Ouch! A Security Deposit That Bites
A Supreme Court Justice was once asked to define “hard-core” pornography. “I can’t define it,” he claimed, “but I know it when I see it.”
Landlords don’t get off the hook as easily when it comes to distinguishing between “normal wear and tear”, and damages that they can legally deduct from the security deposit.
The stakes are too high to make a mistake: unlawful charges against a security deposit can cost a landlord three times the amount deducted, plus the tenant’s attorneys fees in many states.
Unfortunately, there is no definitive list of items that you can or cannot deduct from the security deposit, just like there is no limit to what a tenant can do to damage your unit. While some state statutes try to clarify your rights with regard to security deposit deductions–for example, Massachusetts statutes allow deductions for damages caused by pets, even these statutes leave unanswered questions.
“Normal wear and tear” are those items that are inevitable with normal use and aging – some carpet wear, some scuffing or aging of paint. Normal wear and tear will occur despite proper maintenance and cleaning. You cannot deduct for these items, even if you found a tenant who agreed to pay for them in the lease.
It does not matter how you define this term in your lease, or if you list out specific items of wear and tear and the tenant signs it. The law is still the law. If the item is wear and tear according to your state’s statutes, and the tenant complains, the judge may find that provision of your lease is illegal.
Damages that you can deduct are items that would not have occurred with time or normal use. That can include exposure to the elements, for example, like damage to the paint or carpet from leaving windows or doors open, or problems caused by excessive dirt build up. The costs of structural damage to walls, windows, and doors, or from pets, smoke, or bugs, if not caused by defects in the property, are probably deductible items.
When you do charge a tenant’s security deposit for damages, you are likely limited to the actual loss, not the replacement cost. For example, if you installed 10-year carpet, and nine years later a tenant’s dog destroyed it, it is not likely that a judge will allow you to charge the tenant for the entire cost of recarpeting the unit. You will probably need to prorate the cost of the original carpet over the past several years.
If there is one word to remember when it comes to security deposits, that word is documentation. To defend yourself against a tenant who takes you to court, make sure you come in armed with, at the very least, move-in pictures, move-out pictures and receipts for your costs.
See our feature, Are Late Fees Legal?
American Apartment Owners Association offers discounts for landlords on products and services related to your rental investment, including real estate forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.
To subscribe to our blog, click here.
Accessibility