Q & A: Tenant didn’t do work as promised

Q: When I rented my house to a family I gave them $50 a month out of the rent for the upkeep of my property. Nothing was ever done with the money. I raised the rent and they moved out leaving a terrible mess inside and out. They ripped all the carpet out of the house—I could go on and on. Well I just found out my insurance does not cover damage done by renters.
How can I collect from them money to cover the repair to my house?
A: This situation should be a lesson to all rental property owners. There are two lessons here.
The first lesson: never pay a tenant to take care of the property.  They won’t or they’ll do it badly.  Your rental property is your investment. Your tenant has no interest in how well your investment is maintained. In fact, many would consider their landlord as sucker for paying them to take care of the property. They figure it is the landlord’s job, and if he or she is stupid enough to pay them, the landlord deserves whatever happens.
Faulty logic, yes, but they are also not homeowners and have a “tenant mentality.”
An additional question is if indeed the tenant lifts a finger to maintain the property, how well and how safely will he or she do it? Suppose you hire a tenant to paint the interior of the house. Your tenant is not a licensed contractor.  Up on a ladder the tenant climbs, falls off and breaks his arm. You are liable for the injuries and the medical expenses and possible lost work because the tenant was working for you and you had no workman’s compensation insurance.
Even worse, suppose you hire a tenant to repair the deck off the third-floor apartment. The tenant does a sloppy job; a guest comes visiting and falls through a loose railing to his death on the street below.  You will definitely be liable for the sloppy work, since even if you had hired a licensed contractor you would be liable. But this case would be far worse. You have paid an unlicensed, and assumedly unskilled, person to work on your property.  Unless you have a massive liability policy or have sheltered each of your properties in its own LLC, you will lose everything you own.
The second lesson: mind the security deposit. If the damage exceeds the security deposit, there are three steps to follow in this order:
1.  Send the tenants a bill to their last known address (presumably your property) for the difference between the security deposit and the damage. Give them a deadline to pay the bill.
2.  When they don’t pay or make arrangements to pay, file suit against them in small claims court.
3.  They will probably not show up in court, so you will get a default judgment. But even if they do show up, with your pictures of the damage and a signed property condition report from when they moved in, you will win the judgment. Now follow the procedures to get the judgment noted on their credit report.
No, you will not collect the money this year or maybe even next year.  But a judgment stays on a credit report for 10 years, and is renewable for another 10. It can even be transferred to another state. Plus, it earns interest.
Someday these people will want to buy something on credit—a car, a television, a washing machine, or a house. When the prospective lender pulls credit and sees the judgment, their loan will be rejected because of your judgment. In order for them to buy that car, television, washing machine or house, you will have to be paid first, including interest.
The two lessons, then, never allow a tenant to do work on your property and always collect a security deposit as you do a condition of premises checklist at move in.