I’m pretty sure the tenant’s security deposit won’t be enough to cover the costs to repair damage done to the property. What are the steps to notify the tenant if there is a balance due?

Be sure you understand your state statutes regarding handling and return of security deposits particularly the requirement regarding the deadline for itemization and return of the deposit.

Once you have conducted the move-out inspection, and determined what will be required to return the unit to good condition, you should prepare a written security deposit itemization statement. The statement should list the deductions taken from the deposit with a brief explanation of the required work. Keep in mind that you cannot charge the tenant for damage that was evident at tenant move-in, replacing an item when a repair would be sufficient, or cleaning if the tenant paid a non-refundable cleaning fee. You cannot charge the tenant for normal wear and tear.

If you find that repairs or cleaning cannot be completed within the time required by statute to return the accounting statement and security deposit, you should make a reasonable estimate of costs. When the work has been completed, the receipts must be for an amount at least as much as the amount deducted from the deposit.

One way to make a reasonable dollar estimate for repairs is to determine whether the tenant shortened the useful life of an item that will wear out. If the tenant has damaged or shortened the item’s useful life, you may charge the tenant for the prorated cost of the item based upon cost of the item, the expected useful life, and the replacement cost.

In a letter accompanying the accounting statement, you should request the tenant immediately remit the balance due as shown on the statement. If the tenant responds by challenging the deductions, you may be able to resolve the issue through discussion and reach an acceptable compromise.

If the tenant does not respond to your request for payment, or refuses to pay the amount due, you may consider taking legal action to collect the money owed you. The question that needs to be asked is whether the amount due is worth your time, and effort to pursue collection.

However before filing a lawsuit against the tenant, it is best to write a formal demand letter to the tenant requesting payment of the outstanding balance. The demand letter should state the facts clearly, set a deadline for payment, and advise that a lawsuit will be filed in small claims court if an understanding and resolution cannot be accomplished by the deadline. In some states a written demand letter for payment is a requirement by statute before a landlord can file in small claims court.

If the tenant does not respond and you intend to pursue the matter, you will need to research the requirements for filing a small claims lawsuit in your jurisdiction.

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