Hi BP world!
So, I have been debating for about a year on whether or not to file a lawsuit for damages against my CA rental property? I weigh the pros and cons and overall it seems like it won't be worth the fight. However there is a strong force in me that doesn't like the idea that people can get away with renting properties this way.
Last year, the former tenants caused $3,00.00 worth of damages and did not pay $1600 worth of late fees and pet fees. They also skipped out on the last months rent but, I was able to keep that from their security deposit.
Im active duty military and have been transferred from CA. So,I would also have to fly to CA to pursue this case.
I take a lot of responsibility for being too nice and not screening the tenants better. Their income was great but their credit was bad and the income was all from disability, child support, workman's comp, etc. If nothing else comes from this, I learned a lot of valuable lessons.
Does anyone think this is worth pursuing? Or have any guidance to provide? Thank you for your thoughts!
@Kai Hodge & @Jason McKinley, thank you both for your service..
The only time it is wise to spend more money to chase losses is if the tenants have real jobs with real attachable income. Disability, workman's comp, and child support are not attachable as far garnishing. You are a landlord and it is impossible to get all your rents. There will be losses along the way. If you have no way of collecting money from them in a judgement any money spent will be wasted in addition. Every mistake in a tenant I make it is always my fault, I should have screened better. I don't believe it will be worth your time and efforts to chase after that money> you are to far away also.
Hey Kai,
Active duty here myself. I live in California currently and can totally understand your frustration. I have dealt with a bad tenant at my property in SC and it was difficult to deal with from across the country. Luckily I have a great property manager that was able to take care of it without too much involvement on my part. IMO you will most certainly pay more in legal fees than you will ever recoup from these people. If you factor in a retainer (close to $5000 if not more) and then the wasted time of LONG legal processes and stress from dealing with it your probably better off just learning from it and moving on. If you find you learned something from the situation and your not going into bankruptcy because of it, then I think your in the positive. I'm sure it would feel great to "stick it to them" legally but the juice probably isn't worth the squeeze. Just my humble opinion.
Do you self manage or do you have a property manager?
@Kai Hodge & @Jason McKinley, thank you both for your service..
Thank you Mark for your support. It's really an honor and my pleasure. Its fun getting paid to shoot guns and blow things up haha.
The only time it is wise to spend more money to chase losses is if the tenants have real jobs with real attachable income. Disability, workman's comp, and child support are not attachable as far garnishing. You are a landlord and it is impossible to get all your rents. There will be losses along the way. If you have no way of collecting money from them in a judgement any money spent will be wasted in addition. Every mistake in a tenant I make it is always my fault, I should have screened better. I don't believe it will be worth your time and efforts to chase after that money> you are to far away also.
Thank you for your advice. I definitely agree with your mindset of tenant issues being my fault. All of my issues could have been avoided if I had a business mindset instead of a "friendly person" approach.
Hey Kai,
Active duty here myself. I live in California currently and can totally understand your frustration. I have dealt with a bad tenant at my property in SC and it was difficult to deal with from across the country. Luckily I have a great property manager that was able to take care of it without too much involvement on my part. IMO you will most certainly pay more in legal fees than you will ever recoup from these people. If you factor in a retainer (close to $5000 if not more) and then the wasted time of LONG legal processes and stress from dealing with it your probably better off just learning from it and moving on. If you find you learned something from the situation and your not going into bankruptcy because of it, then I think your in the positive. I'm sure it would feel great to "stick it to them" legally but the juice probably isn't worth the squeeze. Just my humble opinion.
Do you self manage or do you have a property manager?
Great advice Jason, Thank you! Actually, I ended up firing the property manager as well! He was horrible. He took his time to fix the repairs and couldn't get the house rented out. He actually listed the home to rent with a 1/1 pic and it was of the house next door! And he claimed to be a former marine but, I would never recommend him to another service member. We usually take care of our own. I could go on more but I'd just get all spun up.lol
Good thing you have a good property manager. I still use property managers but with caution.
That is sad. I hate when we don't take care of our own as Marines former or not!
I got really lucky with my PM! We found her by accident really and even with that bad tenant over the last three years our property has only been vacant for a few weeks! We have been very happy with her and she has taken good care of us. Her husband is a Marine too so it proves we DO take care of our own...most of the time at least.
That is sad. I hate when we don't take care of our own as Marines former or not!
I got really lucky with my PM! We found her by accident really and even with that bad tenant over the last three years our property has only been vacant for a few weeks! We have been very happy with her and she has taken good care of us. Her husband is a Marine too so it proves we DO take care of our own...most of the time at least.
I'm glad you have a good PM! I think it has a huge impact on your success levels with properties. The PM that I had earlier cost me more than the tenants because the house was vacant for awhile.
