Landlords screen tenants to find renters who will care for their units. But no matter how carefully landlords select tenants, property damage can still occur. So, how should you deal with property damage and calculate what a tenant owes?
Local laws vary on when and how much landlords can charge tenants for property damage, so be aware of what restrictions apply in your area. In every case, damage charges must be reasonable and documented in writing. But preparing for property damage starts long before the final calculations. At every stage of the rental agreement, there are ways to protect yourself and your property.
Start of tenancy: Handling property damage begins before the tenant signs the lease. Your rental agreement should cover how you’ll handle security deposits and what maintenance is the tenant’s responsibility. It should also outline when and how tenants should turn in repair requests and how you will calculate damage costs.
When the renter moves in, perform a walkthrough inspection and document the unit’s condition with photos and a checklist to ensure you’re on the same page.
During tenancy: Respond promptly to maintenance requests by the tenant. Maintaining the property shows that you care, and helps inspire tenants to care for the home as well. Plus, delayed repairs could shift the blame for damages to you. Performing routine inspections can also identify early-stage damage so you can repair it before it worsens.
When the tenancy ends: Once your tenant moves out, perform another walkthrough of the property soon after they vacate. Use the same checklist used at move-in to pinpoint changes. Use this opportunity to highlight any damage you’ll need to charge for. But note that you can charge tenants only for actual damage to the property, not for normal wear and tear like loose doorknobs or faded paint.
If you find damage caused by your renter, subtract the cost from their security deposit. The deducted amount should consider numerous factors:
Replacement versus repair. If an item is repairable, then the tenant should be charged only for the repair cost. If the item is not repairable though, then charging for the cost of replacement is usually appropriate.
Age of the item. In most cases, the age of the damaged item should be factored into the charge. It’s fair to charge more for damage to a brand-new item than an older appliance or fixture. On the other hand, charging the full replacement cost of damaged carpeting that is already 10 years old is not.
Difficulty of repair. A repair that requires a lot of time and skill will merit a higher charge than a quick and easy fix. Charging the actual cost of the repair is best, assuming its a fair price for the scope of work needed.
Any receipts, contractor bids, or other cost documentation should be kept for your records. This documentation will support the itemized list of damages and any charges against the tenant’s deposit.
Following local laws, charging reasonable fees, and maintaining good communication will ensure your renter covers damage costs. Plus, being prepared gives you legal clout if problems arise. Collecting fair compensation for damages is an important part of keeping your property in good repair and maintaining a profitable rental business.
About Rentals America
Rentals America provides full-service property management for residential rental properties. Our team is completely dedicated to property management, and we’re here to help landlords navigate the rental market.
