How to recoup property damage

Question

I have tenants that didn't pay their last months rent and used their security deposit so now I have no security deposit to cover the damages. They didn't leave a forwarding address but I do have their phone number and email address. From reviewing the property, it appears to be over $1,000 in damages. What is my best option to get them to pay? Should I take them to court if they refuse to pay?

John Underwood · Answer

Your probably out of luck honestly.

This is why my security deposit is always hundreds more than one month rent.

This encourages your tenant to pay the last months rent and clean the house in order to get their higher security deposit back.

Check with your local laws in security deposits to see what you can legally charge.

Richard F. · Answer

Just to add onto what @Denise Supplee mentioned, sometimes Tenants will submit a forwarding address to the Post Office. However, even if they didn't, you should send the proper Demand and Notice with your accounting of charges and copies of invoices via Certified Mail, Return Receipt Requested, to the rental address. When it comes back to you, add it to their file, UNOPENED, as evidence that it was sent. Then if you end up in Small Claims Court, the Judge can open it to verify.

Also, you failed by (apparently) not immediately sending a "Late Rent" Notice when you were not paid on time. They actually should owe you the rent plus late fees as determined by your Rental Agreement. If you had done so timely, it is possible they would have made some attempt to pay partial rent or contact you to explain their actions. What does local law state regarding "use of security deposit"? Some states do not allow it to be used for last month rent, and that should be made clear, in addition to having such a requirement within the terms of the Agreement.

Overall, it is doubtful you will ever see a penny of what they owe, but document everything Just In Case. And, Screen Better, and spend more time up front reviewing the contract terms prior to move in. Nobody reads them unless they are obsessive.

Michele Fischer · Answer

Agree, be thankful that it isn't higher and move on with your life.

My moveouts are usually 3-4k now, so 1k sounds awesome.

File it under the cost of doing business.

If it would make you feel better, here are two low energy options:

1. Turn them into collections.  You need to photocopy everything and are unlikely to get any money, but at least it wrecks their credit.

2. Fill out the 1099-C form with the IRS gifting them the 1k.  You lose any later option to recoup anything later but it makes it taxable income for them, which feels kind of diabolical.

Denise Supplee · Answer

Hi @Terence Purnell. First step is to document everything thoroughly, photos, invoices, and a clear breakdown of damages vs normal wear and tear. Then send a formal demand letter by email and text since you don’t have a forwarding address, outlining what’s owed and giving a deadline. If they ignore you, small claims court is usually the next step, especially for that amount. Just keep in mind, even if you win, collecting can be the harder part if they don’t have assets or income you can pursue.

Going forward, tightening screening and being clear that the security deposit can’t be used as last month’s rent helps avoid this situation.

Bryce Jamison · Answer

@Michele Fischer have you known anyone to ever do the 1099-C thing? It sounds hilarious, but possibly illegal. I'm also not sure if there'd be any tax implications. I'd still want the option to write off the losses.

How to recoup property damage

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