As an owner and third party property manager of multi-family communities I have experienced almost everything imaginable over the last twenty-five years. I’ve had roofs collapse from the weight of too much rain in a short period of time, when a vacant unit’s heater broke down and water pipe broke a whole section of apartments were flooded, even a building burning to the ground the day after Thanksgiving. Of course there have been less major things such as residents skipping out in the middle of the night or the occasional slip and fall, but they are pretty common in the industry. While all of these are challenging there is nothing more challenging than the resident who trashes and apartment during their occupancy only to move out and demand their security deposit back.
The first I hear of this demand is after we send the Security Deposit Reconciliation letter out to the vacated resident. The reconciliation details the charges and notifies the resident that they have not only lost their security deposit but they owe additional money. The demand usually comes in a had written letter where the resident claims to have left the unit in better condition than they had received it and if their deposit isn’t returned they are going to sue. For most of these residents it is just and idle threat but to those few residents who know how to “milk the system” it is not a threat, they will react if they don’t get their security deposit back. It is those few residents that I like to write about today.
Regardless of what business you are in there are those people who have learned how to beat the system. While I can’t address your particular industry I can address those most common in the Denver metro area where we see it in the government’s welfare system, at camera policed stoplights and even ads on Craig’s List, people who have figure out how to hide income and still receive welfare, those who have shaded their automobile’s license plate so it is obscured when the strobe flashes and the camera takes a picture, and those who have multiple email accounts so they can run the same advertisement every day without being blocked. But as I’ve already mentioned I want to address those people who know how to work the court system to get back their security deposit.
The process starts when they move into a freshly made ready apartment. Prior to moving in any of their belongings they photograph every room of the unit. These photos won’t be developed immediately but will be saved until after they move out and developed if there is a dispute over the security deposit. While doing the move-in inspection they will point out every small imperfection and request it be written on the move-in report. During their stay they will write and keep copies of letters exaggerating any problem they are having with other residents, on-site management or their apartment. On moving out there will always be two or three friends present making condescending comments while the move-out sheet is completed. These behaviors should all be a “red flag” that you have rented to someone who knows how to “milk the system”.
The reconciliation is mailed out the demand is received and you now have to decide whether to send out a check and cut your losses or play “liars poker”. My advice, if none of the above signs exist play liars poker but if they do exist write the check and cut your losses. You will not win in court when confronted by a person who knows how to “milk the system”. Why won’t you win? Primarily because the courts are filled with judges who believe that property owners are rich and that renters are poor and deserve a break. You will also lose because the renter’s photos and claims will be taking as factual regardless of how much lying they are doing and nothing you will do to prove that the resident is lying will be looked upon favorably by the judge. In my experience it doesn’t matter how much documentation you provide, or how many people you have testify, or even how many photos you present; if the resident implies that your information is false the judge will take it as false.
This may sound negative but it is just the facts as I’ve experienced them. In a recent case where a slovenly resident returned the apartment with grease on the walls and floors in the kitchen, appliances dirty, accumulated dirt on the heater vents, smoke detectors and track lighting, walls riddled with nail and screw holes and even a handrail added that wasn’t to code the judge stated that these were all normal wear and tear and were to be expected at move-out. With such and opinion from the judge I realized that I had lost the trail before the judge had walked into the court room.
Edward Boyle
CEO, Employing Broker
Katchen Company
Katchen Company, founded in 1962, is an integrated real estate company with its corporate headquarters in Lakewood, Colorado. The company offers real estate development, redevelopment, property management, brokerage, consulting services, construction oversight and maintenance services to individual and institutional real estate investors throughout the greater Denver metropolitan area in Denver with satellite offices in Chicago, Las Vegas
and Miami market areas.
