Question Surrounding Security Deposit

29 Replies

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@Chad Nagel and @Scott Schultz my point was not that just because it was depreciated it doesn't mean there is not value, but it definitely doesn't have full value. @Sue K. used a perfect example. If your 5 year old truck is totaled, the insurance will give you the value of a 5 year old truck. Maybe 50% of the new price, you will not get a new truck. You could call them and tell them, but my truck only has 3000 miles on it and it is in great condition and maybe you get 60%. The point is that under no circumstance would you get 100%. That is not reasonable and no court would find it reasonable. Some states recognize the IRS depreciation guideline as reasonable life in a rental. Sure in my home, carpet will last longer but in a rental we all know the standard of care is lower. Even if you wanted to say a carpet should last 15 years, there is still no argument to charge this tenant `100%. One core problem being they have no idea how old the carpet is, but know it is at least 6 years old, so even if it was new 6 years ago, you can do the math.

I am sorry @Joe Splitrock but I think you are incorrect, however in this situation @Andrew Dicks did not know the condition prior Th his ownership, he's probably gona have to buy carpet at his cost, but if I have carpet in good condition on move in, and at move out its trashed, you bet I will charge full price and take my chances in court. 

If you don't have the move-in condition form I don't know a judge that would award you damages for the cigarette burn.  I never withhold if I don't have a move-in condition form.  You are gambling with having to pay double damages. If the security deposit was $500 and you withheld all $500, you would be on the hook for at least $1000 in addition to attorney fees  and court costs for you, and the tenant. 

 If you have a signed lease and it states no smoking you could charge for the fee outlined in the lease BUT that does not translate to the cigarette burn being chargeable or the paint be chargeable.  I.E. The lease may state there is $200 fine for smoking. You could legally withhold that fee from the deposit (as long as a Non Standard Rental Provisions was included in the lease and the charge is covered somehow there).  You could not charge your cost for painting without proof of move-in condition.   

@Andrew Dicks honestly this isn't worth your time, chalk it up to the previous landlords error and move on. It's not worth the risk deducting it from the security deposit and hoping the tenant won't come back and take you to court for a wrongful withholding (which is a nightmare considering double damages and tenant's attorneys fee could be assessed, not factoring in Milwaukee is super lenient to tenants). My suggestion let it go, get out that 21 day letter (return receipt requested) and move on. Also if this is your first 21 day letter look at Tristan's Landlord Tenant blog (link) on how to write that 21 day letter and get on fixing the unit up and getting it re-rented.

Originally posted by @Joe Splitrock :

It doesn't matter what state you are in. You cannot charge 100% of the cost to replace carpet that is over 6 years old. It is true California is more strict about this but according to the IRS that carpet is fully depreciated. Courts are not sympathetic to landlords who charge full cost for old carpet. Prorating based on age is more reasonable if there is no standard in the state. More importantly the new owner cannot prove age of the carpet or that the burns were not there. The carpet could be 15 years old and the tenant could be telling the truth.

I have charged tenants the cost of ripping out the carpet but not the cost of putting in new carpet.  And that the court was okay with.  For $500, do you really want to put up a fight on something so nit-picky?  Personally whether you are right or wrong in this case it might be wasting time versus just getting it over with and moving on.

@Andrew Dicks let me try this from another angle. It does not matter so much what a lawyer would tell you, because what you discribe is not back or white, it's somewhere in the grey middle. Why dont you speak with your tenant about the damages and that you are looking at some deductions from the SD. Maybe you get nothing but agreement, maybe you will get massive push back. Based on that you can decide your next steps. It does not matter if the law is on your side, because the cost and energy to fight it out in court is not worth it. Best think is always to do a walk through with your tenant (be sure you did one by yourself alone first, so you have time to discover any not so obivous issues) and then seek to reach agreement. Be sure to provide a written statement of the deductions you take and refund the rest within 21 days. You can download the Wi guideline as a pdf file - just google WI landlord tenant law - "The Wisconsin Way".  

Hi all. Just a side thought for everyone. With the popularity of video these days has anyone taken a walk through video with new tenants showing the property in good clean condition? With their approval of course. And could it be a very good accountability tool for both parties.