Avoiding Small Claims Disputes: Essential Strategies for Property Owners

In property management, small claims disputes are an occasional inevitability, even for those who emphasize proactive tenant relations and meticulous record-keeping. At GM Properties, we typically encounter between 1 and 3 small claims cases annually, with security deposit disputes being the most common. Understanding the intricacies of small claims can empower property owners to protect their interests and handle cases efficiently.

The GM Properties team offers expert guidance to help property owners anticipate common scenarios and establish clear management strategies. Below, we outline key recommendations to minimize risk and ensure smooth resolutions.

WHAT IS A SMALL CLAIM?

In California, small claims cases involve disputes valued under $10,000. Claims exceeding this threshold become civil matters. When tenants file small claims, property managers often act as agents on behalf of the owner, though the level of involvement depends on the owner’s preferences. Tenants are required to sue the property owner, not the property management company. Occasionally, tenants incorrectly name the management company as the defendant, leading to dismissal. While some drop their claims afterward, others may refile, correctly naming the owner.

COMMON SMALL CLAIMS SCENARIOS

Security deposit disputes are a frequent cause of small claims. Tenants may file claims if they believe their deposit was unjustly withheld or not refunded in full.

In one situation that our team addressed, a tenant in a multi-tenant office building in La Habra experienced carpet damage from an old, poorly patched sewer line. GM Properties quickly offered alternative office space and repaired the suite. Despite these efforts, the tenant terminated their lease and sued for $6,000, citing unusable office space and moving expenses. With detailed email records documenting that reasonable accommodations that were made for the tenant, GM Properties successfully defended the owner in court.

In another instance, a tenant at a multi-tenant industrial property in the City of Industry demanded the return of their security deposit, despite owing unpaid rent. Their initial claim was dismissed as they sued the property management company rather than the owner. When the case was refiled, GM Properties presented clear documentation of the unpaid rent, leading to another favorable ruling for the owner.

HOW GM PROPERTIES PROTECTS PROPERTY OWNERS

To minimize disputes and strengthen our position in court, GM Properties takes proactive steps on behalf of property owners:

• Detailed Documentation: Our team ensures that all communications are thoroughly documented in writing, especially concerning rent and maintenance issues. We prioritize email over phone calls for significant matters such as unpaid rent, making sure records are available if needed in court.
• Record Maintenance: We keep organized records, including rent ledgers, invoices, and receipts, to demonstrate compliance with lease terms and justify any withheld funds. We also photograph each move-out inspection, even when no issues are anticipated, to further safeguard against disputes.
• Court Preparation: When small claims cases go to court, we present well-organized documentation to support our case. Our property managers bring three copies of all relevant records, ensuring a smooth and efficient presentation.
• Owner Identity Protection: To safeguard the personal privacy of our clients, we advise property owners to consider forming an LLC or using a fictitious business name. This not only reduces liability but also prevents plaintiffs from directly targeting or harassing the owner.

Small claims disputes may be an unavoidable aspect of property management, but GM Properties’ proactive strategies and meticulous record-keeping help safeguard our clients’ investments. We’re committed to comprehensive management that gives property owners peace of mind.