@Brandon P. - I hope your lease spells out whether they can or cannot paint the walls. If not, it should in the future and you will eat the cost this time. My leases specifically state that you cannot paint walls/rooms etc without consent from the owner.
1. Annual inspections.
2. Your lease should specifically forbid any alterations without "prior, written approval" by the Landlord. If tenant wants to make alterations and you approve them, this should be done in writing. Build a simple form to fill out that lists the following:
- what alterations they want to make (be specific)
- what materials they will use. If it's paint, make them provide color swatches
- a deadline for completion and inspection. You don't want them to start and never finish, leaving the place a mess. And you want to inspect when it's finished. You shouldn't' wait until they move out three years later to discover they spilled paint all over the floor or got color on the ceiling and trim
- who will pay for the improvements. It's typically the tenant but there may be cases where you want to pay for materials or even pay the tenants for the work. This is dangerous! I never, ever pay a tenant for work unless they specialize in that field. If I'm paying someone for labor, I'm hiring a pro.
- what happens when the tenants leave? Do they paint back to original colors or remove the fencing you let them install? or does it become your property. Spell this out so there is no confusion.
- Include a statement that says the job must be done in a professional manner or they will be responsible for paying to have it corrected. Don't wait until they move out to have it corrected!