Security deposits can be difficult to navigate, especially at the end of a lease term when it’s time to return that deposit to the departing tenant.
California has some pretty strict laws around security deposits. There are new limits to what can be collected. There are strict timelines; the deposit has to be returned within 21 days of the tenant moving out. It’s important to know what a security deposit can and cannot be used for. Making a mistake could lead to a day in court and some serious penalties.
We’re talking today about normal wear and tear versus property damage caused by a tenant. This is something most property owners deal with at the end of a tenancy, as they are making decisions about the security deposit. Let’s make the process easier.
Here are facts about wear and tear (a landlord’s responsibility) and tenant damage (the tenant’s responsibility).
Inspections and How They Help
Before we talk about the difference between wear and tear and damage and provide some concrete examples, let’s back up to the move-in inspection. At that point, the lease is just beginning and most rental property owners are likely not thinking about how things will go at the end of the lease term and how much deterioration the property may suffer.
It’s a good idea to think about the end of the lease term at this point, however.
Careful and detailed inspections impact the ease with which security deposits can be returned. They can also protect rental property owners from mistakes that could prove expensive.
- Move-In Inspection
In order to identify whether any damage has been done to a property at the end of a lease term, owners need to establish and prove how the property looked before a tenant moved in. This starts with the move-in inspection. Before any new tenant takes possession of a rental property, it’s a good idea to walk through it and take a lot of notes. Owners should take hundreds of photos. A video can help, too. This inspection is being used to make sure that the home is move-in ready. Landlords also want to be able to prove what the property looked like before the tenancy. The documentation will be absolutely necessary if there’s a dispute over security deposits and who is paying for what at the end of the lease term. No owner ever wants to hear a tenant claim: “it was like that when I moved in.” By conducting a thorough move-in inspection, it’s much easier to demonstrate that it was, in fact, not like that at move-in.
Give tenants an opportunity to inspect the property as well. Once landlords have completed their own walk-through inspections, it’s a good policy to invite tenants to make additional notes on the move-in report. If they notice defects that were not already documented, ask the tenants for photos. Both landlords and tenants will sign off on this report, establishing the move-in condition.
- Pre-Move Out Inspection
California law requires that rental property owners offer departing tenants a move-out inspection before they leave. This should occur within the two-week window before they vacate the property. They will not necessarily accept the offer to walk through the property with their landlord, and they’re not required to. But, property owners are required to offer this inspection, and it can actually be a good opportunity for both parties. The tenant will have the opportunity to understand what might be deducted from the security deposit and the landlord will get an idea of how much time and money will be required during the turnover process. It’s a good time to make plans and line up vendors.
There are fewer disputes when the pre-move out inspection occurs. There’s more awareness of what rental property owners will consider to be damage. Encourage existing tenants to accept this offer before they leave.
- Move-Out Inspection
Then, there’s the final inspection that occurs after the tenants have left, turned in the keys, and returned possession of the property to the landlord. We recommend that owners get inside to inspect as soon as possible, and definitely within 24 hours of the tenants leaving. Bring the move-in inspection report to the property and do the same inspection that was conducted at that time. Look for any differences in condition. Some of it is likely normal wear and tear, but there might be some damage as well, and that’s what needs to be documented. If a landlord is planning to use any part of the security deposit to pay for tenant damage, it absolutely has to be documented, and this is the best opportunity to do that.
Normal Wear and Tear in Rental Housing
Wear and tear is normal and expected when renting out a property.
This is going to happen, no matter who is living there. Homes deteriorate. It’s why rental owners must commit to updating, upgrading, and improving. This is the best way to continue attracting good tenants. Most investors expect to continue raising their rents. That’s only possible when the property is continually upgraded and improved. During the turnover process, owners will want to be attentive to maintenance issues as well as property improvements. These are the financial responsibilities of the property owner, not the tenant.
So what does wear and tear look like?
It looks like general deterioration. Some examples include:
- Faded paint. Sunny days will deteriorate the paint on walls. There may be smudges and scuff marks that are due to paintings and mirrors hanging on the walls or furniture pushed up against it.
- Worn carpets. There are bound to be high traffic areas that create a patch of floor that looks like it’s been flattened. That furniture will also leave marks in the carpet. This is normal and expected, and it’s wear and tear. Not damage.
- Scratches on floors and walls. Maybe the hard surface flooring has a few scratches from a table that was moved or dragged. Daily use of the home can start to show on walls and floors. As long as it’s minor, it’s not considered damage.
- Loose fixtures. Doorknobs and drawer pulls might be loose, and that’s an easy fix. A faucet with some calcium deposit or fading grout in the tub will also be considered wear and tear.
These will be repairs that property owners must pay for, and they should not be too expensive. It’s part of the turnover process and it comes with the expected expenses that owners face when they rent out a home. Budget for this.
Tenant-Caused Damage in Rental Homes
Damage is different, and while we can easily spot it because of our years of experience managing properties, a lot of independent landlords and self-managing property owners sometimes struggle with separating tenant damage from regular wear and tear.
Damage is often the result of abuse or neglect. It can occur when a part of your property is misused. Here are some of the examples we most commonly see of tenant damage:
- Large holes in walls. While scuffing and scratching may be normal wear and tear, gaping holes are evidence of damage.
- Carpet that’s torn or stained. Most owners will find damage on the floors thanks to pet accidents, spills, and major stains. While some wear and tear on the carpet should be expected, major problems that ruin good floors are different. Whether it’s a carpet that’s torn up from a pet or a hard-surface floor that has permanent marker on it thanks to a toddler, owners can hold tenants accountable for this type of damage.
- Broken windows and appliances. Cracked or shattered window panes are certainly damage. A window screen that’s torn to shreds is damaged. When the dishwasher is broken because someone was jumping on the door while it was open, that’s damage.
When it comes to damage, use the tenant’s deposit to pay for repairs. Make sure it’s easy to show that the carpet was not shredded when they moved in and the large hole in the wall did not exist before the tenancy.
Documenting Damage
We’ve talked about the importance of documenting property condition with the move-in and move-out inspection reports. When a property owner decides to make a deduction from the tenant’s security deposit because of damage left behind, make sure that it’s easy to itemize this in the return of any remaining deposit. Send a list that shows what was deducted from the deposit and why. Include invoices and receipts so it’s clear that only the repair costs are being charged.
This can be a stressful decision for rental property owners to make. Is it wear and tear or is it damage? Do you deduct from the security deposit? If so, is there enough evidence to support that deduction?
These are questions that a property management partner can answer. We’d be happy to take a look at your specific circumstance and make our best recommendation.
If you have any questions about what you’ve read or you’d like to talk more about the value of professional management, please contact us at New Bridge Management. We serve Modesto, Turlock, Merced, Stockton, and the surrounding Stanislaus, Merced, and San Joaquin Counties.
