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The average lifespan of a rental property is about 7 years, but with the right steps, it can be extended to 10. With that in mind, this guide outlines what you should do before renting out your properties and how to maintain them.
Damage that happens as a result of aging in an investment property is known as normal wear and tear. It is considered natural depreciation and is usually caused by a renter residing in the property. It isn’t the result of property negligence or abuse.
Damage vs. Normal Wear and Tear
Normal wear and tear is not the same as harm committed by a renter. Over time, normal wear and tear will occur. Tenant damage is not caused by aging, but rather by neglect, carelessness, or abuse. The landlord is responsible for normal wear and tear, but not for tenant damage.
Normal Wear and Tear vs. Damage: What’s the Difference?
A landlord checklist may assist you in determining what is typical wear and tear vs damage. Let’s look at the two most prevalent instances, regular wear and tear vs damaged carpet and normal wear and tear vs damaged paint, to better grasp the difference between the two (and when you may reduce the tenant’s deposit).
Damaged Carpet vs. Normal Wear and Tear
If the carpet has been in place for more than 5 years, the landlord is responsible for replacing it since that is the carpet’s usable life. If the carpet has little sun damage or evidence of wear, this is considered natural wear and tear, and the landlord cannot be held liable.
It is the landlord’s obligation to ensure that the property is safe. If the carpet has worn out over time and has become a trip hazard, it should be replaced promptly and the landlord should pay for it. However, if the carpet is damaged or frayed excessively, it is the tenant’s responsibility, and the cost of replacing it might be removed from the security deposit.
Furthermore, if a pet or spilled food, alcohol, dirt, or other items stain the carpet, it is deemed tenant-caused damage and may be taken from the security deposit. State rules on security deposits vary, but in general, the landlord must get a repair price from a licensed contractor and provide the renter an itemized account of the damage along with a check for the balance of the security deposit.
Damaged Paint vs. Normal Wear and Tear
Normal wear and tear include peeling paint, sun damage, and a few scuffs, which the landlord should address between renters. Because no one touches the ceiling all the time, ceiling paint generally lasts longer. When a leak develops, or as required, the ceiling paint should be touched up.
It is considered damage caused by a renter if the paint includes holes, excessive scuff marks, or other markings such as sketches or scribbles. The cost of repairing the damage and repainting the walls will be taken from the tenant’s security deposit in this scenario. Get a quotation from a qualified contractor and provide the renter an itemized description of the damage along with a payment for the remainder of their security deposit.
“The simplest method to distinguish between wear and tear and tenant-induced damage is to consider wear and tear to be any damage produced by natural causes or everyday usage.” Damage created by a tenant should be considered the damage that requires more than normal maintenance to fix. Obviously, this excludes items like a burst pipe or damage to the property that would occur regardless of who the renter was.”
— Timothy Czekaj, Czekaj Dusharm LLC, Real Estate Attorney
There’s a lot to deal with as a landlord, including tenant-caused damage and other difficulties.
How to Take a Security Deposit and Deduct Expenses
At the start of a tenant’s lease, the landlord collects a security deposit. These security deposits safeguard the landlord from having to cover costs that aren’t covered by natural wear and tear. Landlords are permitted to deduct from security deposits certain expenditures incurred by tenants.
The regulations governing security deposits differ from state to state. Landlords must normally repay a tenant’s security deposit and submit them any accounting documents within 21 days of the tenant’s departure. This means you must get a contractor’s quote to repair tenant-caused damage within 21 days, deduct it from the security deposit, and submit the itemized deductions along with a check for the difference between the deposit and the cost of the damage to the renters.
An itemized deduction list may be used in lieu of a contractor’s bid in most states, but it’s preferable to be cautious and hire a contractor. Unpaid utilities and past-due rent are examples of other deductions, but you simply need evidence of the bill, not a contractor’s estimate. The tenant may sue the landlord to small claims court if the landlord does not submit the entire list of itemized deductions to the tenants within the specified time limit.
The landlord may take the renter to small claims court if the security deposit does not cover all of the harm caused by the tenant. This, however, maybe both be expensive and time-consuming. If the damage exceeds the small claims court standards, the landlord engages an attorney and files a municipal court lawsuit against the renter. This may be much more expensive and time-consuming, and enforcing a judgment against the renter may be challenging.
