• payment - Getting Paid for Tenant-Caused Damages and Vacancy Loss

Getting Paid for Tenant-Caused Damages and Vacancy Loss

We don’t have to tell you that tenants don’t always leave their units in pristine condition when they move out. You understand that this is part of the business. The good news is that most of the housing programs that we operate allow us to cover some amount of tenant-caused damages, unpaid rent and even vacancy loss. There is a process and some limitations, so let’s review.

Programs and Damage Claim Features

Permanent Supportive Housing (PSH) ProgramsRapid Re-Housing (RRH) Programs
Tenant-Caused DamagesUp to two month’s rentOne-Bedroom – Up to $2,000
Multi-Bedroom – Up to $3,500
Vacancy LossUp to 80% of one month’s rentUp to one month’s rent or $1,000
Process / FormHOM WorksheetArizona Department of Housing ALIP

Notification and Move-Out Inspection

At the end of a HOM-assisted PSH or RRH program tenancy, the landlord must notify HOM immediately upon retaking possession of the unit following the tenant’s move-out. A HOM Inspector will conduct a move-out inspection of the unit within 48 hours of the landlord’s notification. We need to document the condition of the unit at move-out, so please do not perform work on the unit until the HOM move-out inspection has been conducted. The HOM Inspector will take pictures of the unit during the inspection.

Security Deposit Disposition

Following the move-out inspection, a HOM team member will provide the landlord with a copy of the appropriate form for the housing program:

Section II of both worksheets assist the landlord to document the total of all move-out charges and a proper accounting and disposition of any refundable security deposit paid by the program or tenant. If there is a refund of all or part of the security deposit due, the refund must be made payable to the party that paid it at move-in. If the tenant paid, the refund goes to the tenant. If HOM paid, send the refund to us.

Damage Claims

Section III of the worksheets is the Damage Claim section. If the security deposit is insufficient to reimburse the owner for amounts due at the termination of the lease, the landlord may make a claim against the program for reimbursement for damages. This section will guide the landlord through the damage claim calculation. For the HOM worksheet, the maximum damage claim is two month’s rent minus the security deposit. For the ALIP worksheet, the maximum damage claim depends on the unit size, but also considers the security deposit paid in the calculation.

Normal Wear and Tear, Life Expectancy and Documentation

Just as required in the Arizona Residential Landlord and Tenant Act, the security deposit disposition and damage claim process should properly consider the difference between normal wear and tear and tenant-caused damages. Floor coverings, paint and other components of residential rental units have life expectancies that should be considered in calculating tenant move-out charges. We will review claims carefully to ensure that the amounts charged for damages consider these concepts and align with the pictures taken by the HOM Inspector at the move-out inspection. Please be sure to include with your claim all required documentation to support the charges; including quotes, receipts, invoices, etc., for work completed.

Vacancy Loss

Section IV of the worksheets is the Vacancy Loss section. If the tenant vacated the unit in violation of the lease, the landlord may be eligible to make a claim against the program for vacancy loss. This includes move-outs due to:

  • Eviction
  • Abandonment
  • Move-out without proper written 30-day notice

Please note that vacancy loss claims will not be paid if the landlord or tenant provided a 30-day notice to vacate or executed a mutual rescission of the lease.

Payment Processing

The worksheets must be completed and returned to HOM within 30 days of the HOM move-out inspection. Claims are processed and paid within 30 days of receipt, usually much faster provided that the worksheets are completed properly, and appropriate documentation accompanies the claim.

Section 8 Housing Choice Voucher Programs

Please note that Section 8 Housing Choice Voucher Programs, including the Mainstream program and the HUD-VASH program, do not have provisions for damage or vacancy loss claims.

About the Author:

Michael Shore is President and CEO of HOM, Inc., a leading provider of permanent housing solutions that end homelessness for individuals and families throughout Maricopa County. Michael served as Director of Operations for the 100,000 Homes Campaign team from 2012-2014. He is also a member of the board of directors for the Crisis Response Network. Tweet at him at @shikemore.

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