Q: I am a landlord and we moved across the country three years ago for a new job. I recently returned to the area to attend a wedding, so I took the opportunity to drive by my rental home. I was shocked to find that my tenants had dug out more than 30 mature plants from the front yard and backyard landscaping. The property is now barren!
I confronted the tenant and he claimed that all of these plants died and he did me a favor by disposing of them. But I also talked to the next-door neighbor who told me that my tenant had been holding yard sales and selling the plants, shrubs and trees. I am surprised my tenant didn’t sell the lawn as sod! The neighbor didn’t realize that my rental home wasn’t owner-occupied, so she didn’t think to call anyone.
My lease with this tenant clearly indicates that the tenant cannot make any alterations to the property and that he is responsible for any damage. Fortunately, I did take a full set of photos of the rental home, both inside and out, before this tenant moved in. What should I do? How would I prove the value of the missing plants and trees?
A: There are several lessons to be learned from your unfortunate experience. Because you don’t live in the area, you need to have a system that provides you with local "eyes and ears" that would give you immediate notice of something crazy like this. You may have a friend in the area or you can at least give your contact information to the neighbors and ask them to call if they have any complaints about your tenant or see anything unusual.
Another option is to hire a local property management company. Many landlords think that property management is too expensive, but you obviously have demonstrated what can go wrong.
Even with my suggestions, it is important to be personally involved in the management of your property and to be able to see the property personally at least every six months. You should also require your tenant to agree to a property inspection of the entire home and grounds at least yearly.
An annual inspection of the interior and inaccessible areas of the property (like the backyard) is not automatic and is even illegal in many areas unless specifically agreed upon in writing with the tenant. But this can be very important if you live out of the area and do not have local management. …CONTINUED
A few years ago there were many real estate investment seminars touring the country encouraging people to make investments in rental properties in far-away locales. These investments are often marketed in urban areas with the sales pitch focusing on how reasonable the prices are in some distant rural area.
While there may be some truth to the investment angle, my concern is that you should not own and attempt to self-manage a property from across the country. Your devastating circumstances highlight just one of the reasons.
You have already confronted the tenant, and he has apparently lied to you. I think your next step should be to contact an attorney and take the necessary steps to terminate the lease or rental agreement.
Follow the legal advice you are given, but I would also suggest you contact your insurance company and local law enforcement. Your photos will be invaluable, as both law enforcement and your insurance company will be able to quickly see the legitimacy of your claim.
Valuation can be tricky, but you may be able to get some help from your insurance adjuster on the value of the plant material lost — or you can contact a local landscape nursery or even a governmental or college agricultural department. You should get estimates based on the mature value of the plants.
You will likely have to replace the larger trees and shrubs with very small specimens, and it could take years to regain the beauty of your rental home.
If the plant material sold or destroyed by your tenant is significant, you may even need a real estate appraiser to establish the "before" (with plants) and "after" value (without plants) of your home to determine the loss in value, which is referred to as "diminution in value."
You will be able to deduct these damages from the security deposit, but it is likely that even the full security deposit is just a minor portion of your loss. Hopefully, your tenant has a good income and savings, although it would seem that his behavior would indicate he has no assets.
This column on issues confronting tenants and landlords is written by property manager Robert Griswold, author of "Property Management for Dummies" and "Property Management Kit for Dummies" and co-author of "Real Estate Investing for Dummies."
E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com.
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