What Do I Do if the Deposit Doesn’t Cover the Tenant’s Damage or Unpaid Rent?

What Do I Do if the Deposit Doesn’t Cover the Tenant’s Damage or Unpaid Rent?

At the end of the day, every landlord would enjoy their job much more if they didn’t have to deal with unnecessary tenant issues. Unfortunately, not every resident is the ideal tenant and some will leave you with damages and financial losses that can severely impact your bottom line and your livelihood.

If you’re dealing with a tenant whose damages or unpaid rent go far beyond what their security deposit can cover, here’s what you need to know.

It’s a definite legal issue

Before you do anything, you need to carefully review the terms of the lease you’ve put forward. When it comes to damages outside of the scope of what a deposit covers, what does the lease say? Hopefully, your lease was thorough and put forth stipulations for what should happen in the case of exceptional damage but if not, there is still room for legal recourse.

Document the extent of the damages. If your tenant filled out an initial walkthrough form, note how that holds up to the damage present. Also, if there is any record (digital or physical) of the tenant requesting maintenance, make sure to collect receipts, invoices, and other evidence of you addressing their problems.

As far as unpaid rent is concerned, this is a basic factor of every lease that should be explicitly detailed, most likely on the first couple of pages. If you’re dealing with an unpaid rent situation, your first plan of action should be to contact one of the many skilled lawyers in Toronto to receive a consultation. Unless the tenant had a legal right to withhold rent (which is an incredibly rare case) you’re more likely to receive the money owed to you than not.

If any of these issues are happening as a result of a less-than-adequate lease, it’s time to reevaluate your rental contract. It needs to be airtight and none of it should read as though it’s in any way up to the tenant’s interpretation. That puts you on incredibly shaky legal ground and opens you up to a whole host of issues with your resident. If you’re not sure how to formulate your lease, there are plenty of landlord resources to help get you in shape.

It can be prevented

While an in-person meeting with a tenant is how many landlords make their final leasing decisions, it’s not enough to gauge whether or not you’re dealing with a quality occupant. Your entire rental application process needs to be geared towards vetting each and every candidate as thoroughly as you can without coming across as overbearing. There are a few key questions you can ask yourself or put on an application form to help weed out potential problem tenants.

Firstly, while the credit check is important, the score should not be the defining factor. A low credit score doesn’t mean a bad tenant. Many people have low scores because of student loans, higher credit usage, or too many or two few credit lines. These are workable. However, if a prospect has a low credit score because of a history of missing payment or being in collections, they might not be the best fit.

Secondly, a look at their rental history should tell you most of what you need to know. Has the tenant in question ever been evicted? Did they consistently pay their rent? Was it also paid on time (or at least within an allotted grace period)? Have they ever received any complaints from past landlords? If not, that’s also a sign that you’re on the right track with a prospect.

Personality is important, especially for the landlord-tenant relationship, but financial accountability is key. Managing a property might seem like a simple way to make some passive income but ultimately, you’re operating a business and you need to act as such. If the nicest person on earth applies to your building but has five accounts in collections and a previous eviction, do you really want to take that chance?

It’s a sad reality that some tenants opt to take advantage of their landlords, so it’s ultimately up to you to protect yourself and your property to ensure that you’re not putting yourself in a compromising financial position. Tighten up your lease and take preventive measures, then you’ll be ready to find the perfect resident.