Insurance Claim Payment vs Billing Tenant for Damages
I'm heading back to Kona (Big Island Hawaii) to deal with my squatting tenants. I've already filed an eviction lawsuit with a court date late this month. I'm going to try and talk reason to the tenants and get them to move out peacefully.
During their occupation of my property, there was severe water damage to the upstairs kitchen and downstairs bedroom. I only found out about it from my property agent who did a quarterly inspection. The tenant never notified either of us of the damage to the kitchen (tenant does not have access to downstairs bedroom). Tenant claims that the faucet was leaking so he just tightened it up. The sink cabinet floor MDF was swollen and the drywall with the water supply lines under the sink became moldy and there was water pooled under the sink in the cabinet. The tenant never notified me of any of this. Because it was not addressed, it rotted through the plywood subfloor under the sink cabinet and soaked the ceiling drywall of the downstairs bedroom below eventually pulling down the whole ceiling and flooding the bedroom and molding the carpet. The bedroom ceiling drywall, one wall, and the bedroom carpet all had to be replaced.
To be fair, the tenant had no access to the downstairs bedroom, but his negligence to let me know of the water leak in the upstairs kitchen led to extensive water damage.
The insurance company said they estimated the damage to be $5,489. Less depreciation and deductible, they cut me a check for $4,350. They did not give me any money towards the carpet damage as mold damage to carpet was not part of my policy. The carpet estimate came in at $1,253.
Here is the relevant Hawaii tenant code:
Tenant Negligence, Failure to Maintain, or Unlawful Use - Section 69. The landlord may take the following steps in cases where the tenant does not comply with the tenant's obligations to maintain the unit (Section 51):
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D. If the landlord finds out that a tenant's action or lack of it may cause irremediable damage to person or property, the landlord need not give the tenant any time for correction. Instead the landlord may proceed immediately to end the agreement or make the repair and bill the tenant.
I've hired contractors and made the repair. My Question #1 is how much to bill the tenant.
- The actual repair cost charged by my contractors, plus the carpet estimate?
- The entire amount estimated by the insurance company, plus the carpet estimate?
- The difference of the insurance company estimate less what they paid me, plus the carpet estimate not covered by insurance?
- Some other amount?
Question #2. The tenant paid me rent in advance, but signed an Early Termination agreement 4 months after the lease was entered because I was going to evict them but gave them a way to end this amicably. In the agreement, the tenant agrees that the unpaid prorated rent may be used to cover the cost of damages, in addition to the security deposit.
Quit And Vacate Early Termination Of Lease. Tenant agrees to a new termination date of the lease of July 31, 2015.
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Landlord agrees to refund to Tenant all unapplied pre-paid rent less costs for damages, utilities overages, cleaning, and financial remedies upon the date Tenant quits and vacates the property.
Would you recommend billing the tenant for the damages from Question #1, or go ahead and deduct the amount for damages from the rent refund just as the tenant signed and agreed to in the Early Termination agreement?