Tenant Move Out Procedures and Security Deposits

Occasionally, someone will contact me saying their tenant just moved out and they want to know what charges they can deduct from the tenant’s deposit.   My first question to them is “Did you offer them an initial inspection?”

In California, you are required by law to offer the tenant an “initial inspection” during the last two weeks of their tenancy to give them the opportunity to repair any items you find so that they know what is expected of them when they move out.  Your notice to terminate the tenancy, or confirmation of the tenant’s notice to vacate, should include the following statement:

“You have the right, after the giving of a notice to terminate your tenancy or before the end of the lease term, but prior to surrendering possession of the premises, to (a) request an initial inspection of the premises by your landlord or landlord’s agent, prior to the final inspection that will occur after you have vacated the premises, and (b) be present at the initial inspection. The purpose of the initial inspection is to allow you an opportunity to remedy identified deficiencies in the condition of the premises, in a manner consistent with the rental agreement or lease, in order to avoid deductions from the security deposit resulting from the condition of the premises after you have vacated.”

The tenant has the option to request the inspection or to voluntarily waive it.  If the tenant requests the inspection, the landlord must give 48 hours written notice of the date and time of inspection.  The tenant can choose to waive the 48 hour requirement.

At the time of the inspection, the landlord is obligated to give the tenant an itemized statement of repairs or cleaning that could result in a deduction from the security deposit.

The following charges may be deducted from the security deposit:

  • Outstanding rent, fees and late charges
  • The cost to clean the unit to the level of cleanliness at the time the tenant moved in
  • The cost to repair damage, exclusive of normal wear and tear, caused by the tenant or tenant’s guest
  • The cost to restore or replace personal property, such as furniture or furnishings, exclusive of normal wear and tear

Normal wear and tear is where most people get confused.  To determine damage verses normal wear and tearcertain factors must be considered.

  • What was the condition when the tenant moved in
  • What was the age of the component when the tenant moved in
  • What was the useful life of the component when the tenant moved in

Performing a detailed inspection noting the condition of everything in the property prior to a tenant moving in is imperative.   Aside from the written inspection, photos should be taken throughout.  You never know what you might be defending later on, so you cannot take too many photos.

If the carpet was six years old when the tenant moved in and the tenant lived in the property for four years, most likely any damage to the carpet would be considered normal wear and tear based on the “useful life” rule.  However, if the carpet was new when the tenant moved in and was damaged beyond repair after four years of occupancy, the tenant could be charged for the remaining life.

  • Example: Based on a new carpet with an expected life of eight years where the tenant vacates after four years and the carpet is damaged beyond repair.  This leaves, what should have been,four years of “useful life” remaining.  If the replacement cost is $1,500, 50% of the cost ($750) could be charged to the tenant because the owner only got four out of eight years of use.

The same is true for other flooring, paint and window coverings.  Have a written policy as to what you believe to be the expected useful life of each component.  Some owners will use a seven year life expectancy for carpet while others may use a ten year life.  The key is to have a policy in writing that is fair and reasonable.

The California Department of Consumer Affairs provides a guide to help determine deductions for both owners and tenants to avoid unnecessary disputes.   A copy of the guide can be found on our Rental Housing Network website or at http://www.dca.ca.gov/publications/landlordbook/sec-deposit.shtml

Rental Housing Network is a resource center for owners, property managers and agents to help them better manage their rental properties.  For more information on Rental Housing Network, visit www.rentalhousingnetwork.com

Author: admin

Sandy Adams President, Co-Founder Rental Housing Network, Inc. Broker/Owner, Sandy Adams Properties Sandy Adams is President and Co-Founder of Rental Housing Network, Inc and Owner of Sandy Adams Properties. She started her real estate career in 1978. After obtaining her broker’s license in 1985, she began specializing in residential property management. Sandy has served on numerous boards and committees for NARPM (National Association of Residential Property Managers) and CAA (California Apartment Association), as well as serving two full terms on the San Jose Advisory Commission on Rents. She has also taught several landlord workshops for small investment groups and Realtors.

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