When is it worth going to court?

Question

I've got a tenant that moved out 3 days after their lease ended.  There are some damages, amounting to around $600, plus a fee of $250 for not leaving the property till day 3.  ($100/day, and $50 for a half day.)  All in all, they're looking at $850.  I sent them a letter notifying them of the damages found, and that the damages would be deducted from their deposit, and they'd owe the $250 charge.  Now they're wanting They were wanting to go to court over my keeping their $500 deposit, and charging them for not moving out when their lease ended.

I ended up just doing a "cash for keys" deal (in writing), to return half of their deposit, and call it a day.

Was I right?  I don't know how much it would cost to go to court, but I'm thinking a lot more than $850.  I'd hate to end up losing the case for some negligence on my part.

Is there a certain dollar amount when it becomes worth it to sue the tenant?

Thomas S. · Answer

The answer to your question is not as simple as a dollar amount. It is also measured by a landlords perceived responsibility to our industry. Every investor has a different tolerance level for prosecutions. For myself I believe that it is criminal for a tenant to not pay rent owed. When a tenant does this I believe it is my responsibility as a member of the landlord community to take that tenant to court and get a conviction regardless of the amount of money or the chances of collecting. I owe that to all  landlords that will interact with that tenant in the future. The smallest amount I have gone to court for was about $100 plus my expenses.

Other landlords would bribe or pay extortion money to a tenant rather than take up a fight to evict and attempt to collect regardless of the amount. They do not believe they have any responsibility to prosecute criminal tenants and see the situation as too stressful, costly and time consuming. Their priority is only to their dollar today and do not see any return down the road through prosecution of tenants. Fortunately society in general sees things differently.

Criminals need to be prosecuted.

Mike Cumbie · Answer

Thomas S.,

"Sad that our industry is not operated as professionally as most. Or at  least as professionally as corporate landlords. Our customer base would  be of better quality if we did."

Yeah and if the restaurant industry got rid of all those pesky mom and pop shops and every restaurant was like McDonalds or Applebees the dining customers would be so much better conditioned to accept mediocrity.

I know you believe that as a landlord I owe my time and energy to the "charity" of the "Landlord community" to try and make it better. However some of us just do what is right for our business. You are free to spend $800 worth of time and energy to save losing $100 if that supports your business model all you want. I don't think it is wrong to not "donate that $700 for the betterment of society" on a tenant that is going to end up buying and be out of the rent game in 3 years anyway.

Russell Brazil · Answer

I value my time at $100 per hour, so with even small claims court taking up half a day, I too would just give the tenant a few bucks to go away like you did.

Thomas S. · Answer

Keep in mind we are a odd industry in regards to how we deal with consumers. The proliferation of independent owners dilutes any possibility of uniformity. In most businesses that allow customers to make monthly payments, furniture and appliances for example, no dollar amount owed is too small not to warrant a letter from their lawyer threatening court action.

Sad that our industry is not operated as professionally as most. Or at least as professionally as corporate landlords. Our customer base would be of better quality if we did.

Our business would benefit if the industry actually established consistent operation practices and we got rid of all the mom and pop hobby landlords. Imagine having a  fund all landlords contributed to, set up by landlords, to legally process all evictions and collections. It could be financed by very small monthly contributions.

Mike Cumbie · Answer

Hi @Mark Douglas,

Just do what is right for your business, you did fine.

Kurt K. · Answer

For the most part, when we go to court for an eviction we usually get a judgment. But just because you get a judgement doesn't mean you will get paid. I never have. For me its not worth it to hire a lawyer. I just ding their credit and move on.

Thomas S. · Answer

You also need to keep in mind that judges do not assign any value to a landlords time. It is all free time. If there is work to be done following a tenant move out that is to be deducted from a tenants deposit or will be charged to a tenant always hire a contractor to do the work and get work orders and receipts. These need to be provided to the tenants and used in court to justify deductions and fees.

Thomas S. · Answer

9 times out of 10 threatening court action is just that , a threat.

If you operate your business professionally and follow all the regulations being taken to court will teach your ex tenant a nasty lesson and cost them money.

If you make a mistake and have to pay some money back it is still better than offering money you do not owe out of fear, always make them work for it.

Mark Douglas · Answer

@Matt Sicignano  Thomas S.   I guess I got nervous since I've never been to court before.  Actually, they're on the way back tonight to meet me to sign the agreement.  You would just let them initiate the court proceedings?

Elizabeth Colegrove · Answer

Personally I don't give in to tenants but I also charge when I KNOW I can win so I can stand behind it. This way I can always stand my ground because I find that everyone feeling a the best defensive is a good offensive. Its amazing how many times people go away once I say no.

When is it worth going to court?

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