Why I’m Getting Sued by a Tenant

by | BiggerPockets.com

I once read a real estate book that said, “If you’re a real estate investor, it’s not a matter if you’re going to be sued, it’s when you’re going to be sued.” Well, I’ve been in the business about 10 years and I’ve dealt with dozens upon dozens of tenants and sellers and I am now being sued for the first time ever.

Here’s why: A few months ago I had a tenant who signed a lease on one of my rental properties. The day the tenant was supposed to move into the property she said the property was uninhabitable and she refused to move in. She wanted her security deposit back, and obviously I did not give it back to her because she was breaching the contract which she had signed.

Now she is suing me for the security deposit along with other “damages” from not being able to move in. After I found out about this I called the woman to try and be reasonable and figure out what’s going on because the last thing I wanted to do was end up in court.

I asked this woman why in the world she would walk through a house and sign a lease on a house which she now deems uninhabitable. Of course, as soon as I asked her this question she quickly changed the subject and could not answer the question.

All she kept saying was that it was uninhabitable.

In case you’re wondering, the property is in fine condition. She took pictures of the property and her definition of uninhabitable means like a speck of dirt on the carpet and walls that have a scuff on them.

I tried to calmly talk to this woman and explain to her that when you sign a lease you are expected to honor it and that obviously she wouldn’t have signed the lease in the first place if the house was so horrible it couldn’t be lived in.

However, it was pointless trying to talk to her and she hung up on me.

Now, I have a court date several weeks away where I have to go show a judge the lease the woman signed after she had done a walk through in the property. By the way, to make this even better, on my lease I have a part where it says “please note any problems or anything you would like fixed” and she left that part blank.

What I believe happened is that the woman decided she no longer wanted to live in the area (since her mailing address is now out of state) and she realized the only way to get out of the lease was to be dishonest and make something up.

It’s a shame that there are such dishonest people in the world, but the majority of folks are good people, and as I mentioned earlier, in 10 years of business this is the first time I’ve ever been sued.

The pain in the butt thing is, I have to waste my time and the courts time driving all the way to the courthouse because of this woman, but that’s the way our legal system works where anyone can sue you for anything.

Also, if you’re worried about getting sued you shouldn’t be. If you always treat people honest and fairly then you should never, ever be worried about having to stand before a judge explaining why something happened. Yes, you may get sued in life, but if you’ve done the right thing you should hopefully be fine.

As for me, I’ll let you know in several weeks what happens after my day in court.

About Author

Jason R. Hanson is the founder of National Real Estate Investor Month and the author of “How to Build a Real Estate Empire”. Jason specializes in purchasing properties “subject-to” and has purchased millions of dollars worth of property using none of his own cash or credit.


    • LOL sometimes that happens, some people are really good a dodging the bullet and it can take awhile for their actions to catch up with them. I once rented to a tenant with great credit and no prior evictions, turns out she had multiple landlords still trying to get her for rent and because it was still tied up in court it didn’t show up. I find it helps to run a regular google search on people, because you can sometimes find stuff that hasn’t shown up in the background check yet.

  1. Chris Clothier

    I appreciated your last paragraph. It is so funny how much people worry about being sued. That one worry has spawned an entire industry of do-it-yourself and done-for-you “protection” and I hear more excuses from investors who are going to get started as soon as they “take all the steps to take to protect yourself”. I have been sued, as have many other investors and your line about being honest and fair – and might I add transparent – will always help you see your way thru to a proper resolution. Yes, the time spent having to deal with a mess like this stinks, but honesty lets you sleep at night.

  2. You gotta love being a landlord. Thanks for sharing your story. I agree with you and Chris, doing the right thing is your best defense. I’ve been a landord for 10 years now too, and thankfully have only had to deal with the courts for eviction. I enjoy learning from the stories of others though. So please post a follow up after your court date. Good luck!

  3. I hope you seek damages from her. If she has to pay the full amount the contract she signed, she may think twice about backing out on another person. Please keep us updated. I’m very curious.

    BTW, I agree with you and Chris. Treat people with respect and as humans (not just”dirtbag tenants” as some landlords do) and many many problems will be reduced or eliminated.