I'm not sure if your investing in rentals in CA or where you are exactly.But I would start looking early before your PCS move. My house was in the Inland empire (which draws military from Camp P and March AFB) and I had a hard time finding a good fit to take over the home.
We are in Temecula, but not investing there. We do own our home here, but once it is time to PCS (if that ever happens again) we will sell it and cash in the equity. We are not interested in the least in owning a rental in this market. Its a GREAT town and area, but the risk outweighs the reward for us. We are looking to be able to retire from here as my duty station options are limited. So this property is strictly an appreciation/loan pay down investment in our future and not a future rental.
Good luck in the future. I wish you the best.
if you could save the airfare expense and not have to personally appear by having your property manager appear that would save a great deal of the cost. I would definitely pursue this it costs under $100 to file and serve a person typically and it's a quick and simple process at least that's been my experience with small claims court in California. In California if you're suing as an individual you can sue for up to $10,000 in two separate cases each year. Also confirm the statute of limitations, for how long after the event you can see, before you bother filing any paperwork if you outside the statute of limitations you're done.
We are in Temecula, but not investing there. We do own our home here, but once it is time to PCS (if that ever happens again) we will sell it and cash in the equity. We are not interested in the least in owning a rental in this market. Its a GREAT town and area, but the risk outweighs the reward for us. We are looking to be able to retire from here as my duty station options are limited. So this property is strictly an appreciation/loan pay down investment in our future and not a future rental.
Good luck in the future. I wish you the best.
I know Temecula well. My home was in Lake Elsinore ( between Perris, Corona, and Murrietta). I agree with your perception of the market at this time: I wouldn't invest now in that area. I bought my home in 2011 and it was a great opportunity to buy at that time. I'm actually in the process of selling because it never cash flowed as a rental. However, I gained a great amount of equity and hope to use it for future investments.
Good luck to you as well!
if you could save the airfare expense and not have to personally appear by having your property manager appear that would save a great deal of the cost. I would definitely pursue this it costs under $100 to file and serve a person typically and it's a quick and simple process at least that's been my experience with small claims court in California. In California if you're suing as an individual you can sue for up to $10,000 in two separate cases each year. Also confirm the statute of limitations, for how long after the event you can see, before you bother filing any paperwork if you outside the statute of limitations you're done.
Hi Chet!
Thank you for your response. Unfortunately, I ended up firing my property manager and the new one refused to handle any past tenant issues. I will look into the statue of limitations for general knowledge. That was also one of my areas of concerns.
Hey @Kai Hodge,
Whether or not you should sue usually comes down to the answers to two questions....1) Is it worth your time? And 2) What are the chances of collecting on a judgment if you do win?
Only you can answer the first question, but you can read about what I decided to do when faced with the same decision here: https://www.biggerpockets.com/forums/52/topics/252435-taking-a-tenant-to-small-claims-court-part-1.
As for collecting on a judgment, there's a few different ways that can be accomplished but it's not always easy. Wage garnishment is one of the more effective ways (in my opinion), but you'll have a tough time with that if your ex-tenant's only source of income is disability, child support, and worker's comp.
There are other ways to get your money though. For instance, if they've ever written you a check, then you know where they bank and can levy their bank account.
Do they own any property (probably not) or ever intend to (maybe)? If so, then you can file an abstract of judgment and have a lien placed on any property they own or purchase.
The point is, it is possible to collect. And if you want to read about how I collected on my small claims judgment, check this thread out: https://www.biggerpockets.com/forums/52/topics/295592-finally-collected-on-a-small-claims-judgment-against-an-ex-tenant.
A couple other thoughts...I wouldn't worry about the legal fees of pursuing a judgment. You won't have to pay a lawyer because they're not used in small claims cases in California, and the filing fees to file a case are relatively small. They range from $30 to $75 based on the amount you're suing for. In your case, the filing fee would only be $50.
You're also still within the statute of limitations. The statute of limitations in small claims cases varies from two years (for breach of an oral agreement) up to four years (for breach of a written contract, like a lease).
Lastly, even if you decide not to go through with a small claims case, I would suggest you at least consider reporting their debt to the credit bureaus through a company like one of these: Mr Landlord Debt Reporting Service or Rent Recovery Service. It doesn't cost that much and you don't even need a judgment to do it. You'll also be doing a service to other future landlords who screen them because they'll see the debt and know what type of tenant they really are. Plus, who knows...maybe someday they'll want to clean up their credit and decide to pay you off just to get it off their credit report.
Good luck with whatever you decide.
Hey @Kai Hodge,
Whether or not you should sue usually comes down to the answers to two questions....1) Is it worth your time? And 2) What are the chances of collecting on a judgment if you do win?
