Tenant damage is frustrating—especially when you’re staring at a repair bill and a tenant who won’t pay. Small claims court can feel like the obvious next step, but for many landlords it’s a losing trade once you factor in filing fees, time away from work, and the reality that winning a judgment doesn’t guarantee you’ll collect.
Before you sue a tenant for $200 (or any amount), use this quick guide to decide whether going to court is worth the cost.
Key Takeaways
- Court costs more than money. Filing fees + prep time can exceed the damages.
- Winning isn’t collecting. A judgment doesn’t guarantee payment.
- Use a break-even number. Decide your minimum claim amount before you file.
The Hidden Costs of Small Claims Court
1. Lost time
The biggest reason to avoid court for small amounts is the time it takes to prepare. It can take months to compile photos, review landlord-tenant laws, gather lease information, and document conversations. Is this time that you can freely spend?
2. Out-of-pocket costs
With any small claims case, you can expect to pay filing fees. You may also need to pay for serving the tenant and producing evidence, like printed photos, estimates, and copies of your lease. When the amount you’re trying to recover is small, those upfront expenses can quickly eat up most—or all—of what you might win.
3. Interference with your daily routine
Going to court interrupts how you would normally spend your day. Not only do you need to take time off for court, preparing for court can be time-consuming and stressful. It can also pull your attention away from managing your property and responding to current tenants, which can create bigger headaches than the original dispute.
4. Collecting the judgment
Winning the lawsuit does not automatically guarantee that you will receive a payout. A judgment merely means the tenant owes you the money. If the tenant abides by the judgment and pays, you have achieved success. However, if the tenant does not pay, you will need to gear up for another ride. The cost of pursuing a judgment may be higher than the judgment itself. A BiggerPockets user said it best, “Is it worth spending good money, chasing bad money?” Likely, the answer is no.
5. Added stress
Your time and energy will be drained when caught up with a negative experience with a former tenant. It may be in your best interest to let go and move on, and use the experience as a learning lesson.
What amount is worth going to court over?
How do you determine what amount is worth suing over? Going to court can take its toll on your time and mind. However, sometimes the amount owed is worth the trouble of sending the letter of intent, filing the court paperwork, preparing for a court case, and tracking down the tenant if they do not pay.
The best way to determine the right amount owed to pursue this course is simple math. First, think about what your time is worth. Determine what dollar amount each hour of your life is worth.
Second, determine the amount of time you will need to dedicate to the court case. You will need to consider the amount of time you would spend doing each of the following:
- Reviewing the lease
- Writing the letter of intent
- Going to the courthouse to file the case
- Reviewing and compiling evidence
- Spending time in court
- Receiving the monetary judgment if you win the case
Next, consider your monetary costs in going to court. These costs could include time off work, filing fees, an attorney (if you choose) and printing evidence.
Lastly, add up the time it will take to prepare and multiply it by your hourly value. Add in the monetary cost. This number will be your break-even cost. From here, it is a matter of preference. Would you need to double your break-even to make going to court worth it? Triple your break-even?
Example
Let's say it takes 24 hours of time to go through the small claims court process. At $50 an hour, your time costs $1,200. The monetary costs are $200 for fees and $60 to print evidence. Altogether, your costs are $1,460 to break even. From there, compare your break even to what is owed. If a $200 cleaning fee is owed, going to court over the cleaning fee would not be worth the time.
The Choice is Yours
Taking a tenant to court is an unpleasant experience, whether you win or lose. Think about the real worth of the money that is owed to you. Is it worth your time and energy to go through the process of small claims court? In smaller instances, it is likely not worth the hassle. Oftentimes, a letter to a tenant with costs owed and a friendly phone call can do the trick.
While these situations can be unavoidable, screening all prospective tenants online can help you select the most qualified renter for your property. When you screen renters with Apartments.com, you can view credit, past evictions, criminal history, and more that will help you discover the best tenant for your rental.
Frequently Asked Questions
1. How do I decide if small claims court is worth it as a landlord?
Estimate your total time (prep, filing, court, and follow-up) and multiply it by what your time is worth per hour, then add out-of-pocket costs like filing and service fees. If that total is close to—or higher than—what you could realistically recover, court usually isn’t worth it.
2. If I win in small claims court, will the tenant have to pay me?
A judgment means the tenant legally owes you the money, but it doesn’t guarantee you’ll collect it right away (or at all). If they don’t pay voluntarily, you may need to take additional steps to pursue payment, which can require more time and fees.
3. What should I try before taking a tenant to small claims court?
Start with a clear and professional letter that outlines the damage, the amount owed, and a deadline to pay, and keep all communication documented. If possible, consider negotiating a payment plan or settlement—especially when the amount is small and the goal is to resolve it quickly.
Originally published September 25, 2019
