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What to Do if Deposit Doesn’t Cover Damages or Unpaid Rent

The law aims to protect both the tenant and landlord in a contract of lease or rent. This is why a deposit is often paid by the tenant in the understanding that it will be used by the landlord to repair the property after the tenant has left. After all, what property would attract a new tenant if it looks incredibly lived in?

The problem occurs when the cost of the repair exceeds the amount of the deposit. This is not exactly unheard of and unfortunately, many tenants think that with the deposit, they are free and clear from any other liability.

However – this is not the case at all. As a landlord, you should know that there is a remedy for you in the event that the cost of the repair is significantly more than the deposit.

Coverage of the Deposit

The deposit is basically a safety net against unreasonable damages on the property. Normal wear and tear is not enough for the security deposit to kick in. For example, roofing tends to degrade in time and if the damage to the roof can be attributed to the normal passage of time, this is not something the landlord can sue you for.

However, if the damage is caused by negligence on your part, then the security deposit will be kept by your landlord. For example, if your pet happened to destroy the wall or ruined the carpeting, then this is definitely your fault. Water damage sustained over a long period of time could also be a cause for the security deposit not being given back.

There are no specific acts that are considered negligent or part of normal wear and tear. It varies from one situation to another and it’s your duty as a landlord to prove that the damage is caused by negligence.

Unpaid Rent

What if there are no unreasonable damages but the unpaid rent exceeds the deposit? In this case, the landlord can still file a claim against the tenant.

Remedies of the Landlord

The question is: what can you do if the tenant is uncooperative? There are several remedies available to you, whether you are claiming for unpaid rent or insufficient security deposit.

Demand Letter

A demand letter is your first and softest method of asking for the money. The letter should include an itemization of the unpaid expenses, the amount you want to claim, and a date as to when it should be paid. Be as specific as possible when offering an itemization of the expenses and use simple terms for better communication. Provide a communication number so that the tenant can talk to you if there are problems. Some landlords are aware of the incapacity of tenants to make payment at a given date and therefore give them the option of setting a meeting for a face-to-face compromise.

Small Claims Court

A small claims court is the next step should the demand letter be ignored. A judicial action would be more thorough and requires the same itemization presented in the demand letter. In most cases, the demand letter itself can be used as evidence to verify the claim. The burden of proof lies on the landlord during a judicial remedy, which means that you’ll need sufficient evidence to prove your claim. Note however that even with a small claims court, you are not entirely sure that the amount will be paid.

Collection Agency

Your last option is a Collection Agency which would undertake the collecting process on your behalf. The agency would be paid a certain fee for the job which may be fixed or a percentage of the amount to be recovered. Since this is a private remedy, landlords are advised to be careful with the Collection Agency they use. Some agencies can be quite persistent and resort to less than legal means. Note that the tenant – in cases of persistent collection agencies – is also offered a remedy. Compared to a small claims court however, Collection Agencies have more promising results. Pick one with an excellent reputation in the industry and you should be able to get the results you want.

Note that the law between landlords and tenants vary from one location to another. It is important to acquaint yourself with the laws within your specific area for better results.