Bad tenant finally left. Deposit refund.

7 Replies

After several months of non-payment, and over $4,000 of lost rent payment, she's finally gone!  The unit is a mess and will need at least $1500 in repairs and clean up.  We still have $750 of her deposit that will be applied to the repairs.

Do I have to send her a letter of explanation about the non-refund of the deposit?   What if her whereabouts is unknown at this point?

Call her to get that information, if not refer to her emergency contact/ or last known address. That way some due diligence on your end was completed. In CA, you have to provide the refund within 14 days with a line by line item of expenses. So for your star tenant (sarcasm), you'll just provide a cost of repairs/etc. 

Glad, she's gone, now you can work on getting a solid tenant in. 

Start getting bids for repairs and photos ASAP. Different states have different timelines but yes you need to send her something stating she will not get it back here is an itemized list of damages and costs associated with them. 
This will also help protect you in small claims court. You might be able to bill for other costs but I have never done it so I can't speak to that side of things.

If you didn't give her cash for keys or offer to waive the debt if she agreed to leave just send a certified letter to her last known address which will be the address of your property most likely stating she will not get it back due to unpaid rent as well as itemizing what is owed. It will most likely be returned to you, keep it unopened in case they try to pull anything. I would also file a claim in small claims for the remainder, who knows you may collect something but if not you can at least put the rest of us on notice for not much money out of pocket.

Just mail a letter to the last known address and tell her that the deposit is going to unpaid rent (list the amount) and damages.  take photos and then move on to getting things cleaned up and repaired.  you could go to small claims court, but you will likely never see the money,

There is no deposit to refund. Issue her a letter showing the security deposit went to unpaid rent. Show a balance of zero and move on. That's the easiest option. 

Your second option is to send her to collections (unlikely you will get much, if anything, ever). 

My favorite option as of late (thankfully we haven't had to go this route yet) is to "forgive" the debt, at which point it becomes income for the tenant. Send her a 1099, and file a copy of the 1099 with state/feds so that the IRS will come to her looking for the income tax on that amount of money. Just understand you can never collect on it if you go this route. I have a feeling there is going to be a lot of this in CT / MA / NY as eviction moratoriums finish up and landlords in these states can begin evictions - most realizing they will never get a dime in back rent.


Welcome to the big leagues! :D 

More info: 
"According to the IRS, if a debt is canceled, forgiven or discharged, you must include the canceled amount in your gross income and pay taxes on that income unless you qualify for an exclusion or exception. Creditors who forgive $600 or more of debt for you are required to file Form 1099-C with the IRS"

Source: https://www.credit.com/blog/10...

We did offer cash for keys, but she took advantage of the covid eviction rules and stayed for five months.   I believe taking her to civil court may be a dead end since she's not too educated and probably has zero funds.