Only you can answer the first question, but you can read about what I decided to do when faced with the same decision here: https://www.biggerpockets.com/forums/52/topics/252435-taking-a-tenant-to-small-claims-court-part-1.
As for collecting on a judgment, there's a few different ways that can be accomplished but it's not always easy. Wage garnishment is one of the more effective ways (in my opinion), but you'll have a tough time with that if your ex-tenant's only source of income is disability, child support, and worker's comp.
There are other ways to get your money though. For instance, if they've ever written you a check, then you know where they bank and can levy their bank account.
Do they own any property (probably not) or ever intend to (maybe)? If so, then you can file an abstract of judgment and have a lien placed on any property they own or purchase.
The point is, it is possible to collect. And if you want to read about how I collected on my small claims judgment, check this thread out: https://www.biggerpockets.com/forums/52/topics/295592-finally-collected-on-a-small-claims-judgment-against-an-ex-tenant.
A couple other thoughts...I wouldn't worry about the legal fees of pursuing a judgment. You won't have to pay a lawyer because they're not used in small claims cases in California, and the filing fees to file a case are relatively small. They range from $30 to $75 based on the amount you're suing for. In your case, the filing fee would only be $50.
You're also still within the statute of limitations. The statute of limitations in small claims cases varies from two years (for breach of an oral agreement) up to four years (for breach of a written contract, like a lease).
Lastly, even if you decide not to go through with a small claims case, I would suggest you at least consider reporting their debt to the credit bureaus through a company like one of these: Mr Landlord Debt Reporting Service or Rent Recovery Service. It doesn't cost that much and you don't even need a judgment to do it. You'll also be doing a service to other future landlords who screen them because they'll see the debt and know what type of tenant they really are. Plus, who knows...maybe someday they'll want to clean up their credit and decide to pay you off just to get it off their credit report.
Good luck with whatever you decide.
Hi Kyle!
Thank you so much for your detailed response! I was hoping there was a way to warn other landlords. It would also help me to know that they didn't totally get away with this. Thank you again for your insight. I will definitely look into the resources you provided.
If you are going to sue you will have to serve them and do you know where they are?
Hi John,
No, I dont. I have copies of their drivers licenses and socials. I'm hoping if I go through collections they can use that info.
If a defendant does not have money, income or assets that can be attached, as a general rule, it is not economically to file a lawsuit.
@Kai Hodge, I'm sorry your property sustained that kind of damage. I'm guessing you kept most or all of their security deposit after deducting for each item damaged and showing proof with receipts for the repair. As far as late fees and pet fees go, forget about it. Judges here will award damages for unpaid rent and itemized damages that exceeded the deposit amount. Be happy you got the deposit amount and move on.
In the future, screen more diligently. Google everything (numbers, names, email on person, addresses, places of employment) Check credit, income and rental history with a fine tooth comb. Have an animal policy with criteria in place (I say animal because pets in California are evolving into assistive, therapy and service animals at a breakneck pace. Here's some quick tips:
Credit history - no collections, repos, late pays
Income - 2 1/2 times to 3 times the rent, verified by pay stubs and a call to their human resources department at their work
Rental History - Calls to the prior landlords and ask "Was the tenant given any three day notices during his tenancy with you and if so, what were the dates and what was the reason.
For assistive animals/pets, require them to be vaccinated, spayed/neutered, get a letter from a third party who is a social worker, medical doctor or psychiatrist to explain the need for the animal by the tenant. If it is a pet (and that is what the tenant calls it the time of lease signing, you can charge a pet deposit or pet rent. If it is an assistive animal, you can charge a higher security deposit but no pet deposit or pet rent.
I hope this helps!
I consider any landlord that lets their tenants get away with something like that to be a deadbeat just the same as the tenant who did it. It's only about $100 to take somebody to small claims court, you do not need a lawyer, and there are no other fees! Even if you don't get payment from your tenants you will get a judgement against them, it is very easy and cheap. This warns any future person they might do business with.
It is YOUR responsibility as a landlord to put a judgement on their record. It's too easy not to do it. And you might just get that money you're after, too.
@Kai Hodge, I'm sorry your property sustained that kind of damage. I'm guessing you kept most or all of their security deposit after deducting for each item damaged and showing proof with receipts for the repair. As far as late fees and pet fees go, forget about it. Judges here will award damages for unpaid rent and itemized damages that exceeded the deposit amount. Be happy you got the deposit amount and move on.
In the future, screen more diligently. Google everything (numbers, names, email on person, addresses, places of employment) Check credit, income and rental history with a fine tooth comb. Have an animal policy with criteria in place (I say animal because pets in California are evolving into assistive, therapy and service animals at a breakneck pace. Here's some quick tips:
Credit history - no collections, repos, late pays
Income - 2 1/2 times to 3 times the rent, verified by pay stubs and a call to their human resources department at their work
Rental History - Calls to the prior landlords and ask "Was the tenant given any three day notices during his tenancy with you and if so, what were the dates and what was the reason.
