Being Sued by Tenant

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Being Sued by Tenant

A.R Shakir
Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes

My tenant in Chicago send a claim from a lawyer, stating I owe 27 thousand dollars in damages for not returning the complete security deposit.  The security deposit was 10 thousand dollars, she did not pay the last months rent, so 6550 was left. I charged 2,600 for repairs and damages, and sent receipts and pictures. I did not return the money from where the account is being held, and I did not return interest. It was an oversight from my part, but for 2600 I being sued for 27 thousand.....

Any way to approach this.?

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Alicia H.
Rental Property Investor · Oreland, PA · Member since 2017 · 51 posts · 32 votes
8y
“He who represents himself has a fool for a client” ~Abraham Lincoln Best of Luck.
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  • A.R Shakir
    OP
    Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes
    8y
    Kimberly H. My assumption is yes she wanted her commission and she didn’t care.... She missed all the damages at checkout too
    0Reply
  • A.R Shakir
    OP
    Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes
    8y
    Ultimately it’s my fault
    1Reply
  • Julius G.
    Investor · Atlanta, GA · Member since 2015 · 11 posts · 2 votes
    8y
    You should get a lawyer. Here in GA it’s only 3x the deposit if not returned in 30days. I have a current case involving this.
    0Reply
  • Kimberly H.
    Residential Real Estate Broker · Chicago Suburbs, IL · Member since 2013 · 1k+ posts · 594 votes
    8y

    Wow. Well at least if you talk to an attorney, make sure you get one that handles security deposit issues all the time in Cook County. Otherwise you'll just get more bad advice.

    1Reply
  • Peter S.
    Chicago, IL · Member since 2018 · 22 posts · 12 votes
    8y

    @A.R Shakir You can try this law firm (http://chicagoeviction.com/), they specifically side with landlords and will not even talk to tenants about any complaints.  I follow their blogs, but never used them.  

    0Reply
  • A.R Shakir
    OP
    Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes
    8y

    @Peter S.

    Thanks, I have been looking for someone to help Landlords, hard to find!

    0Reply
  • John FranczykPro Member
    Wholesaler · Racine, WI · Member since 2015 · 143 posts · 84 votes
    8y

    Do you own the property personally (I hope not) or through a corporation? If it's through a corp/LLC that has been maintained properly, you can send a reply stating that the corp owns the building, it has no assets, it is judgment proof, etc. Any lawyer that gets that kind of letter will ask his or her client for a retainer to keep the case going because that letter subtly indicates an intention to drag the case out. The phrasing in that kind of letter might require some effort to get it right. No tenant's lawyer will want to put a lot of time an effort into a case that will not get him or her any fees.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Brie Schmidt:

    @A.R Shakir - get a lawyer, not returning the interest is automatically a 2x SD penalty.  I am not sure they can do much though

    https://www.cityofchicago.org/city/en/depts/dcd/su...

     hoiw does this work when interest rates have been .05 to 1 .00   big deal 250 bucks .. out our way we cant put these in interst bearing accounts as they must be in trust accounts which by law cannot bear interest..

    you know me I would ignore it unless they actually filed a summons and complaint.. but that's me..

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    1Reply
  • Ed B.
    Real Estate Investor · Sacramento, CA · Member since 2010 · 292 posts · 103 votes
    8y

    Your post is unclear.  Was the rent  $3450??

    0Reply
  • A.R Shakir
    OP
    Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes
    8y
    The rent was 3550 but the deposit was 10000. The tenant did pay last month rent because the “check was lost in the mail” so I had to deduct that from the security deposit.
    0Reply
  • A.R Shakir
    OP
    Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes
    8y
    @ED b
    0Reply
  • Diane G.
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    @A.R Shakir

    Your original question sounds very unclear to me.. Did you return the SD or not? 

    0Reply
  • A.R Shakir
    OP
    Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes
    8y
    Diane G. Yes after I deducted the last months rent that was not paid, and damages(2650). 3800 left about. She is suing for 27k! Based on Chicago law, I did not pay interest of 250 dollars. And I returned her deposit from an account other then were I held the money.
    0Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y

    @Jay Hinrichs It needs to be paid annually, last year not one of my payouts was over $1

    Most lawyers aren't going to touch a petty case over $1 miscalculation  and a few grand.  But the way our ordinance is written it is a full 2 x SD over a few pennies

    But a $10k SD where the fine is automatically $20k + is sounds like other rules were not followed, probably worth the lawyers time 

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  • A.R Shakir
    OP
    Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes
    8y
    Brie Schmidt So I probably should settle... for 250 of interest now I owe 27k doesn’t seem fair. To note I had to deduct for unpaid rent and damages from deposit which looks like it doesn’t matter
    0Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y

    @A.R Shakir - are they offering to settle? 

