First Time Landlord: Needs Advice on Rental Deposit Deduction

Hi Real Estate Experts,

I am a first time Landlord renting a town home. Our tenants moved out and we are supposed to be returning the rental deposit back to them. I have the following questions around it

  1. Is there a law or regulation on deadlines around returning the rental deposit. Should this be within 15 days or 30 days after the tenant leaves the premises ?

  2. I am planning to make the following deductions on rental deposit: carpet shampoo, painting of one wall, replace refrigerator handles. Am I required to provide receipts from vendors for making the fixes ?

  3. There are a few scratches and dents in the laminate flooring. How can we fix these…? see pics below. How much will it cost…?

  4. Small dent in the garage wall… Can this by fixed by a handyman…? How much would he/she charge for it…?

Thanks for all your responses…

thanks
…m

Scratches on laminate floor

Garage wall dent

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I think you have 21 days to refund the deposit, after they officially move out. You need to provide itemized (not receipts) deduction. In case tenants challenges you, in court, on deduction, you may need those receipts to prove your claim.

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This might help some…mentions that 21 days…

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First of all, you didn’t provide any details on whether you did a walk-through at the beginning of the tenancy. That is crucial since if you didn’t, it would be your word vs your tenant’s word regarding some or all of the damages. I do walk throughs where we note in the lease (using the appropriate walk-through form) what issues there are so that we all are on the same page so that there shouldn’t be any disagreement about damages later.

Oh, and with cell phones now, we all can take pictures of anything questionable and that could be included into the record quite easily on the spot.

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When did the renter start renting? Before 2009, I believe you can charge for normal wear-and-tear, but not if they started renting after 2009. In that case, you may have a hard time charging them for the floor scratches, carpet shampoo, and paint (depends on how long they stayed there).

The garage dent is clearly not normal wear and tear.

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I’m not an expert on what is ok to deduct but CA is tenant friendly so my gut is along what @Terri said. Dings in inexpensive flooring are likely wear and tear. The wall is outside normal wear and tear. I’d have a handyman repair it and charge them. I wouldn’t expect that to be very expensive.

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This is all really minor stuff…The garage dent can be fixed with Fixall and paint… $50…the floor can be repaired if you have some spare laminate. .If not charge a $100 per ding…Next time discuss these kinds of damage before signing the lease…

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@Jil @sfdragonboy @Terri @MM_HH @Elt1 Thanks a lot for your responses. This is very much appreciated.

The renters were staying in the townhome from 2013. When they moved in, the renter asked me for 10 days time to report any pre-existing damage in the house. He could not find anything. I allowed 10 days because we did not have anybody else willing to rent and the boiler-plate rental agreement had an option to specify the days. They have been good renters paying rent on time and did not ask for a lot of stuff. For example, once the lady of the house mentioned the dishwasher was not working properly, the man of the house said that the dishwasher is fine and will last for another 3 years!! The only issue I had with them was that they would not sign the new agreement after the 1-year agreement expired. They wanted to keep their options open, but paid rent on-time for 3 years!

The renters moved out over Thanksgiving weekend. I did a walk-through with them in the night and there were no lights in the house, because they had disconnected power. The renter mentioned the following: no shampooing of carpet, broken vent cover, broken refirgerator handles, lot of dirt in one wall.

I discovered the dents in the laminate flooring and the damage to the garage door very recently when I saw the place during day time.

Thanks for the suggestions about taking pictures and asking them to sign during the walk-through. I would greatly appreciate if any of you can share the rental agreement. I am looking for something that specified an increase in rent if it is month-to-month.

Thanks

…mottai

You can know the rules here

You can see those sample agreement by googling it. There are CAR forms which you are not supposed to use it if you are independent landlord. However, you can create your own based on those. You can also go to near by library and get some California Rental related books which will help you.

I highly recommend that you join one of the local/regional homeowner associations. You will learn a lot about proper procedures, new oncoming laws that you need to abide by and you can get blanks of the latest rental agreement forms to use. I am a member of both the AOA and EBRHA but probably should consider joining the SF one since it has done a lot of good for us small time owners in the Fab 7x7. The AOA is cheaper in that it offers a multi year membership. Both also send you a monthly magazine.

Regarding your situation, I hope the tenant is an agreeable chap and will reimburse you fully for whatever damages he caused. The problem I see is that you do not have any real proof that any or all of those damages weren’t there in the first place. You mention the 10 days arrangement, but did he sign anything stating that there is nothing wrong with the place? I am assuming not. So, what happens if he legitimately disagrees with say that ding in the flooring which in his mind he really thinks he didn’t do it??? Doing a thorough walk-through at move-in and signing off on it (both parties) provides a starting point or a meeting of the minds of the condition of the rental space. At move out, you do the same walk-through and make note of any changes. You can see that if the first and last walk-throughs are done, you will have less chance of of damage disagreements. Or, at least you will have the proof you need to justify any reimbursements you are deducting for. Good luck!!!

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Three years at $35k per year…I am guessing. . $350 worth of damage is peanuts. .Fugetaboutit
I could fix that damage in my sleep…Find a good handyman

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If they specifically mentioned it, they will be more amenable to paying. If you are repainting the house anyways, then don’t charge for the dirt on the wall, and specifically say that you’re not charging for the dirt, but you do want reimbursement for the dent. If you’re not painting, take them up on the dirty wall, and mention the dent anyways and see if they acknowledge it and agree to pay it too.

