Perhaps your tenant lied and took advantage of you. He may have broken the lease or you may have been evicted. In any case, it damaged your rental and cost you money! What are you doing now?

First, put your emotions aside and spend some time organizing your ex-tenant’s file. Whether you own one unit or a thousand, or manage your rentals full-time or part-time, you’re running a business. Any successful business keeps complete and well-organized records.

Keep copies of all receipts required to repair the unit, spent on legal fees, unpaid rent, etc. Complete a move-in inspection checklist, preferably with the tenant if possible. They both sign the document. The move-in inspection will help you document the condition of your unit and the debt you owe. If you’re not completing the move-in inspection checklists now, start at your next move. This important step is often skipped “because I didn’t have time.” Take the time. There is no excuse for not having a full move-in inspection signed by you and the tenant.

One question that is sometimes confusing to some landlords is whether or not you can collect through the lease. If the tenant signed a twelve-month lease and moved out or was evicted after only six months, do you owe the remaining six months? The short answer is no, not yet. In many states, if you are unable to re-rent the unit before the lease is up, the tenant will owe you the lost rent. However, he does not owe her rent until it is due. He will only charge you now for the lost rent, as of the date of the move-in statement. If he wishes, he can update the amount he owes each month until the unit is re-rented or the lease expires. Discuss this matter with your attorney.

Does your lease include termination and/or “no notice” charges? I often hear: “He’s on the lease; he has to pay for it.” The thought here is that if he is in the lease, he is binding. This is not necessarily true. Termination and no notice fees may be legal in your state, and your tenant may be responsible for them. With various state laws and recent case law, I recommend having an attorney periodically review his lease to make sure it complies with current laws. If it’s legal in your state, no-notice and termination fees can be a great way to calculate all the fees when you move out, without having to add future rent as it’s due. Again, talk to your attorney about this.

Take photos. A digital camera is important to your business. Moving pictures are nice to have, but moving pictures are a must. The checklist and pictures not only help document the condition of the unit, but can also be helpful later if the tenant gets creative with their description of the condition when they moved in and when they moved in.

Keep a record of all communications you have with your tenant, especially any communications related to moving in or paying rent. If you don’t have a registry, start using one right away for all your current and future tenants.

Once you have your records together, fill out a declaration of move. Most likely, your management software will do this for you. The check-out statement must include the names of everyone who signed the lease, the address of the unit, the check-in and check-out dates, and an itemization of charges. If a deposit was placed on the unit, it will display the deposit subtracted from the total due. State laws vary on what, how, and when you must notify the tenant of how you applied your deposit. Follow the law to the letter. Failing to do so will give your debtor the upper hand, and you may have to pay your deposit even though you actually owe them money. Some states require that this statement of move be sent by certified mail within a certain number of days of moving. Keep your certified mail receipt with your records. You may need proof that you followed the law. Mail the moving statement to your debtor at their last known address. This may be the address of your rental unit. If the letter is returned without receiving it, keep it on file as well.

A word of caution here: Some landlords are tempted to rack up and overstate charges. Although it is tempting, in the end it will not do you any good and it is not legal. Being fair and reasonable in your charges will greatly increase your chances of recovering the debt.

Now that you’ve got your documents organized and you’ve mailed your moving declaration, don’t put the file somewhere and forget about it. The money owed to you is an asset. I can’t tell you how many times I’ve heard the comment, “That bum will never pay his bill!” I can tell you with confidence that this way of thinking is costing homeowners millions of dollars a year in lost profits. With a little time and effort on your part, you can collect all or part of what is owed to you.