If you own rental property in California, you need to comply with special rules and procedures for vacating tenants.  California landlords must provide their tenants with written notice that they’re entitled to request and be present for an initial pre-move inspection.  A vacating tenant can decline, but if he accepts that the rental property owner or manager needs to provide him with feedback on what cleaning and repairs, if any need to be addressed to receive his security deposit back in full.  [AOA members may download form #135 – the AB2330 Walk-through Process instructions and necessary forms from www.aoausa.com.]

Security deposit disputes are the number one problem in landlord-tenant relationships.  Although the proper use of the Move-In/Move-Out Checklist eliminates many of these disputes, the definition of ordinary wear and tear is one of life’s greatest mysteries.

Many owners see a tenant’s security deposit as a source of additional income that is theirs for the taking.  However, as a business practice, returning the security deposit in full is actually much better for the owner.

You can minimize arguments with the former tenants and avoid small claims courts by making only fair and reasonable deductions and providing the security deposit accounting and any refund within the legally required time limits.  [Within 21 days of the actual move-out date in California.]

Although state laws vary, typically the only lawful deductions from a tenant’s security deposit are for cleaning, damages beyond ordinary wear and tear, keys and unpaid rent.  Therefore, the actual out-of-pocket costs to renovate the rental unit for the next tenant are greater than the legally allowed deduction because you must pay for all damage that falls within the scope of ordinary wear and tear.  Be careful not to charge excessive deductions to try covering these expenses or you may fight a losing battle in small claims court.

Tenants often request the chance to do some more cleaning or make repairs if you indicate that deductions will be made from their security deposit.  If you feel that they are capable of the work and can do it quickly, you may want to give them a second chance at cleaning or simple repairs as is now legally required in California.  However, we wary of tenant repairs that can cost you more to correct later or that create liability issues. When it comes to the majority of repairs, you’re better off refusing tenants’ requests to fix them themselves.  

Defining Ordinary Wear and Tear

Legally, you’re entitled to charge your tenant for damages beyond ordinary wear and tear.  But virtually, all disputes over security deposits revolve around this elusive definition. It’s your job to be able to tell the difference between ordinary wear and tear and more serious damage that you can legally deduct from your tenant’s security deposit.

The standard definition of ordinary wear and tear in most states is deterioration or damage to the property expected to occur from normal usage.  The problem is then is what’s considered to be normal usage.  Judicial decisions vary from court to court. If you ask 100 small claims court judges or commissioners, you’ll likely receive 100 different interpretations of this definition.

The bottom line is there are no hard and fast rules on what constitutes ordinary wear and tear and what the tenant can legally be charged.  The below chart will give you some ideas for comparison to help you determine what’s ordinary wear and tear and what goes beyond ordinary into damage that you can charge for.

Ordinary Wear and Tear versus Damage
   
Ordinary Wear and Tear Damage Beyond
(Landlord’s Responsibility) (Tenant’s Responsibility)
   
Smudges on walls near light fixtures Crayon marks on walls or ceilings
Minor mark on walls or doors Large marks or holes in walls or doors
A few small tack or nail holes Numerous nail holes that require patching or painting
Faded, peeling or cracked paint Completely dirty or scuffed walls
Carpet worn thin from normal use Carpet stained by bleach or dye
Carpet with moderate dirt or spots Carpet ripped or with pet urine stains
Moderately dirty mini -blinds Bent or missing mini-blinds
Doors sticky from humidity Broken hinges or door frames

Pictures and the Security Deposit Itemization Form

Every rental property owner and manager can recall claims from former tenants protesting security deposit deductions because they “left the property cleaner than it was when they moved in.” You need evidence to back up your claim in case a tenant disputes the damage.  Cell phone photos or videos of the damage can be effective tools to resolve disputes with tenants or prove your position in court. In fact, many courts now have video monitors that you can use to show the judge or jury your evidence. Just be sure you have possession of the unit or have given proper legal notice before entering it to videotape.  Bust out that digital camera or video recorder and follow these guidelines when listing charges on your Security Deposit Itemization form.  [AOA Form 133.

  • Indicate the specific item that’s been damaged.  List all damaged flooring, window coverings, fixtures, appliances or furniture separately.
  • Indicate the specific location of the damaged item.  Note the room and which wall, ceiling or corner of the room the damaged item is located in.  Use compass directions, if possible.
  • Note the type and extent of the damage.  Be sure to describe the damage in detail by using the appropriate adjectives like, filthy, substantial, excessive, minor, scratched, stained, soiled, ripped, cracked, broken, inoperative, missing, burned or chipped.
  • Note the type and extent of repair done.  Describe the repair by using words such as spackle, patch, paint, steam clean, deodorize or refinish.  Indicate if an item is so damaged that it has to be replaced and if so, why. Indicating the item’s age is helpful especially if it was new when the tenant first occupied the rental unit and its life span was supposed to exceed the length of stay of the tenancy.
  • Indicate the cost of the repair or replacement. List exactly how much you spent or plan to spend based on a third-party estimate. The law requires you to include all copies of receipts/invoices [for charges over $125.00.]

Making out the Check

Roommates or married couples in the midst of a separation or divorce may fight over the security deposit.  Legally, the security deposit belongs equally to all tenants who signed the rental contract, unless otherwise agreed in writing.  If you have a court order or a written agreement or instructions signed by all the tenants, you should always handle the deposit as directed.  If not, plan to follow these steps for paying out the security deposit in multi-tenant situations.

  • Make your security deposit refund check payable jointly to all the adult tenants.
  • Prepare a mailing that includes the security deposit refund check for one of the tenants with a copy of the check to the others.  Leave it up to the tenants to handle the check’s endorsement.
  • Mail copies of your security deposit itemization form to each of the tenants at their respective forwarding addresses.  [If you do not have a forwarding address, mail it to their last known address, which is the address of the unit.]

Mailing the Security Deposit Itemization Form

[California law requires you mail the itemization form and any invoices/receipts within 21 days from the actual day of move out], however, make sure you don’t wait until the last minute because the consequences are severe, including forfeiting your rights to any deductions and punitive damages. Send the security deposit accounting and refund, if any, as soon as you’re sure of the final charges.

If you won’t know the final charges and deductions before the deadline for the accounting and/or return of the security deposit balance, then you should send the tenant a written itemized accounting of the charges you do know and indicate that you’re waiting for additional information.  Be sure to include an estimated time that you expect to have the final charges and then send the final accounting and any remaining funds as soon as possible.  

Don’t withhold the entire security deposit if you know the undetermined items are likely to be much less than the balance of the security deposit.  In those instances, conservatively estimate the potential remaining charges and refund the balance of funds along with your explanation letter, by the deadline.  Most judges will consider this move a good faith effort and won’t penalize you if the matter ultimately ends up in court.

You can send the deposit accounting and check via certified mail, however it’s much more cost effective to go to the post office and ask for a certificate of mailing which records the date you sent the check and doesn’t require the recipient’s signature for delivery.

If your security deposit itemization form and refund check are returned undeliverable, be sure to save the returned envelope in case the former tenant claims you never sent the legally required accounting.

Robert Griswold is a hands-on property manager with more than 30 years of experience, having managed more than 800 properties representing more than 45,000 rentals.  He owns and runs Griswold Real Estate Management, Inc. with offices in southern California and southern Nevada. His book, Property Management for Dummies, published by John A. Wiley & Sons, is available at LandlordBooks.com.  For more information, visit http://www.griswoldremgmt.com.