What charges do I use Rent deposit for?

6 Replies

What things can you deduct from a deposit?

@Vickie Bruce - first check with your local laws. Then second, check what your lease says or doesn't say. Outside of that, I charge for anything outside of wear and tear. 

If the bedroom carpets are ten years old, and they have wear from where they were walked on, I wouldn't charge them. But now if there is a new, big stain in the carpet, I would charge them to have it cleaned. 

If a light bulb is burned out, I wouldn't charge them for that. Now if the ceiling fan has a broken blade, they would get charged. 

If I painted the unit before they moved in, and one wall has stains and smudges all over it, they get charged to have it cleaned/repainted. 

If I find a broken towel bar, they get charged for the replacement. 

If the tenant didn't clean the unit before they left, I charge for that.

Does that help? Do you have specific items you are questioning?

Thank you for your response.  I really just want to make sure I do the right thing.  The carpet was brand new and now it is very bad.  I dont think I will be able to remove all the stains.  The walls and cabinets had been painted before they moved in but for some reason they started painting them orange.  It says plainly in the lease no painting without written consent.  They only painted a stripe on one wall then moved on to a door and painted a 1 foot area and then just the fronts of some of the kitchen cabinets.  A door was knocked off the hinges and propped up and a hole is smashed in another door.  Then they had the nerve to ask for their deposit back.

This is a good reason why you do a walk thru with the tenant and have them sign a document stating the condition of the place upon moving in. I even give my tenants 3 days to complete the form, so they can have a REAL good look around.

Upon leaving I pull out the exact same document and go through it once again. Wear and tear I don't care... but holes in the wall = the drywall and my time to fix it. Paint when/where I don't want it... $40 for each gallon of paint I will require and $20 per hour I'm painting it.

I fill out the form and give them a copy as they leave. I tell them to leave a forwarding address and that's where the remainder of the damage deposit will get sent to said address.

Thank you for posting this question, and a second thanks to everyone who replied. I am new to BiggerPockets and to real estate investing, but topics like these are not only interesting but very helpful in developing a good understanding of rental property management, and investing. So thanks again to everyone!

Very sincerely,

George

Vickie,

Here is a blog that wrote on deductions from security deposits, but always a good idea to read over your States landlord tenant laws;

Security Deposits VS Normal Wear and Tear

This is probably one of the hardest things to determine and explain. What exactly is “normal wear and Tear”/ The definition is the deterioration of the property that occurs during occupancy where the tenant cleans regurarly and cares for the premises reasonably.

Remember security deposits are for the protection of the landlord in the event that something is damaged or really dirty.

What Can and Can’t be Deducted from a Security Deposit? I also want to point out that you MUST video or do a full walk thru with photos prior to the tenant taking occupancy. Possibly using a professional third party vendor for the pre-inspection is a great idea, give a copy to the owner and tenant

Excessive holes in walls

Broken tiles or fixtures in the property

Plumbing backups

Repainting where a tenant has repainted from the original color

Tears, holes, stains or burn marks in carpets

Missing or damaged blinds

Broken windows and window screens

Broken doors and locks

Broken or damaged appliances

Excessively Dirty

Pest control if you see Bugs and or fleas

Junk or trash left behind

Past Due rent

Fees incurred from fines from the association due to the tenants conduct or lack thereof

Water damage to hardwood floors

Missing outlet covers

Remotes for garage or gate if not returned

Rekey of locks if tenants did not return the keys

Unpaid utilities, as long as they were part of the lease agreement

Undoing a tenant alteration

This is a sample of things that are usually considered to be normal wear-and-tear and should not be deducted from a security deposit:

Slab or plumbing leak

Normal rug wear. Be especially careful charging a tenant for the entire cost of carpet when the carpets are like 10 years old

Picture or pin holes in walls, as long as not excessive

Painting the exterior of the home

Pressure washing unless there are oil stains from their auto

Routine maintenance

There are many more circumstances that could and will come into play, but lets all work together to come to a resolution. Remember those photos and or videos prior to and after occupancy to document everything!

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