What if a Tenant Damages Your Rental?

No matter how many times you cross your T's and dot your I's, run background checks, and screen tenants, every landlord is susceptible to an encounter with a bad tenant. This is one of the risks associated with renting.

If you find yourself in this less-than-favorable situation and the tenant has totally trashed your property, you may wonder what remedies you can pursue. Below, we will review the actions any landlord can take when their property has been damaged.

Know the law in your jurisdiction:

The first step to take when you learn that your property has been damaged is to review

the landlord-tenant laws in the jurisdiction where the property is located. To aid with this process, you may also need to consult with an attorney.

Inspect the property:

After reviewing the jurisdictional rules and/or consulting with a competent advisor, you should conduct a reasonable inspection of the property. During this inspection, you should create a list of the damages and capture them on video or in pictures. In some extreme circumstances, you may even have to obtain a police report.

No matter the type of damage, always remember to document it and maintain adequate records of all events.

Note: In some jurisdictions, the tenant has the right to be present when you inspect the property. For this reason, it is of utmost importance that you know the laws of the jurisdiction before taking any action.

Try to negotiate with your tenant:

Once a reasonable inspection of the property has been conducted and the cost of the damage determined, you should contact the tenant to see whether they are willing to negotiate and settle the cost. The tenant may agree to repair the damage themselves. If this is the case, you are in luck: You can avoid going through the judicial process.

Contact your insurance provider:

Once a reasonable inspection of the property has been conducted and the cost of the damage determined, you should contact the tenant to see whether they are willing to negotiate and settle the cost. The tenant may agree to repair the damage themselves. If this is the case, you are in luck: You can avoid going through the judicial process.

File a complaint in your jurisdiction:

If you cannot resolve the dispute on your own, the next step may be to file a claim against the tenant in landlord-tenant court. If you take this step, the landlord will need to review a broad range of legal issues such as leases, security deposits,  rent escrow, breach of lease agreements, evictions, and more. Since filing a small claim will involve various legal issues, you should consult with an attorney before taking this step.

The tax law and repairs:

Whether you or the tenant makes the repairs, you can claim a deduction for the cost of the repairs when you file your taxes. Typically, landlords can deduct the costs of certain materials and supplies used to keep the rental property in good operating condition, as well as the costs of repairs and maintenance.

Additionally, according to the IRS, the landlord can deduct the expenses paid by the tenant if they are deductible rental expenses. So, you got lucky again!

The bottom line:

As the saying goes, where there is no risk, there is no reward. One of the unfortunate risks of being a landlord is the possibility that the property will be damaged. While this is one of the risks, the good news is landlords have several options for recovering the cost.