We have some good tenants that we need to talk to about their pet dog.
We ask for an extra pet deposit ($500) and the damage has already gone above that. We haven't discussed it with them yet, but here's the situation.
The tenants called us and said their air conditioner doesn't work. It's an old unit (from the 70's) and we knew we'd have to replace it at some point soon. We've gotten two estimates so far for a new system. The first estimator pointed out that it's obvious the reason the old unit isn't working, the refrigerant lines have been pulled off the unit (and sadly all the old (Freon) refrigerant has escaped, polluted the atmosphere). When we were over with the second estimator, we saw that the dog had been chained up to the old unit, so then it became obvious how those refrigerant lines became pulled off. It's a strong dog.
The estimate for a new AC is something like $2500. I asked the service guys how much would it be to refill the old unit with the old refrigerant, and they estimated $700 (old refrigerant is very expensive). We do plan to upgrade, but I asked what a repair would cost because it seems that's the amount the tenants should be responsible for.
We like these tenants, and plan to renew. But we do need to charge them for the damage to the old AC. Their security deposit is $1100, and the extra pet deposit is $500, so we have $1600 from them, but if we are to charge them the estimated $700 to repair the system (even though we will choose to upgrade instead), should we ask for that payment separately? This has never come up for us before (that is to say, damage from a pet in the middle of a lease period). We like the humans, and it may have been an honest mistake (though stupid). Probably one of the children decided to tie the dog up to the old AC unit.
Nevertheless, anyone have any advice for us? Should we write a letter and ask for separate payment now? I think the $700 contribution to the new AC system sounds reasonable...opinions?? Or should we just plan to deduct from the security deposit, even though they may not move out for several years? Like I said, except for this one instance, the humans and the dog are just fine.
If they or the pet caused the damage they are responsible. Bill them. Even if you upgrade the system they are still responsible for the $700 in damage. Ask the contractor for an itemized receipt reflecting that pet damage was $700 and replacement/repair damage was the remainder.
The tenants should pay at least the $700. I would first ask them to pay upfront. If they are financially unable to do that all at once, I would accept what they have now, and deduct the remainder from their deposits. I would then inform them they need to replace the amount deducted from their security deposit accounts ASAP, whether it be the following months, or broken up into payments over two months.
Get documentation from the repairmen stating that the damage was caused from abuse.
This takes you out of the spotlight and makes it much easier to approach the tenant.
You now have a 3rd party professional saying "Damage was caused from abuse, and will cost "X" to fix".
Get the problem fixed and attach the appropriate charges to the tenants ledger.
If the tenant happily pays for it, great!
But if they don't; when they go to pay their rent, pay for these charges first. This will leave an amount of rent unpaid. You will always have more leverage over the tenant when there is unpaid rent, rather than other fees/charges.
Just do all of this as nicely as possible, but be firm as the property manager.
Don't budge, and simply say:
"Hey there, we received a report from ________ that this damage was caused from abuse. It is going to cost _________ to fix. As per your lease agreement, you are required to pay for such damages. The total amount _____________ has been attached to your ledger and will need to be paid by _________ ."
Also, I would not recommend deducting these charges from their deposit. Their deposit is your leverage while they are living in your home. If you spend it all up, they have no incentive to take care of the place.
You will want to have that money at the time they move out in case you need it then.
I would leave the security deposit and pet deposit alone as they are not intended for use during tenancy. This is damage that the tenants regardless responsible for. I would definitely upgrade the air conditioner to a new unit. I would also have the HVAC tech write up the cost to repair the damage and replace the freon. Present his repair bill to the tenants and explain that you have decided to upgrade the central air for their comfort at your own cost. However they are responsible for the $700 in damage and you will pay for the remaining cost to install a new unit of 1,800.
See how the conversation goes. Be ready to comprise for a lower amount ($500) even since you do like them and to build goodwill. One way to soften the blow of the $700 charge is to let them know that the new unit should make the house more comfortable and save them money on the energy efficient side.
I would approach the tenant and ask them to help pay for the repairs, although I'm not sure I would ask them to foot the $700 bill. Personally I don't know how you still have an AC system from the 70s, I'm in Las Vegas where if your AC makes it 10 years your lucky. If you were planning on replacing it anyway, and absorbing the entire cost yourself, I would think that you should be charging for the amount of time between now and the planned replacement date, not the cost to repair something you were already planning on replacing anyway. That's just my opinion though. Also I would make sure your local tenant landlord laws dont prohibit you from charging them over and above their pet deposit, just to cover all your bases.
The problem I see with charging the tenant, is that normally you can only charge a tenant for the percentage left of the useful life of something. In other words, if the A/C unit's life expectancy was even 30 years, you're beyond that. So, there is no percentage of life left in it that you can charge the tenant for.
I don't think you'd win in court over charging them for the A/C unit. And, normally, you can't charge them for repairs that didn't happen. I trying to picture your explanation to a judge of why you think the tenant should pay $700. You'd say, well, we could have had it repaired for $700, but we chose to buy a new one and make the tenant pay $700 towards it.
I don't know. I just don't see it flying. Especially since you can only charge the tenant for the lost "life expectancy" percentage that they cost you. Which was nothing.
I think you should eat the entire cost of the new A/C unit. BUT, show the tenant the estimate to repair it for $700, and for a new unit, and tell them that if they damage this brand new unit, the full cost will be on them. And I'd put that all in writing, too.
@Sue K. has a pretty good point there.
You could always tell the tenant that they caused the damage, and they need to fix it using one of your approved service providers. That's a pricey repair, and your tenant probably isn't going to love hearing that - so if you are generally happy with your tenant you tread lightly on this one otherwise they could turn from good tenants to bad very quickly. 700 bones is a lot of $$.
I've seen complete AC systems last a lot longer than I could have ever imagined, but seldom do they go without some kind of maintenance or a recharge every couple years. I've also seen expensive new units blow up in 6 years.
Thanks, everyone. These are very helpful responses. I was thinking along the lines of Sue Kelley, I didn't think it would fly, but felt that charging them something would be reasonable. The AC was working before they got the dog, despite its age. We only have a very few AC days each summer here in Wisconsin, so even though it's over 40 years old, this unit hasn't seen so many days of use. Despite its inefficiency, since it's used relatively little, there hadn't been much impetus to replace the unit so long as it was working.
I think we may discuss it with them and see if they are willing to make some kind of contribution because the need to replace the AC now is really their dog's fault.
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