If you are renting out a property, it is important to know what to do if a tenant damages your rental home. This will always be frustrating for you to deal with, and the cost of repairing that damage will likely fall to you initially, until you can recover funds from the security deposit. Avoiding damage is the best way to deal with it. But, if you are inspecting a property after a tenant has moved out, and you encounter damage that goes beyond normal wear and tear, make sure you have a plan in place for dealing with it. Luckily, your tenant is responsible for any damage they cause. You can hold them accountable in a number of ways. Let's talk about what you'll need to do.
Check Your Lease Agreement
Your lease agreement is the logical starting point. Most leases will stipulate what happens when a tenant causes damage to your property. Your lease will state that tenants are expected to return the property in the same condition it was in when they took possession of the home, with normal wear and tear excepted. If a tenant damages rental property beyond what is considered reasonable under a lease agreement, they will be held financially responsible for the damage. The rental property lease agreement will define what forms of damage are covered and how much the tenant is expected to pay for them. Find the specific language that will back you up.
Document and Repair Property Damage
Most rental property owners will not discover that there is tenant damage until after the lease has ended and the resident has moved out. You'll want to get into the home as soon as possible to conduct your inspection. This, typically, is where you will find that things have been damaged. When you're inside the home, document any damage you find. In detail. Take photos and notes. Compare the condition now to the way the property looked before the tenant moved in. When you make a claim for damages, you'll need to be able to document what you've had to repair. This could protect you against an expensive legal penalty. If you cannot prove the damage, a tenant may be successful in getting the courts to charge you punitive damages. Once you have gathered all the necessary documentation that supports your damage claims, make repairs right away. You'll need your best vendors and contractors lined up to complete the repairs that are needed. Not only do you want to send a complete itemized statement and a bill for what the tenant still owes you; you also want to rent the property out again as quickly as possible. Make those repairs and charge the tenant what they owe.
Charge Your Resident's Security Deposit
Once the work is complete, you can think about reimbursement. Collect the invoices and the evidence that you've paid the bills. Then, you can let your tenants know that you're keeping all or most of the security deposit. Follow all Pennsylvania security deposit laws. When there's excessive damage, you probably aren't returning any of the deposit. You still need to send that accounting of damages. Provide an itemized list of what you're withholding and why. Hopefully, the deposit you kept will cover the amount of damage that was left behind. In some cases, however, the damage will go beyond your deposit. You'll need to include a bill for the amount that's still owed by the tenant. Provide a deadline by which you expect payment to be made.
When the Tenant Doesn't Pay: Collections
Unfortunately, if a tenant causes more damage than their security deposit covers, it can be difficult to collect what they owe from them. While they're responsible for paying the difference, it's difficult to compel them to pay without investing a lot of your own time and money. When you are left with a balance, first try to talk to your tenant and work out a payment plan that both parties can agree to. If you cannot get anywhere with your tenant, consider talking to an attorney about how best to proceed with collecting those costs. Depending on how much the tenant owes you, it's possible to continue trying to collect from them. This will take a lot of your time and resources. Decide whether it makes financial sense.
Preventing Tenant Damage: Screening and Insurance
Let's talk about how to prevent tenant damage. If you find yourself dealing with a ton of tenant damage at the end of a lease term, you'll want to avoid any similar experiences in the future. Here are some suggestions:
- Adopt serious screening policies. Most landlords believe that with a quick credit check and an income verification, they can be sure they have a qualified tenant ready to rent their home. Dig a little deeper. Investigate rental history and talk to former landlords. Find out if any damage was left behind and if they received a full refund of their security deposit. Check every applicant's credit for money that's owed to former landlords or apartment communities.
- Conduct routine inspections. Getting inside the property at least once a year to ensure everything is functioning the way it should will show you whether you have to worry about tenant damage. Make sure your lease reflects that you'll inspect or walk through the property once during the lease term.
- Require renter's insurance from your residents. This will protect you from any of the tenant's liability when they're renting your home. If they damage something during the tenancy, you can make a claim against their policy and have the problem paid for. It saves both of you money.
Working with a Philadelphia property manager can also help. We understand tenant relationships, we inspect your property frequently, and we can see the red flags that might warn us there's a problem. If you'd like some help avoiding tenant damage, please contact us at Innovate Realty. We work with investors of all experience levels in the greater Philadelphia metro area as well as surrounding suburban areas in Montgomery, Chester, Burlington, and Delaware County, to the Delaware River.