For a better understanding of security deposits and deductions, consider the following example:
Deductions from a Security Deposit as an Example
“In most places, the tenants are given the benefit of the doubt, and it is up to the landlord to show that the damage was done on purpose and isn’t simply natural wear and use. Because more time has passed for typical wear and tear to occur, the longer a renter stays in a property, the more leeway they have.
As a landlord, you must be confident in your ability to persuade a court that a deduction from the tenant’s security deposit is justified. This damage is confined to intentional or irresponsible activities, such as holes in the wall, pet damage, maltreatment, and harm caused by criminal conduct.”
— Sotereas Pantazes, EFynch Landlord & Founder
How to Avoid Tenant-Landlord Conflicts
Legal action may be taken in the event of a dispute over regular wear and tear or damage committed by a renter. To prevent this, all tenant expectations should be written down and incorporated in the lease so that the renter is informed. These expectations include topics like who is responsible for mowing the lawn, snow removal, and common area upkeep.
“One of the most important safeguards a landlord can take is to do a thorough move-in inspection. During the tenure, the landlord should conduct (at least) yearly inspections to determine the rate of wear and tear, as well as any tenant damages. The lease and/or lease addendums should include security deposit guidelines. The renter should have a clear understanding of what is expected of them and what condition the landlord wants the property to be in when they move out.”
RUPCO’s Director of Property Management, Jake Michels
If the tenant breaks any of the lease conditions, such as failing to pay rent or causing damage to the property, an eviction may be necessary. Paying the renter to leave the property is an alternative to evictions, which may be time-consuming and expensive. This is known as “cash for keys.” The renter must vacate the premises in a short length of time and will be compensated for returning their keys and not causing additional damage to the property.
If the tenant contests the property damage allegations, the landlord should be prepared to go to court. A judge may request verification of communication from the landlord in court, including how the tenant was advised of the security deposit withdrawals. This is why you should submit your contractor bids, itemized deductions, and other documents through certified mail so that they can be monitored.
A copy of the lease and documentation of where the security deposit was stored may also be requested by the court. Keep security deposits distinct from other property-related costs by using a separate company bank account.
In the following part, we’ll walk you through four procedures for documenting typical wear and tear vs. damage. This will come in handy if you end up in court for tenant damage.
How to Keep Track of Wear and Tear vs. Damage
It’s crucial to do a move-in and move-out walk-through with each renter when documenting wear and tear vs. damage. Make a list of any differences. This will assist you in determining what you are accountable for paying and repairing as soon as possible. You’ll also know what the renter is responsible for, which you may take from their security deposit.
The four phases of documenting wear and tear vs. damage are as follows:
Step 1: Create a Landlord-Tenant Checklist.
Print out our landlord-tenant move-in checklist and walk the renter through each room of the house with the checklist in hand. Take photos of each place and document the present state. Remember to include all appliances as well as the property’s external surroundings.
Step 2: Perform routine maintenance
A landlord should check the property on a regular basis. This will keep them informed about the existing state of the property as well as what has to be corrected right away. Routine inspections demonstrate to the renter that you care about the property and expect them to care as well. During each inspection, you’ll be able to keep track of wear and tear as well as damage caused by tenants.
Step 3: Address Tenant Requests
Responding to tenant requests demonstrates to the tenant that maintenance is completed on time, and so rent should be paid on time as well. Responding to tenant queries promptly also aids you in staying on top of any issues. Fixing a problem as soon as it occurs is less costly than waiting for it to worsen. It will also assist you in preventing tenant-caused damage before it occurs.
Step 4: Completing the Landlord-Tenant Move Out Checklist
It’s time to execute a move-out checklist when the renter has entirely moved out. This checklist will contain comments on the present state of the property. You’ll walk around each room, noting any damage and photographing each location.
Look through the move-in checklist while you fill out this one to see what condition the property was in before the renter moved in. This will help you figure out who is to blame for the harm. If the damage was caused by the renter, the cost of repair might be taken from the security deposit.
Conclusion
You now understand the meaning of regular wear and tear, as well as the distinction between normal wear and tear and damage caused by renters. Normal wear and tear are crucial to a landlord since it impacts the landlord-tenant relationship and, if not properly recorded, may cost the landlord money.
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