Property damage caused by tenants is something that nearly every rental property owner fears. In our experience as Phoenix property managers, tenant damage that goes beyond the security deposit is rare, especially if you’ve screened your tenants carefully, inspected the property regularly, and managed to maintain a good working relationship with your residents.
Excessive damage does occur, however, and you’ll need to know how to handle it.
These are the immediate steps to take if a tenant damages your property. After we discuss what you should do right now, we’ll take you through some preventative measures that can help you prevent this from ruining your rental experience in the future.
Check Your Lease Agreement
The lease agreement you and your tenant signed at the beginning of the tenancy should discuss the tenant’s responsibilities and the expectations that you have for how the property will be maintained. It should state that tenants are responsible for all damage that occurs outside of general wear and tear. If a tenant or their guest has caused damage, repairing that damage is the responsibility of the tenant.
Your lease agreement may include penalties for damage. It may explain how the tenants will be required to pay for it; whether the money is deducted from the security deposit at the end of the lease term or if damage that occurs during the lease term needs to be paid for with the following month’s rent.
Review your lease so you know where you stand in terms of holding your tenants accountable. You’ll also want to reference this part of the lease agreement when you send your tenants a letter or have a conversation about the damage that’s been detected and the methods with which it must be rectified.
Estimate the Cost of the Property Damage
You’ll need to know how much the tenant damage is going to cost. Maybe you’ll have to make some quick repairs or perhaps the damage is so extreme that you’ll need to call in multiple vendors to coordinate getting your property back into habitable and rentable condition.
Whatever the circumstances, you need to document the damage.
Take photos and videos. Make notes. Collect estimates from vendors who are likely to make the repairs. Schedule the work as soon as possible. Waiting for your tenants to pay for the repairs before they’re made is unlikely to get you very far. Have your vendors repair whatever has been damaged, and then prepare your demand for payment. If the damage is discovered at the end of the lease term, when you’re conducting a move-out inspection, you’ll need that disposition information when you’re explaining why all or some of the security deposit was withheld. If the damage is done during the tenancy and the tenants are still living in your home, you’ll want to let them know what the costs are for those repairs.
Perhaps your tenants will pay right away. If they don’t, you can ask them to include payment with their rent.
It’s possible they won’t pay, and then you’ll have to deduct the amount at the end of the lease term. You could attempt to cancel the lease agreement and evict them, but such an action may only cause more expenses and frustration for you.
Charging the Tenant’s Security Deposit for Damages
When you’re making a claim against your tenant’s security deposit for damages they caused while living in your property, you’re going to need solid documentation. The courts will side with the tenant unless you can absolutely prove that they damaged your property.
This begins with the move-out inspection.
You should have conducted a thorough inspection before a tenant moved in and documented the condition of the property. Your move-out inspection form will show that damage occurred during the tenancy. You will need photos, and don’t be afraid to take a lot of pictures.
If you don’t have a completed move-in inspection form, with the tenant having signed off on the condition of the property, you’re going to have a difficult time charging tenants for damages at the end of the lease term. Make sure all this documentation is in order.
Your tenant can be present when you do the move-out inspection. They’ll have to request that you let them know when the move-out inspection will occur. Usually, tenants do not show up, especially if they’ve damaged your home. If a tenant does request that they be present, let them know when you’ll be inspecting the property. You are under no obligation to work around a tenant’s schedule; just let them know when you’ll be there to assess and document the damage.
Once you’ve collected all of the information you need to prove the tenant has damaged your property, you’ll need to put together an itemized list of what was spent to repair that damage. That’s the amount you can lawfully deduct from the security deposit. If the amount that you’ve spent exceeds the amount of the security deposit, you will not return any of that money to the tenant.
When Damages Exceed Deposits
If the amount of damage caused by the tenant exceeds the amount of the security deposit you’ve collected, you can put together a demand letter and send it to the tenant. This letter should include how much is owed and when and how you expect it to be paid.
Include invoices, receipts, and the lease language that reflects the tenant’s responsibility in this matter. You can also re-send an accounting of the security deposit that was withheld.
You’ll have to decide how hard you want to push to get this money paid back. If you have a super-responsible tenant who feels bad about the damage and is concerned about their reputation and future landlord references, they might pay you immediately for whatever is owed. More than likely, your tenant will ignore your request for payment.
You can hire a lawyer or a collection agency to try to recover that money. You can also sue your tenant for the money owed. These options are good options, but you’ll have to be prepared to spend some time and a bit of your own money recovering the funds. Decide if that’s worth it.
Tips to Preventing Tenant Damage
If a tenant has damaged your property, you only want to go through that experience once. Here’s how to prevent it from happening again:
- Excellent Tenant Screening
Tenant screening often focuses on financial responsibility. And it should. You want to be sure your tenant can afford the rent every month. Don’t forget to look at rental history as well. Contact current and former landlords. Find out if any damage was left behind. Ask if the tenants received their full security deposit back at the end of a lease term. Discuss whether the pets were well-behaved and find out if there were any issues during the tenancy. Always ask if they’d be willing to rent to that tenant again.
- Collect an Adequate Security Deposit
In Arizona, there are limits to what you can charge for a security deposit. You’re not permitted to collect more than the equivalent of one and a half times the rental amount. Collecting that full amount might leave you with a longer vacancy; not all tenants are going to have that amount of cash to put down as a deposit for your property. Most landlords charge one month’s rent for a deposit. That’s a good way to ensure you have enough of a deposit to cover potential damage.
- Inspect the Home
You understand the importance of your move-in and move-out inspections. We recommend getting inside the property at least once a year, to conduct an inspection. Write this requirement into your lease agreement and provide your tenants with plenty of written notice before you inspect. Then, use this opportunity to check for any deferred or unreported maintenance. Look for signs of damage or potential lease violations. Tenants are more likely to take care of your property when they know you’ll be inspecting. And, you won’t be surprised by excessive damage at the end of the lease term if you’ve been inside the home once or twice during the tenancy.
- Maintain Good Tenant Relations
A good tenant relationship solves a lot of disputes and conflicts before they escalate. Make sure you’re working well with your tenants and doing everything you can to establish and maintain good communication and respect.
- Work with East Valley Property Managers
Professional property management comes with a number of benefits. You won’t have to worry so much about tenant damage because your management team is taking care of things like screening, inspections, and tenant relationships. We have the experience to ensure your costs are kept down and your property is protected.
We understand that property damage is a real fear and often an unnecessary expense. We’d be happy to share some of our processes and systems for keeping it to a minimum when we’re managing your rental property. Please contact us at TCT Property Management Services. We manage homes in the East and West Valley, including Mesa, Gilbert, Chandler, Scottsdale, and Phoenix.
