All rent agreements usually requires payment of an interest free security deposit before the commencement of a rent agreement. The security deposit amount is typically equal to five to six month rent but it can exceed in some cases.

These deposits are refundable without any interest payment at the end of the tenancy agreement if the tenant has fulfilled the terms and conditions of a rent contract.

Local laws are designed in a way to protect the interest of both the owner and tenant. Security deposit is an amount that safeguards the interest of landlords. It can be used against any intentional damages caused by the tenants or any unpaid rent.

There will be no problem if the security deposit covers the amount of damage. But what if the other cost cannot cover the loss or unpaid rent? In those circumstances, the landlord or rent management company, like SANGAU could take the following steps.

Communicate to tenants

Don't rush and be patient. Communication can resolve a lot of problems. A good relationship between tenants and landlord or rent management company helps. In this regard, the company should communicate with the tenant that the security deposit cannot cover the cost of damages and they should pay the amount. This communication is also known as a Demand letter. A good tenant always pays attention to such communication to avoid legal issues.

Legal Proceedings

When the tenant doesn't respond to the demand letter, then there's no other option except initiating the legal process for recovery. A rent management company like SANGAU has its own legal staff to handle such an exigency.

There are challenges when the dispute resolution is done with legal means. The legal case could be weak if there is a lack of evidence. The court decision is based on evidence and enough evidence should be provided for damaged property. A rent management company like SANGAU takes photos and videos of the property before handover to a tenant and hence it is easy to prove the damages caused by the tenant.

Legal case is a time-consuming matter and requires the attendance of the proceedings during the case by parties concerned. Legal cases also incur court fees and lawyer fees. This increases the recovery cost due from a tenant in addition to the cost due to damages or unpaid rent.

There are various ways by which a legal case might be avoided. These solutions are discussed below.

Increase the deposit

By increasing the security deposit amount the landlord or rent management company is on the safe side. It also helps them to identify only good tenants who will take care of their property to claim the security deposit at the end of the tenancy agreement.

Negotiation

To avoid inconveniences for all parties when going legal it is always better to not go to court and negotiate the matter out of the court. By discounting a small portion of the amount to be recovered there might be a possibility to recover the balance amount. The discounted amount could the equivalent of lawyer's fee and other costs.

Collection agency

Rent management companies hire collection agencies to collect the amount due from a tenant. Collection agencies charge a certain fee towards such services and it needs to be carefully evaluated if this is a cost effective solution. For more Details visit our website.