If a tenant dispute is going to escalate to the point that you find yourself in front of a judge in small claims court, it will almost always be a security deposit conflict. Security deposits are the main reason tenants take their landlords to court; they don’t like having deductions from their deposits, and they almost always find them to be unjust.
Even if you do everything you’re supposed to do, you might find yourself defending a deduction you made in small claims court. If a tenant feels you violated California’s security deposit law or withheld money unlawfully, they can file a claim.
In our blog series on tenant move-out procedures, we’ve been talking in great detail about the importance of well-documented move-in and move-out condition reports. We’ve talked about timeline and the difference between regular wear and tear and tenant damage.
In today’s blog, we want to help landlords through the process of dealing with a court action. If you’re summoned to small claims court in California to defend yourself against a tenant lawsuit, there are a few things you should know.
Consider Reaching a Settlement with Your Tenant
As soon as you receive a demand or notice from your tenant that they are disputing your charges or claiming you broke the law, reach out and try to resolve the issue. It’s best for all parties if you avoid the courthouse. Even if you feel like you have a good chance of winning, it’s rarely worth your time.
Sometimes, you and your tenant can reach an agreement. If the tenant is disputing damage, you might be able to reduce the amount you deducted. If you can come to a compromise before the court date, you’ll save yourself a lot of time, money, and stress. Talk to the tenant and find out what they want. If you settle on a compromised amount that’s deducted or you agree to return the full security deposit instead of going to court, make sure you both sign a settlement agreement that outlines what you agreed to and stipulates there will be no further court actions.
What to Expect from Small Claims Court
If you’ve never been dragged to court before, this can be a difficult and emotional experience. Hopefully, you’re working with a qualified Long Beach property management company that can help you. If you’re on your own, you may want to talk to a property manager or consult an attorney.
The maximum amount for which a tenant can sue you in small claims court is $10,000.
That’s little comfort, of course, especially if you’re facing an expensive lawsuit over a $100 security deposit dispute.
Before you go to court, decide whether you’re at fault. This should be an objective and business-minded decision, not an emotional one based on ego. If, in fact, you returned the security deposit or part of the security deposit 25 days after the tenant moved out instead of 21 days after the tenant moved out, you’re going to have a hard time defending yourself against that. And, you should expect punitive damages in addition to any judgment that the tenant wins against you.
You’ll receive an official notice of your court hearing date, and you’ll need to be prepared. If you are not guilty of what the tenant is claiming, you’ll have to prove that you followed the California security deposit law. Make sure you have a copy of your signed lease and inspection reports. You’ll need any correspondence and the complete accounting of the security deposit and any part of it that you withheld. Don’t show up without copies of receipts for work that was completed. You cannot charge a tenant’s deposit for a new door and then not have the new door installed.
You should have detailed pictures and videos of the move-in inspection and the move-out inspection which should support your reasoning for keeping the security deposit or deducting from it. If you withheld money to cover lost or missing keys or a unit that wasn’t cleaned properly, make sure you can document that that tenant did not follow proper move-out instructions.
Bring everything relevant to the case to court.
Your California small claims court isn’t as formal as a criminal courtroom. However, you might want to arrive early so you’re comfortable with the process and the surroundings. Practice what you’re going to say to defend yourself and review your documentation in detail so you’re prepared and poised.
You and your tenant will have an opportunity to present your case. It shouldn’t last more than an hour, and the judge either rules a certain way immediately or you’ll receive the judgment in the mail a few days later.
Try to avoid the courtroom unless you’re sure you’re going to win. If the judge rules in your tenant’s favor, you’re likely going to have to pay far more than the dispute itself.
Document Everything Pertaining to the Deposit
Your tenant doesn’t have to sue you right away. So, make sure you save all of your documentation, including inspection reports and receipts, as well as invoices and estimates. If you’re called to court in a few months or a year, you want to be prepared.
As we have said in previous blogs, the move-in condition report and the move-out condition report are critical to protecting you against security deposit disputes. You want a clear and undisputed record of what the property looks like before the tenant moves in. And, you’ll want to be able to compare that to the clear and undisputed record of what the property looks like after a tenant moves out. If you’re going to charge the deposit for a broken window, you better have pictures that show the window was not broken when a tenant moved in, but then was broken after a tenant moved out.
Working with a professional Long Beach property management company is always a good idea. Smart investors know that property managers can help you earn more and spend less on your rental properties. We can also protect you against costly mistakes and legal liabilities. Tenants understand exactly what they can get away with, and they’re far more likely to take advantage of an individual landlord who is self-managing than a professional management company with industry experience and extensive tools and resources.
We don’t like having tenant disputes, and we work hard to maintain good relationships with all of our renters. We keep communication open, and we’re always careful with the way we document our properties and manage our move-out processes. Going to small claims court is never fun, and we don’t like to do it. So, we’ve spent many years putting preventative measures in place to ensure our systems are consistent, fair, and legally compliant.
If you want to avoid a legal action with your tenant in small claims court, make sure you have a good relationship with that tenant. Don’t ignore maintenance requests. Document everything, and return the security deposit within 21 days of your tenant moving out.
We have a lot more advice to provide Long Beach landlords and rental property owners throughout California. If you have any questions or need any help, please don’t hesitate to contact our team at Progressive Property Management.