evidence to prove what the apartment looked like originally. A demanded letter was sent for an additional $300, but it was never responded to. In the end, it wasn’t an amount worth fighting for.

Still feel like you have a strong case? Don’t let me talk you out of it! Fight for your money! Just know the uphill battle you may face.

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