Security deposit disputes are probably the most common reason landlords go to court – and not because they want to, but because they get sued by tenants.
That’s what happened to one landlord when her best tenant ever turned into a tenant from hell.
The saga began when her quiet, well-behaved tenant moved her boyfriend in with her for the last two months of the lease. The landlord admits she made a mistake consenting to this without screening the man, who had a dog and a confrontational disposition.
She also made a mistake by not doing a walk-through with the tenant. She “dropped by” while they were moving, and then came back alone after they had surrendered the keys. What she found was a significant amount of damage, including a scrapped wall. One end of the breakfast bar was broken off. Someone had tried unsuccessfully to glue it back in place. There was mud and some trash on the carpets, which had to be cleaned again before the next tenant could move in. The screen door was virtually shredded.
She made appointments for carpet cleaning and with her handyman to repair the unit before the next tenant moved in – all time away from work, and then she made an accounting for the tenant and explained why she would not be returning the security deposit. She requested the outstanding balance to cover the damage.
Our landlord was at work when she received a call from her receptionist that she had a visitor. That’s when she was served with a summons to small claims court. The tenant was seeking the entire deposit, plus a penalty for wrongful withholding.
The first time going to court is always a scary experience for anyone, but landlords have the added stress of wondering if the judge is going to side with the tenant. This perception of the tenant as the “underdog” is one reason why tenants find their way to small claims court so readily. Television shows like Judge Judy make the process seem easy — tenants feel they can just walk in, tell the sympathetic judge their story, and come away vindicated.
Meanwhile, our landlord scheduled to take a day off work to cover the trial, and took another day off to prepare her defense. She spoke with her carpet cleaner and handyman. Reluctant to get involved with the trial, she subpoenaed each just in case someone got cold feet. She didn’t want to be left hanging. She then organized her photos of the damage with her receipts for each repair, and compiled the information into a binder with tabs and highlights, and a summary in the front. Some of her friends, including a real estate broker, chastised her for compiling so much information – “the judge will never take the time to read that!” But she held firm.
On the morning of the trial, the judge ordered her to “try to work it out” with the tenant. The tenant was there with her boyfriend. The landlord approached the couple to see if there was room for compromise, but they both turned their backs to her. When the judge returned, he scolded the landlord for not settling, and warned her that she “was not going to like how this turns out.”
Despite that stomach-wrenching discouragement, she listened attentively while the tenant testified. It was clear from the woman’s testimony that she had paid to have the carpets cleaned, and did not appear to be aware of the damage in the unit. The boyfriend was the last one to leave. But the boyfriend was not on the lease or responsible for any damages. The tenant was.
When her turn came, the landlord offered the summary of expenses to the judge, who responded “is this all you have?” That’s when she handed over her notebook, with all the tabs and highlights, and photos and receipts of every item that she deducted. The judge was blown away. In fact, he went back into his chambers and took nearly an hour to pour over every page. When he came back out, he did something unusual — he allowed every penny of the landlord’s deductions, and ordered a judgement in her favor against the tenant. He even asked the landlord how much it cost her to assemble the notebook and suggested it might be a court cost. She was unprepared for that and couldn’t think of a figure.
To date, the tenant still owes about $200. And while the landlord missed a few days of work, she learned some valuable lessons from the process that can help all of us become better at landlording:
Always screen every adult who will be living in the rental.
Add all adults to the lease to make them liable for the rent– and damage.
Always collect an additional security deposit for pets — or have a “no-pets” policy.
Always walk through the property with the tenant after everything is out so you can both see the damage.
Only deduct for real expenses. Judges are skeptical to begin with. One exaggerated expense can taint your entire case.
Document, document, document if you want to win in court.
American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.