A security deposit is your protection against any damages caused by tenants during their stay. However, there are times when the damage caused by tenants is so severe that the repair or replacement costs exceed the amount of the security deposit, putting you in a fix. Spending from your own pocket to repair the damage is not always a solution. So, here’s a short guide on how to handle property damages that exceed the limit of rent deposit.

Document the damage during your inspections

Keep an eye out for damages to your rental when you are conducting your annual inspections and immediately document any major or minor damage that you spot. You can take a photo, record videos, or simply make notes of these damages as you try to find out why and how they occurred.

This documentation serves as proof in the event that the case goes to court and will not only ease the process of claiming damages but also help you in estimating the repair and replacement costs, which is the next step.

Calculate the estimated cost of repairs and replacements

You will need a statement of costs to prove that the damage repair cost is more than the amount of the security deposit. Make a list of all required repairs, get an estimate of the total cost from a professional contractor in writing, add the material costs, and save the receipts from your repairs-related purchases. This gives you a definite figure to discuss with your tenant when it comes to asking for repairs costs.

Communicate your reasons for withholding the security deposit with your tenants

Ordinarily, landlords are expected to return the security deposit once the tenant moves out (within 21-days). However, in cases where the damages exceed the security deposit, you need to inform the tenant why you will be withholding the amount and making the necessary deductions. Communicate with them to understand whether the damage was caused accidentally or due to negligence. Explain the severity of the damage to your tenants and let them know how much it will cost to repair.

You can share your estimated calculations to give them a clear picture of the difference between the estimated price and the amount of the security deposit. Creating a detailed itemized list can help them understand the exact reason for not receiving the total amount.

Send a demand letter claiming the costs of property damage

If the damage repair cost exceeds the security deposit amount, you ought to send a demand letter to your tenant, asking them to pay the remaining amount they owe you. The letter should include the detailed itemization of damages, cleaning fees, copies of all invoices and the amount you are demanding, and the date by which it should be paid.

You also need to provide contact details such as phone number, address, and an email address so that tenants can contact you if they have any concerns regarding the amount. You have to follow legal procedures when asking for the repair costs from your tenants. Make sure you check the state law to know the legal procedure of sending the letter.

You may have to take the matter to the small claims court

If your tenant does not respond to the demand letter, you may need to file an official complaint in small claims court. However, this should always be a last resort and only if the amount is large enough to justify the legal expenses you will incur.

If you do plan to file a petition, you will need to prepare your case, collect all the evidence, and organize it before initiating the process.

Although you cannot avoid the problem of damage while renting the property, you can minimize it to a certain extent by conducting extensive tenant screening processes to qualify responsible and reliable tenants for your Merced rental.

At River Drive Properties, we help landlords manage repair costs, claim damages, handle security deposits, and deal with situations when the damage exceeds the rent deposit amount. We also conduct rigorous tenant screening processes to select high-quality renters for your home who are ideal tenants.

For more details about how to resolve issues related to security deposits, contact us at River Drive Properties.