Curious as to what to do as a landlord

Chicago, Illinois
Managing Your Property
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Curious as to what to do as a landlord

Margaret Dreesen
Member since 2021 · 4 posts · 2 votes

I am a newbie at being a landlord.  My late husband and I had a small studio on the Chicago Gold Coast.  My tenant fell over his own cane and then called 911 in the middle of the night.  The fire dept used crowbars to break into the condo to take the tenant to the hospital.   They deemed it a life threatening situation. My tenant has been living in the condo for over a year and is out of the hospital and back at the condo.

The new outside fire door costs over 3000 USD.  Can I use some of the tenant's damage deposit to pay what my insurance does not pay? 

Any suggestions from you experts out there?

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2y
Quote from @Margaret Dreesen:

1. Do not EVER use the security deposit for repairs or rent while the tenant lives in the rental. The deposit is for after they move out. It is your only leverage to ensure the tenant complies with the terms of the lease. Your law probably prohibits you from using it for any expenses during their residency.

2. This is a tenant expense. They should file an insurance claim. If they don't have insurance, then they have to pay out of pocket. If they don't have insurance, this is a great opportunity to explain to them why it's necessary.

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  • Joseph BeilkeBusiness Member
    Real Estate Agent · Palm Coast, FL · Member since 2018 · 364 posts · 244 votes
    2y

    As a Firefighter and Real estate professionals, I would contact the Tenants Property and Liability insurance provider to cover the difference.   If you did not require your tenant to carry this type of coverage and not name you also on the policy as insured you may be out of luck.  

    I would then approach the tenant and work out a solution that is far for the both of you.  I recommend not dipping into the deposit unless you have no other choice to pay the bill.  

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    2y
    Quote from @Margaret Dreesen:

    1. Do not EVER use the security deposit for repairs or rent while the tenant lives in the rental. The deposit is for after they move out. It is your only leverage to ensure the tenant complies with the terms of the lease. Your law probably prohibits you from using it for any expenses during their residency.

    2. This is a tenant expense. They should file an insurance claim. If they don't have insurance, then they have to pay out of pocket. If they don't have insurance, this is a great opportunity to explain to them why it's necessary.

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  • Paul De Luca
    Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
    2y

    @Margaret Dreesen

     Situations like this demonstrate the importance of tenants having renter's insurance. That's a large expense and I imagine that would wipe out the tenant's whole security deposit. Plus, that isn't really an expense that should be deducted from the security deposit anyway.

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  • Melanie ThomasBusiness Member
    Real Estate Broker · San Antonio · Member since 2022 · 1k+ posts · 489 votes
    2y

    Hi Margaret. Sorry you are having to deal with this issue as a new landlord. No you cannot use the deposit to pay for the door. The tenant would be on the hook to pay and hope he does have insurance. I would make it common practice to require a tenant policy be in place during lease term. Good luck & happy investing!

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  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    2y

    @Margaret Dreesen this is a huge bummer and is one of the things you don't expect in the investing world. Almost no one in Chicago still has a deposit, so that is the first thing I noticed. There are some very, very good reasons why you might want to return it to the tenant ASAP. 

    I would definitely approach the tenant to see if they have tenant insurance as your first line of defense. I also would check to see if this is part of the building covered by the condo insurance policy as well. 

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  • Joseph BeilkeBusiness Member
    Real Estate Agent · Palm Coast, FL · Member since 2018 · 364 posts · 244 votes
    2y
    Almost no one in Chicago still has a deposit, so that is the first thing I noticed. There are some very, very good reasons why you might want to return it to the tenant ASAP. 

    @John Warren. I am fair from familiar with IL or Chicago RE Laws.  Can you elaborate please?

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  • Margaret Dreesen
    OP
    Member since 2021 · 4 posts · 2 votes
    2y

    TY and no the condo association by laws make the fire door and upkeep the owner's responsibility.  At the guidance of the comments here, I have talked with the Condo Manager and Tenant.  I have gone ahead and filled with my own insurance company.  I have asked the tenant to contact his renter's insurance company.  This is a learning experience for me in my landlord adventure.  I am hoping my insurance will pay the highest percentage and the tenant and I could split the rest.  I need to get the door fixed now to keep my tenant and the rest of the building safe.  I appreciate everone's input.

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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    2y

    That’s on the tenant. Send him the bill. If he doesn’t pay then raise rent an extra $100. This is another reason why I do month to month leases.

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  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Margaret Dreesen

    1) You typically cannot use the SD to cover damages while the tenant is still living in the property w/o the tenant's written approval.

    2) Even if tenant agrees, not a sound business strategy as now you have nothing to cover possible damages when tenant moves out.

    3) Filing a claim on your own insurance is also business-foolish, as now your claim will track you in the insurance world for about 5-7 years and if you have another claim - may lead to cancellation or spike in premiums.

    4) Tenant is 100% responsible for the damages! PERIOD. Of course, this assumes you have a well-written lease.

    5) Yes, this is an unfortunate event and we all feel sorry for the tenant. Still, he's 100% liable. Do NOT make the DIY mistake of being nice and covering this for the tenant.

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  • William HooFatt
    Homeowner · Member since 2024 · 14 posts · 14 votes
    2y

    First - Is the door currently secure?  Can I just push my way in and rob the place?

    If not, get someone to put a temporary fix or something.  Some plywood bolted on the front and a repair of the frame?  My guess is the building maintenance manager might be able to do this for a fee.

    If the Condo Assn or insurance will not cover.  You may have to pay out of pocket.  This could be a short term hardship.  Keep all receipts and submit with your taxes as a business deduction

    Assuming you make over $3000 in passive income, you can probably deduct $3000 as a passive expense.

    That's how I look at it.

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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    2y

    Hi @Margaret Dreesen - Sorry to hear about your late husband.

    This is an interesting question that I believe has been answered already...NO you can NOT use the security deposit to fix the door....especially here in Chicago.

    Maybe see if they would split the cost with you?  Otherwise, chalk it up to good problems to have.

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  • Margaret Dreesen
    OP
    Member since 2021 · 4 posts · 2 votes
    2y

    Thanks to all of you for your guidance.  My contract now includes rental insurance and I realize that next contract period I will need to raise the tent a little to better cover expenses of the condo--lesson learned there.  The tenant and I worked out a resolution.  This turned out now to be a win-win as my unit is getting a new state of the art fire door.  Thank you again as I am learning much from the Bigger Pockets community!

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