Evaluating and documenting security deposit charges

6 Replies

I'm curious how other landlords handle this.  After a move out walk through is completed with or without the tenant, how do you: 

1) Evaluate what to charge them for?  How about if you do the work yourself?

2) What not to charge them for?

3) How do you document it?

I've seen bits and pieces of this subject on BP, but I don't recall seeing anything comprehensive like an "ultimate guide" etc.

Let me start out with I buy class A rentals. My tenants typical stay for a year so as far as I am concern there should be no wear and tear :)

Therefore basically I charge for anything I have to do make the house back to the current state. I have had some tenant leave the house perfect and others I returned $7 and everything in between.

@Elizabeth Colegrove 

You would charge them for carpet replacement if the carpet is 10 years old and can't be professionally cleaned well enough anymore?  I'm not sure that is right.  I get what your saying overall though.   

For the ones you charged how did you do based on the questions above?

Thanks. 

@Bryan N.  

No I wouldn't charge them for 10 year old carpet replacement but spilling red wine on my carpet is not wear and tear :) Not maintaining the yard and therefore costing $700 to get it back under control is not wear and tear especially since defined in the lease. If I have to hire a cleaner for a move out clean,not wear and tear.  I also charge them for running into my garage door, etc. I wish I had charged one my tenants who was only in the house for 8 months gauging my hardwood floors. 

It can depend on your local landlord tenant rules as well.  I was advised long ago, and we pretty much stick to it with our rentals in Raleigh, that 7 years for carpet, 3 years for paint, for instance.  If you install new carpet and the next year it needs replacement, charge them for it.  If it's been 5 years and it needs to be replaced, charge them a portion of the cost using the invoice as a guide.  We hired a painter at our last turnover as they were there 2 years and it already needed a full paint job, so he listed the hole in the wall he had to repair and the excessive damage to certain rooms and split the bill accordingly, then charged the tenant's deposit for their part.  When it's extremely filthy, we hire a cleaning crew, pay the normal rate fee ourselves and charge the tenant the excessive rate (usually $50 more).  I've been advised that landlords charging hourly labor for their own work is hard to get by a judge, but having receipts from professionals usually passes.  If it's in good shape, we turn it over ourselves quickly and move on, charging tenants for any materials that we feel are over and above (like our carbon monoxide detectors were missing, so we charged them for new ones).  If it's excessive, we hire out, get receipts, and charge it to the tenant's deposit.        

@Bryan N.  After almost 20 years, we have an efficient process, but haven't really documented it. But here are a few tips....

1. When the tenant moves in, we give them a Move In Packet, which includes "Move-Out Instructions" too, which has three pages: Move-Out Instructions, Minimum Charges for Services and Turnover Costs guide (typical charges for damaged items or need for additional cleaning), and Notice to Vacate form.

2. We do periodic inspections and charge for damages as the occur or as they are discovered. This helps us avoid a build up of chargeable damages at the end and also keeps the tenant in better compliance with the terms of the rental agreement.

3. We don't charge tenants for carpet cleaning. If the carpet is worth keeping, we pay for the cleaning and only charge the tenant for damages, such as significant stains, burns, tears, pet urine, etc.

4. We encourage tenants to do move-out walk throughs with us and point out to them what they can do to get back their security deposit.

5. We refer to the Move-In Condition Report of the current tenant and also that of previous tenants if we have a question about the current condition and the former condition.

6. We use a template for the our "Deposit/Move Out Report" which includes information about landlord-tenant law (RCW 59.18.280), information about the tenants (name, rental address, dates of tenancy, final inspection findings.  We list the amount held as Security Deposit and subtract, if warranted, from the following categories: Extra Cleaning, Extra Yard Care, Missing Items, Damages, Unpaid Utilities, Unpaid Fees, Unpaid Rent.

7. We charge either the actual cost or estimated cost of items (labor & materials). Since we only have 14 days to complete our report for the return of the deposit, we often need to rely on estimates. We get our estimates from the Minimum Charges/Turnover Costs guide (you can find samples on-line if you google it) and also from the HD Supply catalog.  If you have never seen an HD Supply catalog, get one! We can order some pretty obscure items from the catalog and have them delivered within one or two days. In our jurisdiction, we can charge a reasonable rate for our own labor. We keep all the receipts and documentation for our own records, but only provide the tenant with the final report on which charges are itemized.

I will stop there, at a lucky seven! We have a good track record to returning deposits. This starts by letting tenants know up front "Our wish is to return all of your security deposit. We trust you will leave the premises in such condition that we are able to do so."

Marcia Maynard, Fischer Properties | Podcast Guest on Show #83