  4. Professional Tenants are popping out of the woodwork’s … thanks to the internet ! Been trying to get someone out of one of our property’s since December. Hired a attorney for their appeal… I feel your pain

  5. Thanks for sharing your experience. I had a similar experience where 2 months before the lease expired the tenant decided not to pay the last month of rent because it was “uninhabitable” and expected their deposit back. Good grief… these experiences make life more interesting.

  6. Erik Hitzelberger on

    Good luck Jason! It’s hard to believe someone can sign a move-in inspection form and then declare the place unihabitable, but strange things happen in the court system. Like everyone else, I’m interested to hear the outcome.

  7. So don’t go easy on her. File a countersuit for the full amount of the lease, plus attorneys fees.
    That may make her go away. Send the suit with the lease she signed. Use words like frivilous when you send it back.

    Probably more hassle factor than anything, but any reasonable judge will likely find in your favor if it goes that far. She may be in for a big lecture from the judge if she trys to follow through with this.

    Hopefully the lease you have was written by an attorney and not self produced. The only problem I see is if you wrote your own lease you might have made it so one sided, or used the wrong language, that it would not hold up in court.

    This is not legal advice, for legal advice see an attorney.

  8. Gotta love when people defend by going on the attack (in real life, instead of keeping it to sports or war). Funny thing is, most don’t realize the legal system has no problems whatsoever with breaching a contract – you just need to pay the consequences. A contract is a business deal. If circumstances change and it is counterproductive to go through with a business deal that doesn’t make sense anymore, you back out of the deal and pay some money to compensate the other party. Then you go on your way and conduct whatever business transactions do make sense. You decide to move out of the area? No problem. Just give up your security deposit and all is good. Too bad people seem to have lost common sense, common decency, and common courtesy.

  9. Interesting story. I agree with your strategy of treating people with respect, honesty and integrity and you come out on top 9 times out of ten. But then there are situations like what Will Barnard is going through (See Occupants from Hell) and other recent stories posted in BiggerPockets.com.

    I’m curious as to the dollar amount involved. What is the monthly rent and security deposit? How much is this formerly prospective tenant seeking in damages? I certainly would be tempted to countersue for the lost rental income since she decided not to move in to a habitable apartment. Did you rent the unit to another party?

  10. Sounds like they may have found a place maybe equivalent, but either closer (convenient) or better price and wanted to deposit back.

    Suggestion: Include a clause the deposit is non-refundable.

    You have stopped advertisement, you have holding costs, and there are no harmful or hazardous barriers for tenant occupancy then your case should be successful.

    You could petition (counter) for additional advertisement fee’s to re-list and vacancy. I would not attempt talk to contact the anyone that made a bogus claim keep it in court.

    Sure your case will turn out well.

  11. I will second Bruce’s comment about countersuing, though if you are representing yourself, you may choose not to include the attorney’s fees. Read your lease form carefully and I recommend you only ask for what is specifically stated in your lease in the event of cancellation.

    I am not an attorney and encourage you to seek your own advice. As a fellow landlord/investor, I would recommend when you go to court that if/when asked if you have kept the security deposit, your reply might be seen as more favorable if you state that you simply have not refunded the security and that it remains in a separate account where you hold deposits, pending the outcome of the suit. This is where your countersuit will prove productive, because if that is successful, that is possibly how the judge will award legal right to keep the security. In New York (and possibly other states, again, I’m not a lawyer), the security deposit belongs to the tenant UNTIL a judge says it doesn’t anymore OR until the tenant signs off relinquishing their right to it. Technically, if you successfully defend against the tenant’s suit, you may not gain legal right to the deposit until after filing your own suit and proving that you have the right to keep it. If your “almost” tenant is now living out of state, countersuing at the same time as their suit will help move the process along.

    Good luck!


  12. Hi!

    what happened with this case? and did you go to court.
    I am on the other end..BUT the place i went to temporary rent (a cottage) WAS unhinhabitable , the 2nd bedroom smelled horrible of mildew and mold……(it was a vacation rental) ..they say im lying and refuse to give me my money back……..i never moved in……….ITs a vacation rental, regulated NOT with landlord tenant acts………..anyhow I am not lying..and it was moldy……………so i wanted to know.since i did sign a contract (for 4 months) taht i would give them 30 days notice
    well its not my fault..and im not cancelling becuase i feel like it………………………………………

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