Unfortunately, things happen in a rental that the security deposit will not cover. The total discovery and settlement of these charges will leave a landlord asking if there is a way to financially recover? There is a legal path but it is not as clear cut as filing a lawsuit. This article will help you decide whether or not to pursue damages from your former tenant.
Pursue Damages in a Lawsuit
Basically, these suits come in several flavors. These three examples are similar but some slight differences.
- Filing a damages suit at the same time as an eviction is filed. This suit will cover lost rent and the recovery of security deposit shortfalls.
- A tenant who skips on their lease.
- When a security deposit is not adequate to cover the damages after a tenant moves out.
Hopefully a security deposit is being held. Each state has their own rules for providing a former tenant with an accounting of their security deposit and any funds held back. If a balance is owed by the tenant, they should be given a few days to pay the balance. When no additional funds are received from the former tenant the landlord gets to decide about pursuing damages.
The biggest challenge when pursuing damages is officially serving a lawsuit on your former tenant. If a damages suit is filed at the same time as an eviction case then many of these steps do not apply. When no eviction has occurred, be prepared for the time needed to complete the following.
- Former tenant has to be found. Often this means skip-tracing.
- Former tenant then has to be served notice of a damages lawsuit.
- Former tenant is allowed a certain period of time to respond.
Once successfully served a court hearing will be set. So, by this time, it is not unusual that several to many months have passed since the tenant vacated the rental. In other words, don’t think you are going to recover funds quickly, if at all.
If all goes well, the supporting documents from your security deposit settlement will prosecute your case against the former tenant. The judge will review the evidence and grant your request for damages plus court costs. Now you have a Judgement against the tenant. But, still no funds.
And you have spent quite a bit out of pocket to obtain that judgement.
Judgements follow your former tenant around so it makes it hard for them to get a loan. It also sticks out on a credit report if one is run the next time the person needs to rent. So, you do have some leverage now that might produce payments. In our experience though, that is usually not the case.
Since you have better things to do with your time, hiring a collector is the smartest move. Just be prepared that the collector will keep approximately a third of any funds they receive on the judgement. But they will actively pursue the former tenant for payment. And if they know the legal system well enough they can pursue garnishments.
Should You Pursue Damages?
So the final decision is yours. A few things to consider.
- Use an attorney to file suits for evictions and damages. A good attorney will know how to combine these case filings to eliminate the loss of time on service once a tenant is evicted.
- Decide if the cost is worth the potential reward. Did the former tenant have a 6-figure career that they would likely be able to pay up, or were they living on minimum wage?
- Sometimes you just want to make your mark and cloud the former tenant’s credit to put the world on notice. If so, just be aware of the possibility you are throwing more good money after bad. But if it helps you sleep at night, it might be worth it.
One final word about pursuing damages. We are not attorneys or legal professionals. We are property managers in Indianapolis. The above is accurate based on almost 30 years of experience in the field. But we would never pursue one of these cases without legal assistance. The above is to provide you guidance. You should be able to find legal assistance through your property manager.