Deposit is an issue that can get into an ugly fight. It’s better to be a little more forgiving.

I think the smart strategy is to make sure you are not charging a rent that’s severely below market. I have changed strategy to forgive most deposit deductions. Once I made a few hundred deductions for cleaning and repairs with receipt, still the tenant went to the small claim court and I happened to be busy on that court date. So she won by default and I got a judgement which affected my Refi. That judgement is worth thousands of dollars or even hundreds of dollars to me, later I refunded everything and had the tenant to remove the judgment. I even offered extra bonus, the tenant refused my extra payment and removed the judgment, because I was super forgiving to her and agreed for her to move out earlier due to hardship.

If you offer a huge favor to them, they may appreciate your gesture slightly. But when you deduct a few hundred dollars with valid reasons, they became mad and want to fight to tooth. It is not worth it.

If you really want to make a deduction, explain to them well and make sure they are ok with it. When it’s small claim court time, try to settle.

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Good stuff, @BAGB. And I agree in general that I tend to more often than not generous about the security deposit. It would have to be something pretty bad for me to deduct anything. The potential for say a small claims dispute is not worth it for me. The obvious reason for quick and full return of the deposit would be if the tenant was willing to leave slightly early so that I get that extra time to get the old apartment ready for the next one…

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I have a tenant just move out that required thousands to clean up…He was a smoker…But since he came with building I purchased and I have no idea what it was like when he moved in if figure I am stuck…I deducted a cleaning fee of $100…But I had to repaint, new floors, new blinds, clean every non painted surface with oven cleaner…And now I have to buy an ozone generator…still smells…Smokers should not be allowed in any unit…this guy destroyed the place. .It was all brown from tar and nicotine. .Even the toilet had to be cleaned with oven cleaner.The refer still smells smoky inside…Thank god there is an extreme housing shortage in Tahoe…only one prospect complained…Took a week to clean up…Rented in one day…
The only good news, I raised the rent from $825 to $1100…

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Whenever my wife cooks something smelly or if there is just a funky smell, she will use some of that aroma oil that you use with a candle and it really does make the place smell great. It may not be able to overcome say cigarette smoke from many years but worth trying.

Right… There are renters that cause a lot of damage–could be a smoker, meth manufacturer, dog owner who let the dog scratch up the floor, cat owner who let the cats pee and vomit all over the place.

But nickel and diming over small stuff tends to piss off the renters who are conscientious and tried their best to keep the place in good shape and makes it worse for the next tenant, plus it can give you a bad rep if neighbors mention it to your next tenant.

For example, I know that the PM company charged the neighbors for 20 years of wear and tear on carpets only to have the landlords sell the house without replacing them. While that was legal because they’d moved in before 2009, I have to be honest that I’ve thought about not paying a month’s rent right before giving notice to make it so that they have to come after me for payment for damage. It’s not my goal to defraud anyone, but I’d rather they have to demand payment from me than me have to go to court to get my money back from them over frivilous or even fraudulent claims. When I moved in, I didn’t think it necessary to list every scratch and dent–that to me indicates a bad tenant if I’m soooo worried about scratches and little things–so I focussed on the big things. But now I know better.

Terri, are you moving and your landlord is deducting a big amount from your deposit?

About your neighbor, did the landlord give the tenant a below market rent? Over 20 years, the tenant could have saved 100k in lower rent. However, the tenant is mad about the deposit deduction. The landlord could just charge market rent and give a full refund of delosit. Which do you prefer?

I do not know if the property manager will keep the entire deposit, but I’m prepared for the possibility because of what happened to the neighbors.

First, whatever rent the neighbor was paying is irrelevant, in my opinion. The security deposit is not intended to make up for charging less rent. That is not its purpose. There’s no rent control here, just charge what you want, don’t try to gouge people as they move out under false pretenses.

Second, even if they were paying under-market rent, which is possible, they were also not getting anything fixed or improved on the house. Many renters see that as an even tradeoff–you rent at lower than market, and the landlord doesn’t fix anything. That goes hand in hand. You pay less, you get less, and it’s considered even. It’s not viewed as grounds to take an entire security deposit.

Initially, I was surprised that CA landlords could charge for “wear and tear” at all–that never happened in Boston. Turns out it was legal for renters who started renting before 2009 in CA but not in Boston. Later, though, I realized that the money never got used to actually replace the carpet (I toured the house when it went on the market and there was no carpet at all), and I have wondered if that was fraudulent. Can you charge for carpet cleaning if you never do it? Can you charge for carpet if you never replace it? If a PM is going to make fraudulent charges, it’s going to end up in court. Question is, would you rather they have to ask you for money, or you ask it from them?

Teri, you have given a perfect statement why landlord should maintain the property well and charge a market rent. Tenant does not appreciate the below market rent. That’s why I would rather be generous on security deposit but give appropriate rent increases. Rent is much more important than deposit. A market rent will not bring complaint, but a deposit deduction can bring a lawsuit.

If you skip last month rent, a nice landlord like me might give you a pass. A property manger will give you notices and even an eviction since it looks very bad on PM when rent is not received on time. This PM has done a poor management job by leaving rent at low level for many years, and he made large deposit deductions to anger tenant and risk the landlord for small claim court lawsuit. I would fire the PM.

Also for a tenant with your profile, you want to avoid lawsuit since a judgement or eviction will make you ineligible for mortgages. With your profile, you do not need to nickel and dime on deposit, your credit is much more important than low income tenants.