Fair Wear and Tear vs. Property Damage

It might seem like we’re mincing words, but the difference between “fair wear and tear” and “damage” can actually have a big impact on your pocketbook — as well as the state of your rental property.

Which will it be in your case? Read on to understand the difference.

What is fair wear and tear?

Properties depreciate — plain and simple. And when someone lives in a property, it’s expected that the home will decline slightly due to use.

The carpets will get worn down, the paint will fade, and grout will get dirty with foot traffic. This is called wear and tear, or sometimes reasonable wear and tear or normal wear and tear, depending on your state.

Regardless of what term you use, you can’t expect your tenants to foot the bill for fixing it. It’s a largely expected result of someone living in the home, and outside of following basic standards of cleanliness, there’s nothing tenants can really do to prevent it or stop it from happening.

Examples of reasonable wear and tear

  • Faded paint or peeling wallpaper
  • Slightly faded or dirty carpet
  • Scuffs on wood flooring or small cracks in tile
  • Dirty grout or caulking
  • Small nail holes or scrapes on the wall
  • Sticky doors and windows
  • Faded metal fixtures, shower rods, etc.
  • Worn enamel on toilets, sinks, and tubs
  • Loose door handles

Who pays for wear and tear?

The landlord is responsible for covering the costs of any wear and tear on the property. And in cases of longer-term tenants, landlords may actually need to pay for more wear and tear than usual.

What is property damage?

Unlike wear and tear, property damage isn’t an expected outcome of renting a space to tenants. It’s above and beyond general depreciation of a property, and it’s often the result of poor maintenance or cleaning habits, neglect, or physical abuse of the home. Pets and children often cause property damage unintentionally.

Examples of property damage

  • Stained or burned carpet (something steam cleaning can’t get rid of)
  • Holes in carpeting or large swathes of missing wallpaper
  • Broken windows, mirrors, or fixtures
  • Holes in walls or doors
  • Clogged pipes and drains due to lack of cleaning
  • Doors or cabinets off their hinges
  • Missing tiles
  • Broken appliances
  • Broken blinds
  • Pest infestations
  • Damage done by pets (urine smells and stains, scratched doors/walls, etc.)

Who pays for property damage?

Tenants are responsible for covering the costs of property damage that occurs during their tenure. You as the landlord can take the money out of their security deposit or, if the damage goes beyond the amount of the deposit, send them a bill for the added cost. (Hopefully, it doesn’t get to this point, though, or you may find yourself in small claims court trying to recoup those funds.)

  • The state of the property/damaged item before it was damaged. How old was it? How clean was it? How much life did it still have in it? If the tenant damaged carpet that had already been in the home for 15 years, you can’t very well justify charging them for brand new, premium-grade replacement carpet.
  • How long the tenant was in the home. A little damage after 10 years in the home isn’t the same as it is for a tenant who’s been there for only 18 months. The home is obviously going to look different if a tenant has been in there for the long haul — and that’s to be expected.

You should only charge the tenant to replace what life the item had left in it. Let’s say, for example, the tenant cracked a shower door. The door was brand new when they moved in, and they’ve lived there 10 years. According to the National Association of Home Builders, shower doors should only last about 20 years max. By these standards, you would only charge the tenant for about half the price of a new door, since half its lifespan has already passed.

The importance of a move-in inspection

Tenants aren’t going to just freely admit they broke something and then cough up hundreds of dollars to pay for it. In order to prove there was damage done to the property (and justify dipping into that security deposit), you’ll need detailed inspections on both ends of the lease term.

Before the tenant moves in, use this move-in checklist and go through the property room by room. Take photos of each space and note any signs of wear and tear or damage that already exist. Ask the tenant to do the same upon move-in, and have them fill out this template with all of their notes and findings. They should return it to you within a few days of moving into the property.

How to prevent undue wear, tear, and damage

As with anything, prevention is the best policy here. And while you’re not the one living in the home, there are some things you can do to keep undue property damage at bay.

For one, stay visible. Keep in touch with your tenants and make sure they know to alert you if anything goes awry in the home — even something minor. Something small like a clogged drain can easily lead to deeper damage later on, so open and honest communication is critical.

You should also have a stringent tenant screening process in place and, once a renter is found, clearly stipulate in the lease which maintenance tasks they’re responsible for. Do they need to trim the hedges and tree branches away from the home? Are they required to steam-clean the carpets once per year and clear out the air vents every month? Be specific.

Finally, never re-up a lease without seeing the property first. The longer it’s been since you’ve seen the home, the more damage there could be, so always do a quick walk-through before signing on that dotted line.

Fair wear and tear is expected; property damage is not. Want to make sure you can collect on that property damage should it occur? Have a comprehensive inspection process in place, and always photograph the property before and after a tenant occupies the space for proof. A detailed lease can also protect you (and your property), as can a healthy security deposit, required up front before move in.

Source: fool.com