The Perils of Move-Out Inspections, Tenant Wear & Tear vs. Tenant Damage, and Tenant Security Deposit Handling.
Once the tenants return the keys and garage door opener, perform a move-out inspection. Be aware that many states require the landlord afford the tenant the opportunity to be present at a move out inspection, not allowing the tenant to be present could violate local or state law. The move-out inspection is an important task that requires considerable time to properly perform and review the results. The outcome will determine if there are any substantial changes to the property and if the tenants are liable for the costs required to make the property rent-ready.
The inspection process is critical because improperly documenting damage or failing to send the necessary documentation required by law may place you in a liability situation that can be quite costly and could possibly absolve the tenants of any responsibility for damage they
would otherwise be responsible. You may have to cover the costs needed to make the property habitable. Compare the move-in inspection results with the move-out inspection to determine what work is required to make the home rent-ready and if the former tenants or their guests caused any damages or made unauthorized improvements to the property.
Wear and Tear Versus Damage
Real Property Management’s informative series on rental home management answers many of your questions about being a landlord and this very important topic, Wear And Tear, What Is Normal? Security deposit funds belong to the tenant, and the landlord must return this money when the tenant leaves the property in acceptable condition, minus normal wear and tear, as required and defined by state law.
Wear And Tear
Normal wear and tear is the physical deterioration that occurs with normal use. Wear and tear generally excludes occupants’ or their guests’ negligence, carelessness, accident with, or abuse of the premises, fixtures, or chattel property. Normal wear and tear is deterioration or
depreciation in value by ordinary and reasonable use.
Other signs of everyday wear and tear are worn electrical switches, frayed pull strings on blinds, lightly scuffed hardwood floors, loose caulking, peeling wallpaper, faded curtains, and dirty window screens. Time and regular daily use can cause any of these items to become worn,which does not constitute damage.
When a tenant causes damage beyond normal use, a landlord has cause to charge the tenant for the damages. This may include damages inflicted by the tenants, their guests, or pets.
- Matted carpet or furniture impressions are wear and tear; burned or stained carpeting is damage.
- A few small nail holes are wear and tear; large holes in the walls constitute damage.
- Fading or yellowing of paint is wear and tear; large stains on the walls and ripped wallpaper are damage.
One way to mitigate permanent and expensive damage is to stay on top of regular maintenance issues as they arise, rather than allowing them to go unaddressed. For instance, broken-shades:
- If you have a leaky window that allows rain to blow in, have it repaired before it damages the woodwork around the window or the flooring.
- If you have a dripping kitchen pipe, have it repaired before it causes the wood under the sink to rot.
- If the wall behind a door is missing a doorstop, expect that the doorknob may punch a hole
into the wall.
Expectations and Documentation
Proper maintenance and clear tenant expectations can help prevent wear and tear from turning into damage. Walk through the property with your tenants prior to move in and make note of any existing issues.
Perform another walk through with your tenants prior to move out, and critically examine the home and document any changes. Compare the differences in your notes from move-in inspection with those from the move-out inspection.
You want to be able to prove that any changes to the home are due to wear and tear, or that the tenants have damaged the property and you can legally (based on local and state law) deduct repairs from the security deposit. You may allow the tenants the opportunity to repair any
problems before you deduct the costs from the security deposit.
If you withhold money from the security deposit for damages, you must be able to prove the conditions before and after occupancy. It is imperative to follow state law to ensure you comply with required notices and deposit the tenants’ refund as required.
Documentation is critical because improperly recording damage or failing to provide the necessary information as required by law may place you in a costly liability situation. You may have to cover the costs involved in making the property habitable and possibly absolve the tenants of responsibility for damages or unauthorized improvements.
Reasonableness of Wear and Tear
State law often defines the reasonableness of wear and tear, which often depends on the tenants’ length of residency. For instance, if the tenants lived in the property for three years, it may be reasonable to expect to paint the walls and clean the carpets. If the tenants lived in the
property for six years, it may be reasonable to expect to replace the carpeting. The property owner typically bears the costs for normal wear and tear maintenance.
Many courts will allow you to prorate the useful life of a damaged item. If the court believes that the useful life of carpeting in a rental dwelling is five years, then the cost of replacing the carpeting would have to be prorated over a five-year period. You cannot charge the former tenant the full replacement amount if items are past or well into their life expectancy.
Keep in mind that the security deposit belongs to the tenants, and you act as an escrow agent to hold and care for the tenants’ deposit. However, the funds may revert to you at the end of the tenancy if you make a successful claim against the deposit (in compliance with local and state laws) or the tenants have otherwise forfeited the deposit through a violation.
You must specify security deposit deductions to pay for damages or cleaning in a letter to the tenants, which also includes a list of deductions and an explanation for each specific item. Some states require copies of itemized receipts for materials or professional services, including
your own labor at a reasonable hourly rate.
Real Property Management is the nation’s leading property management business. We know both sides of the security deposit dispute, and we know the processes for settling tenant claims lawfully and professionally, taking out the guesswork for you.
The security deposit belongs to the tenants, and you act as an escrow agent to hold and care for the tenants’ deposit. However, if you make a successful claim against the deposit, in compliance with local laws, or the tenants have otherwise forfeited the deposit through a
violation, the funds may revert to you at the end of the tenancy.
If tenants owe additional money, send an invoice with a note to pay the balance due. If the tenants do not pay, you may contact a collection agency.
Seriously consider any claim against former tenants’ security deposits. The security deposit claim must be verifiable with clear and convincing proof. Make these claims within the confines of your local and state laws. You must return the security deposit or any remaining portion to the tenants deposit within a certain number of days, as defined by local and state laws. The courts may assess steep penalties if you do not follow this process properly.
Real Property Management Hampton Roads is part of the nation’s leading property management company. We know the pitfalls, and we know the processes for settling tenant move-out claims. We can guide you through the process.
Visit us at www.rpmhamptonroads.com.