What to Do if Your Rental Property Is Damaged

What Is Considered Property Damage?

Property damage is any damage that goes beyond normal wear and tear. For example, minor issues like small nail holes in a wall and light dings in a doorway are usually considered normal wear and tear. By contrast, property damage is considered harm that tenants could have avoided, such as:

• Structural damage: This happens when the home's foundation, walls, roof or ceiling are compromised. For instance, if a tenant leaves the water running and floods the house, moisture can soak into the walls and foundation and cause mold and cracks.
• Broken fixtures: Landlords are responsible for making sure lights, fans and other fixtures are in working order. But if a tenant breaks them, they're typically responsible for repair or replacement costs.
• Pet-related damage: If you allow tenants to have pets at your property, expect some extra wear and tear. But pets can also cause property damage, such as scratched doors, chewed-up baseboards and other damage that'll need to be repaired.
• Paint or wallpaper: If your tenant paints the walls a non-neutral color or puts up wallpaper without your approval, it may go against the lease agreement they signed. Agreements typically include a clause requiring tenants to get written permission before making these types of changes.
• Burned or stained flooring: Accidents happen, but repairs could be costly if a tenant causes significant damage to your flooring. A burn mark or spilled juice on the carpet, for instance, could leave lasting damage that'll need repair.

What to Do if Your Rental Property Is Damaged

Unfortunately, rental damage is part of the cost of doing business as a property owner. If you plan to rent out your property for a long time, you'll likely encounter it at some point. If you do, it's important to handle it professionally and in accordance with rental laws. Follow these steps to communicate with the tenant and repair your property.

1. Document the Damage

As you assess the damage, it's wise to record a video tour of the rental as you go while describing each issue in detail. Be sure to take plenty of photos as well. If the tenant caused the damage, having thorough documentation can strengthen your case if you eventually take them to small claims court. Ideally, you can compare it to the inspection report you put together before the tenant moved in.

2. Contact Your Insurance Company

Contact your insurance company right away to report the damage. Be ready to describe the incident in detail and submit any photo or video evidence you've gathered to support your claim. Don't begin repairs yourself or pay contractors out of pocket until you've spoken with your insurer and have made sure they are covered.

If something was stolen from the property or it was vandalized, file a police report and provide the report number to your insurer.

3. Get a Repair Estimate

You'll want to get several repair estimates to compare quotes and make sure you're not overpaying. Your insurer may send an assessor to evaluate the damage and provide a repair estimate. If you're working with a property management company, ask them for a recommendation from their network of vendors. You might get a lower rate based on the company's volume of work.

4. Speak With the Tenant

Once you've gathered evidence of the damage and repair estimates, notify the tenant in writing of the damage and potential costs and attempt to resolve the matter. Include any photos or documentation that support your claim. If the damage was clearly caused by the tenant's neglect or carelessness, they should pay for repairs. But if the cause of the damage is unclear, or if you may be partly responsible, it may be best to negotiate a fair split of the costs.

5. Begin Repairs

If the tenant is still living in the unit, coordinate with them to schedule repair work at a convenient time. Remember, most states require landlords to give at least 24 hours notice before entering a property with tenants. Always respect the tenant's time and privacy when arranging for contractors to visit.

If you discover the damage after the tenant moves out, you can schedule the work quickly. Deduct your repair costs from the security deposit according to your rental agreement's guidelines. Then send the tenant an itemized statement for the deductions and include repair receipts to substantiate the costs.

Who Is Responsible for Rental Property Damage?

Determining who's responsible for covering rental property damage usually comes down to two things: the lease agreement and the nature of the damage. Here's how responsibility for property damage is typically divided between landlords and tenants.

Tenant's Responsibilities

Tenants are entitled to a livable and safe home. They also have certain responsibilities, namely:

1. Keeping the unit clean and in good condition: This includes regularly cleaning the kitchen and bathrooms, preventing mold in sinks or showers and routinely taking out the trash.
2. Avoiding unnecessary damage: Tenants may be responsible for negligent actions, such as letting pets ruin the flooring or improperly mounting heavy items to the walls. Also, if your tenant makes unauthorized changes, like removing a built-in cabinet or adding wallpaper, they must restore the space to its original condition.
3. Reporting problems early to prevent bigger issues: Most lease agreements require tenants to report issues to their landlord before they get worse. If your tenant doesn't report a leaky pipe, for example, it could lead to rot or mold.