For assistive animals/pets, require them to be vaccinated, spayed/neutered, get a letter from a third party who is a social worker, medical doctor or psychiatrist to explain the need for the animal by the tenant. If it is a pet (and that is what the tenant calls it the time of lease signing, you can charge a pet deposit or pet rent. If it is an assistive animal, you can charge a higher security deposit but no pet deposit or pet rent.
I hope this helps!
Thank you Penny for the information. I will definitely use your tips as a guide for screening tenants next time. I didn't do my research and it showed when I realized the tenants I had selected. I've learned, unfortunately the hard way, but I've learned.
@Kai Hodge, I'm sorry your property sustained that kind of damage. I'm guessing you kept most or all of their security deposit after deducting for each item damaged and showing proof with receipts for the repair. As far as late fees and pet fees go, forget about it. Judges here will award damages for unpaid rent and itemized damages that exceeded the deposit amount. Be happy you got the deposit amount and move on.
In the future, screen more diligently. Google everything (numbers, names, email on person, addresses, places of employment) Check credit, income and rental history with a fine tooth comb. Have an animal policy with criteria in place (I say animal because pets in California are evolving into assistive, therapy and service animals at a breakneck pace. Here's some quick tips:
Credit history - no collections, repos, late pays
Income - 2 1/2 times to 3 times the rent, verified by pay stubs and a call to their human resources department at their work
Rental History - Calls to the prior landlords and ask "Was the tenant given any three day notices during his tenancy with you and if so, what were the dates and what was the reason.
For assistive animals/pets, require them to be vaccinated, spayed/neutered, get a letter from a third party who is a social worker, medical doctor or psychiatrist to explain the need for the animal by the tenant. If it is a pet (and that is what the tenant calls it the time of lease signing, you can charge a pet deposit or pet rent. If it is an assistive animal, you can charge a higher security deposit but no pet deposit or pet rent.
I hope this helps!
Thank you Penny for the information. I will definitely use your tips as a guide for screening tenants next time. I didn't do my research and it showed when I realized the tenants I had selected. I've learned, unfortunately the hard way, but I've learned.
If you're looking for deduction, you can always sue and deduct the judgement. Topic 453 - Bad Debt Deduction
My eviction attorney routinely gets a money judgment along with the judgment for possession, he does it all at the same time. What does your eviction attorney say about this?
Hi BP world!
So, I have been debating for about a year on whether or not to file a lawsuit for damages against my CA rental property? I weigh the pros and cons and overall it seems like it won't be worth the fight. However there is a strong force in me that doesn't like the idea that people can get away with renting properties this way.
Last year, the former tenants caused $3,00.00 worth of damages and did not pay $1600 worth of late fees and pet fees. They also skipped out on the last months rent but, I was able to keep that from their security deposit.
Im active duty military and have been transferred from CA. So,I would also have to fly to CA to pursue this case.
I take a lot of responsibility for being too nice and not screening the tenants better. Their income was great but their credit was bad and the income was all from disability, child support, workman's comp, etc. If nothing else comes from this, I learned a lot of valuable lessons.
Does anyone think this is worth pursuing? Or have any guidance to provide? Thank you for your thoughts!
Hi Kai,
First, pet fees are not legal in CA. No non-refundable fees are legal. The way to handle potential pet damage, is to ask for a larger deposit. In CA, you can legally ask for twice the rent for non-furnished and three times the rent for furnished. That's it. No non-refundable fees of any kind, whatsoever.
And for late fees, you have to prove actual out-of-pocket losses to you, due to the tenant paying late. Pretty impossible to prove.
Now, as far as $3,000 damages, yes, you can go after that, less what you recovered from their security deposit, as long as it wasn't normal wear and tear.
But, then there is the issue of whether or not the PM gave them written notice of their right to a pre-move-out inspection, then did one if they requested one, which then resulted in the PM giving the tenants a written list of what they had to do to get their full deposit back. Only exception is if there was damage caused after the inspection, or was hidden during the inspection (under the bed or the Picasso, for instance.)
If they left without proper notice, your requirement to do the move out inspection is waived.
Then, you need to give them a written itemization of deductions from their deposit within 21 days after they vacate.
If you don't do these things, you lose all right to any of the deposit.
So, there might not be as much to go after as you had thought (non-refundable pet fees, late fees not likely allowed). And if you're not sure if everything else was done by the book, you could end up having to give them back the deposit you kept.
Therefore, unless everything was done perfectly, it's not likely a good idea to sue them. Sorry.