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How to Win When You’re Sued over Security Deposits

If you’re new to property management, you’re probably working overtime to make sure you don’t make any costly mistakes.

You do your best to screen for tenants who will pay their rent on time and keep your property reasonably clean and damage free.


Even when you do your best to follow the rules, you could find yourself being sued in small claims court. Imagine one of your tenants moves out.

You do a walk through and assess costs for damage and clean up.

You discover that those costs are higher than the amount of your tenant’s security deposit and inform him you won’t be returning it. Your tenant disagrees and takes you to court.

Fortunately, there are common sense steps you can take to maximize your chances of winning in small claims court.

Here are 4 tips to ensure the evidence you present in court makes the most persuasive case possible:


1. Demonstrate Compliance with the Laws in Your State

The laws which cover security deposits differ from one state to another.

For example, in California, security deposits must be returned within 21 days with an itemized list of deductions.

New York, on the other hand, requires landlords to return deposits in a reasonable time frame, usually defined as between 21 and 45 days.

Be sure you know all the laws in your state and be prepared to present evidence of your compliance with those laws in court.


2. Present Evidence of Clear Tenant Communications, Including an Official Walk Through

It’s important to show the court that you've made reasonable efforts to communicate with your tenant.

Show the court any correspondence you've sent which details your expectations about the property, how you assessed costs for damage and clean up, and how those costs affected their security deposit.


You should also show evidence from an official walk through, preferably one which you and your tenant completed together.

Important evidence from your walk through would include photographs of the unit which compare its condition before the tenant moved in and after he moved out.

You should also have an itemized list of deductions from the security deposit.


3. Demonstrate Any Reasonable Efforts to Achieve Resolution

Courts are impressed when litigants have made reasonable attempts to resolve their disputes and avoid taking the court’s time.

Bring with you all evidence of such efforts, such as letters and emails in which you attempted to arrive at a reasonable compromise, along with your tenant’s response to those efforts.

If before going to court your sought the help of an official mediator, bring evidence of this, including an official statement from the mediator which demonstrates your good faith.


4. Prepare a Court Statement and Line up All Your Evidence

Small claims courts are not as formal as criminal courts, but you still need to be fully prepared if you want to win.

You should create a concise and persuasive statement which summarizes compliance with your state’s laws and your principal evidence.

It’s also a good idea to practice this statement several times before your court date.


In addition, make sure you bring all of your evidence with you to court.

This includes a signed copy of the lease, all correspondence between you and the tenant, your photographs, and your itemized list of deductions.

You should also bring estimates for repairs and clean up, or receipts for work that’s already been completed, and any witnesses who can back up your claims about the unit’s condition.

Take the time to organize your documents so you can quickly produce them when they’re requested.


Conclusion

No one likes going to court, but in situations where tenants destroy your property and refuse to pay for the damage they caused, small claims court can work to your advantage.

To win in small claims court, be sure you can produce evidence which demonstrates that you've followed the laws of your state, made reasonable efforts to communicate with your tenant and resolve your dispute, and have suffered financial damages which require you to keep some or all of your tenant’s security deposit.

Posted on Mar 19, 2015

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