There are a variety of reasons that landlords can find themselves in the small claims court system. Tenants can attempt to sue for various reasons, such as an injury occurring at a rental property, repair reimbursements, or filing an illegal eviction suit.
Depending on the circumstances, it may be you who must file a small claims lawsuit in order to sue your tenants for damages of some kind.
The majority of the time, however, landlords are dragged through the small claims court system due to a disagreement over withheld security deposits. A disgruntled tenant can sue even the most careful and considerate of landlords regarding the return of their security deposit.
Using the example of security deposit withholding as grounds for being sued, here is a guide for landlords navigating the small claims court in California.
To protect them from unnecessary litigation, it is vital for landlords to comprehensively understand all laws they must abide by, and the rules around security deposit returns are no exception.
In the state of California, the deadline for itemizing and returning security deposits to tenants is 21 days. Landlords must provide their tenants with a notice of any intended deductions, which is usually broached during a pre-vacate inspection. Provide an itemized list in writing and outline clearly how the deposit will be applied towards costs such as cleaning, damage repair, and rent arrears.
The maximum amount that a tenant can sue for via the California small claims court is $10,000, with a cap of no more than two claims over $2,500 to be filed annually.
Tenants typically sue through small claims court because the filing is relatively cheap, there is no requirement to engage lawyers, and with no juries involved, the process is fairly swift. For example, in California, filing a claim with the small claims court typically costs between $30 and $75, and hearings are usually scheduled within 70 days of cases being filed.
You may receive a demand letter from your tenant prior to them filing a small claims suit. Of course, if it comes to your attention that you haven't followed all necessary laws and guidelines, such as returning their deposit within 21 days, make sure that you rectify any errors and do what you can to make things right.
If the matter does go before the court, you want to be able to confidently demonstrate that you have acted reasonably as a landlord both before and during the dispute. Therefore, make sure that all correspondence between parties is respectful and reasonable.
It is in your best interests to keep the matter out of court if possible. Instead, attempt to reach a compromise with the tenant, perhaps by suggesting that you both attend mediation. Reaching an agreement in mediation can then be signed off as an acceptable resolution and conclusion.
If you cannot reach an agreement, your tenant will likely proceed to sue you, so be sure to keep all records pertaining to the case. Most California small claims court hearings occur within 70 days from the filing date. In addition, the Statute of Limitations for tenants suing for security deposits, and other contract issues is four years, so it's vital that you keep hold of all records for that period.
If a tenant sues you, you will be served a copy of the small claims lawsuit which will include the small claims court hearing's date, time, and location.
Ideally, you will be able to prove that you followed all necessary laws and guidelines as a landlord with tangible evidence. Preparation is key to succeeding in small claims court, so gather all important documentation, including:
You will need to prepare at least three copies of any evidence you intend on using - one for you, one for the other party, and one for the judge).
Hearings in small claims courts are typically relatively informal, but in order to give yourself the best chance of being viewed favorably, it pays to practice your defense in advance. In addition, have your evidence and associated documentation well organized, so that you can easily access any item during the hearing.
In preparation for defending yourself in small claims court, it can be helpful to watch a few cases online in advance, so you can get an idea of what to expect. Also, visit your court's website for any additional resources.
Ultimately, the hearing consists of you and your tenant taking turns explaining and defending your point of view, presenting any evidence, and introducing any witnesses to back up your claims. The process itself is fairly swift, usually within an hour, after which the judge will either deliver their verdict or opt to notify both parties within a few business days.
As a landlord, there are many laws and guidelines that you must follow, and failure to do so can be very costly, so it really does pay to be meticulous in the way you conduct yourself and your business with your tenants.
The more respectfully you have treated your tenants and conducted your business as a landlord within the guidelines of the law, the more favorably a small claims court will judge you.