Tenant withholding rent due to no record of their deposit

[Brendan Moehn]

TL:DR- Tenant withholding rent due to not going to get deposit back, which there is no record of. What's the best time/cost effective way of dealing with it?

I purchased a property end of October, 2019. The previous landlord stated there was no deposit, and the tenant's signed lease states there is no deposit either. Therefore, I received no deposit at closing. The current tenant's lease is up end of February and due to myself raising the rent they decided not to renew. However, when the tenant asked about getting his deposit back I told him there was no deposit noted in lease or by previous landlord. When asking for proof of giving the deposit he says he paid it in cash with receipt or proof (greeeaat).

I attempted explaining that there's no proof of his deposit and that it legally doesn't even exist. If he has an issue that he can contact his previous landlord to discuss this matter. (I said it much nicer than this, however, there is a language barrier as he is Spanish speaking and very little English) Due to this, the tenant has decided to withhold his rent for his last month of the lease stating that he's not paying until he gets his deposit back (which is $850 compared to $950/mo current rent). On top of this, his kid has drawn on the walls and the linoleum flooring in the living room is cracked and coming up so he wouldn't be getting the full deposit back even if there was one.

Now, my question is "How would you handle this?" I know legally I can evict, take him to small claims for past rent, late fees, and damages to the property. However, I know this also may not be the best time or cost effective way of handling the situation. Any other ideas? Any help is appreciated!!

[Sarah Brown]

Post notice of past due rent to get the eviction party started.  Then have a conversation with where he has options.  Sometimes giving people options makes them feel in control of the situation even though you are controlling the options.  You can try cash for keys to get him out quicker than an eviction; "I won't come after this months rent, if you are out in XX days."  If you don't pay, I will charge for rent plus cost of eviction.  It doesn't have to be worded exactly like that, or maybe you have some other options in mind, but at this point its about limiting costs and getting the property back in the best condition as possible.  

If you think it would be helpful, I have in the past required the tenant to leave the unit as "rent ready" as part of a condition of cash for keys.  Depends on how bad the unit is. 

Good luck!