Normal wear is expected over time, but more serious damage that results from these scenarios may be deducted from the tenant's security deposit.

Landlord's Responsibilities

As a landlord, you're responsible for keeping your property safe and livable. You must maintain its key systems, like heat, electricity and plumbing. You're also expected to handle repairs to the unit's structure to ensure its safety.

If damage is caused by regular use, weather or aging, it's generally the landlord's responsibility to handle it. It comes down to keeping the home habitable. That means if the roof leaks, the heater stops working in the middle of winter or anything else affects the livability of the rental, it's generally up to the landlord to take care of it.

Tip: Do a thorough walk-through before the tenant moves in and document the condition of the unit with photos. You can also fill out a conditions checklist that you both sign and date. That way, you'll have clear evidence if damage happens and you need to deduct repair costs from the deposit. If your tenant disagrees with the findings of your report or finds undocumented damage, make a good-faith effort to address their concerns.

Can You Take Legal Action for Rental Property Damage?

Yes, you can take legal action for rental property damage caused by your tenant. Before proceeding, however, you'll want to make sure you're acting in accordance with your rental agreement, state and local rent laws, and that you have enough documentation to support your claim. Here are steps you can take:

1. Contact the police. If you suspect a tenant vandalized your property or stole certain items, you may want to file charges with the police. You'll likely need a copy of the police report when filing an insurance claim or if you have to take the tenant to court.
2. File an insurance claim. Landlord insurance may cover accidental damage caused by tenants or from covered perils like a fire or severe weather. For example, you might file a claim for a dishwasher lost in a kitchen fire, but not if the unit broke down due to age or normal use.
3. Sue the tenant. It may be worth it to sue your tenant if the repair costs significantly exceed the security deposit and you have clear evidence the tenant caused the damage. You'll want clear documentation to support your claim, including photos and videos, repair estimates, the original walk-through checklist and a copy of your lease agreement.

How to Avoid Rental Property Damage

You can't always prevent damage entirely, but taking the right steps before and during a tenant's lease may help protect your investment property.

• Screen tenants carefully. Preventing damage to your property starts with renting to tenants who are most likely to be responsible with it. That's why it's so important to thoroughly check each applicant's credit and rental history, and follow up with at least one former landlord. If an applicant left damage at a previous residence, there's a higher likelihood they'll do the same with your property.
• Create a clear rental agreement. Your lease should spell out your rules and expectations in detail, such as your pet and smoking policies. The rental agreement should also inform tenants of their responsibilities, like reporting issues promptly and not making unauthorized changes.
• Perform regular inspections. It's a good idea to inspect the property periodically, as long as you give tenants adequate notice as required by law. You may discover small issues before they become larger ones. Depending on the issue, you may fix it yourself or work with the tenant to resolve it.
• Take "before" pictures. Photograph each room in detail before a tenant moves in and do it again when they move out. These photos, along with the walk-through inspection report, can protect you if a tenant later claims the damage was already there.
• Make repairs right away. Ideally, tenants will respect the property as much as you do. Along those lines, you're more likely to get respect from your tenants when they see you quickly and reliably address issues to keep their home livable. This also prevents them from making a DIY repair that results in further damage.
• Require a fair deposit. A security deposit won't prevent damage, but it gives tenants a financial stake in taking care of the property to get their money back. And when damage does occur, the deposit can help you pay for it. Most landlords typically charge the equivalent of one to two months' rent as a security deposit, but check state and local rent laws to make sure your deposit is within legal limits.

Learn more: What Do Landlords Look For in a Tenant?

The Bottom Line

Damage is part of the risk of renting out your property, even if you have responsible tenants. Remember, you're responsible for fixing any damage that stems from regular wear and tear. But if the tenant is at fault, you may be able to cover repair costs by using their deposit, filing an insurance claim or taking legal action for repayment based on the lease terms.