    The ordinance is clear - double SD is the penalty so if you can settle for less than that I would do it

    Also be prepared to prove the $10k was in a seperate interest bearing account

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  • A.R Shakir
    OP
    Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes
    8y
    Brie Schmidt No offer to settle, I am hoping but prepared just to pay the amount because of all the laws that I have been reading on. It was in a separate account,it was not interest bearing. It’s my fault but the penalty just seems enormous. Any lawyer recommendations?
    0Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y

    @A.R Shakir - unfortunately I don't

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y
    Originally posted by @Brie Schmidt:

    @Jay Hinrichs It needs to be paid annually, last year not one of my payouts was over $1

    Most lawyers aren't going to touch a petty case over $1 miscalculation  and a few grand.  But the way our ordinance is written it is a full 2 x SD over a few pennies

    But a $10k SD where the fine is automatically $20k + is sounds like other rules were not followed, probably worth the lawyers time 

     chicagoland never ceases to amaze me.. right when you think U know it all.  Right?

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    1Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    8y

    The funny thing is that with all these tenant friendly regulations spreading across the country the ultimate losers will be the tenants. The higher our risk level the greater reward we will need to achieve through much higher rents.

    Unfortunately the big losers are those new investors that never bother to learn the laws that govern our business. So many members post with questions that are basic landlord 101 and should never be needing assistance in the first place if they bothered to educate themselves before becoming investors.

    In this case some mistakes were made, maybe not to serious. Since the deposit was in a non interest account and assuming rent increases were applied annually probably a wash. Not sure about deducting the rent owed from the deposit, depends on state laws.

    The tenant is obviously a scammer and should be dealt with by his lawyer. I would advise against trying to settle this early in the process.

    I would definatly be in Jay's camp..prepare your lawyer but do nothing till they file.

    2Reply
  • Angelica Vargas
    Butler, NJ · Member since 2017 · 15 posts · 10 votes
    8y

    Wow, I'm so sorry to hear this, A.R. As infuriating as this is, don't be discouraged - it's part of business and part of the learning process. 

    I think Erik and Brie had great answers. I would like to add that "Good Documentation Practices" (GDP) are SUPER CRITICAL when stuff like this happens. I don't know if this is the right way, but here's what I would do...

    1. Check and gather your lease agreements, any receipts for the security, and any other pertinent documents handy.  

    1a. Also get anything you can regarding late payment records or other discrepancies that occurred during the time that this tenant occupied the property. Any emails that were sent, text messages, etc., are valuable here. Assemble them into pdf's or old-fashioned paper copies. Organize them in such a way so they're easy to explain and for anyone to understand.

    2. Find an attorney that specializes in landlord/tenant disputes ASAP. Even one that works mostly with tenants should be familiar with the laws. Show him all this info and see what can be done.

    You should also educate yourself on the laws in your area. If Chicago is anything like NYC, the laws lean more on the tenants' side in order to combat the growing homelessness prevalent in big cities. Sadly, this often comes at the landlord's expense.

    Good luck!

    1Reply
  • A.R Shakir
    OP
    Real Estate Investor · Champaign, IL · Member since 2017 · 57 posts · 6 votes
    8y

    @Thomas S.

    Yes I take responsibility for not paying 200 dollars of interest over 2 years, just never thought a penalty or 27K (2 times security deposit and remaining security deposit) was the penalty.

    I will have to sell to pay the place to pay this amount.

    @Angelica Vargas

    Thanks for the advice, I did not do my homework, but I will the next time.

    0Reply
  • Account Closed
    Attorney · Skokie, IL · Member since 2016 · 270 posts · 109 votes
    8y

    @A.R Shakir

    0Reply
  • Account Closed
    Attorney · Skokie, IL · Member since 2016 · 270 posts · 109 votes
    8y

    @A.R Shakir without knowing the facts of the case, it is hard to make a determination of whether you should settle or not. My recommendation would be to reach out to an attorney who does a significant amount in Eviction Law in the City of Chicago and obtain a legal opinion or assistance settling the matter. Although I handles these types of cases, I would not be the ideal attorney for this case. I am happy to make a recommendation though of some attorneys I know in the area. 

    I included a link to the part of the act that deals with Security Deposits: 

    https://chicagocode.org/5-12-080/

    A few things you need to know as a landlord who collects security deposits in Chicago are as follows. This is not intended to be legal advise and so I advise you not to construe it as such: 

    1. You need to put the funds in an interest bearing account. 

    2. You may accept the first months rent and security deposit and put it in the same account initially, but then you must transfer the security deposit into a separate account within five business days. 

    3. You need to clearly write the name of the financial institution that is holding the security deposit on the lease. 

    4. You must pay the interest out to the tenant each year (12 month period). 

    5. Within 45 days of vacating the property, you, the landlord must either refund the security deposit plus interest, or if you are deducting damages, you must provide a notice that complies with the RLTO within 30 days itemizing the deductions you intend to deduct. 

    This entire process is so cumbersome that many of my clients are now moving towards a better vetting process of prospective tenants and rather than take a security deposit, they are taking a non-refundable 1/2 months rent in the form of an administrative fee. 

    4Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    8y

    @Account Closed - In your experience, if the landlord does not hold the money in an interest bearing account and does not pay back the interest, is it black and white 2 x SD? 

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