Tenant damage is a real and understandable fear for many rental property owners. Your investment is worth a lot of money, and when the tenant you place does not treat it as well as you expected them to, it can be difficult to recover – financially and emotionally.
You need a strong set of precautions in place to avoid the type of damage that leaves you struggling to make your property rentable again. We’re going to talk about those precautions, and we’re also going to share some strategies for how to proceed when there’s damage to your home for which your tenant is responsible.
Here’s our best advice, as experienced San Francisco property managers.
How to Handle Tenant Damage
Your tenant may cause damage during the lease term. You might also notice damage after the lease term, when your tenant has moved out and you’re conducting an inspection. The actions you take will depend on the type of damage that was caused and the accountability that’s provided in your lease agreement.
- Lease Agreements
The lease you and your tenant sign together should have some kind of language that addresses tenant damage and how it’s handled. Refer to that lease before you take any action when tenant damage is detected and documented.
- Document the Damage
Documenting the damage is an important first step in addressing it. Whether you notice the problem during an inspection or the tenant calls to tell you that they’ve broken a window, make sure you complete a report and take some pictures.
This is especially important during the move-out inspection. When you notice tenant damage after that tenant has moved out, your documentation must be thorough. You’ll deduct the repairs and replacements from the security deposit, and you need to demonstrate why that’s justified.
- Hold San Francisco Tenants Accountable
When tenants cause damage during the lease term, advise them to work with their renter’s insurance company. Maybe they left a pot on the stove and a small kitchen fire was started. Perhaps a pet scratched paint or floors to the point that repairs are needed. Tenants can file a claim with their renter’s insurance company if the damage is covered by their policy.
Send the repair bill directly to the tenants when they cause damage. Ideally, they will pay for the repairs and everyone will move on. If they don’t pay for the repairs, you’ll have to pay out of pocket and then attempt to collect the debt from your tenants. This is not always easy.
If it looks like your tenants are not going to pay, you have the option to cancel the lease and evict them. As long as your lease agreement provides for this option and you feel confident that you can adequately document that the damage in the home is a violation of the lease agreement, this would be considered a just cause eviction.
- Security Deposit Deductions
When damage is discovered after the tenant has moved out, you can use the security deposit to pay for that damage. Make sure it’s documented. Make sure you can clearly see the difference when you compare the move-out inspection report to the move-in inspection report. Make sure it’s really damaged, and not general wear and tear, which is your responsibility as the property owner.
Send an itemized list of deductions to your tenants within the required time period to return a security deposit in California (21 days). Include receipts, invoices, and quotes. You don’t want to give your tenants any leverage to fight back in court or through a lawsuit.
What if the amount of damage exceeds the security deposit you have? You’ll be entitled to use all of the tenant’s deposit. Make sure you send the proper letter within the 21 days. Let them know how much is still owed. You’ll need to put that in writing, and you can also give them a deadline by which to pay it before you take additional collection steps.
Collecting that balance may not be easy. You cannot compel the tenants to pay you what they owe. You can take them to court, but that may cost you more time and money than you’d like. You can continue trying to collect what is owed to you. Write to them. Call them. Talk to an attorney who specializes in collections.
Don’t take it personally when tenant damage is discovered. It might not have been intentional. Accidents happen. Things break. Instead of worrying too much about it, take the immediate steps that are necessary to make it right. Your first priority is getting the home rented again. Make the repairs, hold your tenant accountable as best you can, and move on.
How to Prevent Tenant Damage
The best way to deal with tenant damage, of course, is to prevent it. Here are some of the precautions you want to take so you don’t find yourself having to deal with the expense and the frustration of tenant damage.
- Share Expectations with Tenants
Before tenants move in, you’ll send them the lease agreement and invite any questions. This is an excellent opportunity to talk with your tenants about their responsibilities while living in your rental property. Highlight important parts of the lease, such as the rent collection process, procedures for reporting maintenance, and what they’ll need to do if they cause any damage to the property.
When you talk about your expectations for how your property is cared for, there will be no surprises when tenants are held accountable for any damage they cause.
- Develop Good Tenant Relationships
When you have a professional, positive, and respectful relationship in place with your tenants, you’ll find that situations like this are handled with more ease. First, there’s less likely to be tenant damage. When tenants work well with their landlords and appreciate the relationship that’s in place, there’s less risk that negligence or abuse will lead to damage.
Make it easy for tenants to talk to you if something does happen. You don’t want maintenance to go unreported simply because your tenants are afraid of admitting that they’ve caused damage to your property. Remain approachable and accessible. Listen. Be empathetic, even while you’re holding them accountable. This doesn’t have to be unpleasant. Acknowledge the problem and get together on fixing it.
- Conduct Walk Through Maintenance Visits
California is pretty strict when it comes to protecting tenants against overreaching landlords. You cannot show up at the property whenever you please just to look for damage that you suspect may have occurred.
You’ll have complete freedom to conduct move-in and move-out inspections. The inspection you do at the end of a lease term will help you identify and document damage that’s done after a tenant has moved out. But, you don’t want to wait that long.
A maintenance walk-through during the lease term is acceptable. You simply need to give your tenants plenty of notice that you’ll be conducting it. Include this inspection in your lease agreement so it’s not a surprise. If you notice any damage while you’re inside the property, you can address it with your residents right away.
Train your maintenance people to let you know if something looks off. If you send over a vendor to take care of some small repair, they can get a look at the inside of the property and let you know if there are holes in the walls or broken appliances. Good maintenance relationships will help you prevent damage.
- Collect an Adequate Security Deposit
Always collect a security deposit. This money belongs to the tenant throughout the lease term, but you’re holding it, and it protects you against the potential damage that a tenant can cause. State law limits how much you can collect. On an unfurnished property, you can collect the equivalent of two months’ rent. So, if your San Francisco property rents for $3,000 per month, your security deposit can be up to $6,000.
We’re not suggesting you always collect twice the amount of rent. That might dissuade otherwise good tenants from renting your home. However, you do want to be sure you’ve collected enough of a deposit that you can pay for any damage that the tenant leaves behind. Most property owners will collect an amount that’s close to the equivalent of one month of rent.
San Francisco Property Management
Another great way to avoid tenant damage is to work with a San Francisco property manager.
We have systems in place that help us protect your investment property. We screen tenants well, looking for a solid and positive rental history. We inspect carefully. We document property condition. We hold tenants accountable to the lease, and we make sure they understand the importance of taking their responsibilities seriously.
Property managers provide a valuable buffer between you and your renters, too. It can be uncomfortable for property owners to confront their tenants about damage. We don’t have that barrier. It’s our job to maintain your home, protect your investment, and work well with your tenants.
If you’d like some additional advice, please don’t hesitate to contact us at Sharevest Property Management. We’d be happy to help.