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Security Deposits Versus Actual Damage Costs

There's perhaps no worse moment in a landlord's career than unlocking a recently vacated apartment to find it has been wrecked. Torn carpeting, scuffed walls and broken appliances are a quick and easy way to spoil any property manager's day. Bad turns even worse when you realize that you may not be able to use all of the tenant's security deposit for repairs. Scott Safadi of Cal Bay Property Management encourages all property managers to consult their local laws to determine their rights to the full amount of the security deposit.

So what happens when the damage exceeds the value of the security deposit? Create an itemized list of all the damage done to the apartment and all you paid to repair it. Include receipts, invoices and any other evidence you have to show that the damage they left behind was indeed of excess of the value of their security deposit. Subtract the security deposit from the balance and then send the tenant a bill for what they still owe.

While you could certainly work out a payment plan and give them plenty of time to repay their debts to you, we'd recommend giving them a tight turnaround time for this debt. Ten days shows that you mean business and that the consequences for their actions are indeed serious. If it means taking them to court to pursue legal action, then so be it.

In the future, avoid having this problem by charging a larger security deposit. You won't be stuck footing the bill for expensive repairs nor having to take a delinquent tenant to court. Consider, too, adding a list of common repair costs to your onboarding packet that you present to new tenants. Seeing a list of prices for things like repaired refrigerators, burned out light bulbs and replaced carpeting can help "scare straight" unruly tenants in advance. This list also comes in handy if you need to point to a warning about how much of the security deposit your tenants could lose if they don't take your warnings about property damage seriously.

- Scott Safadi, Cal Bay Property Management

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