How to Exempt Ordinary Wear and Tear on Your Rental Property - dummies

How to Exempt Ordinary Wear and Tear on Your Rental Property

By Robert S. Griswold, Laurence Harmon

Rental units, indeed all living spaces, gradually wear out from human use. Carpeting becomes worn, floors get scuffed, paint fades, wallpaper peels, metal rusts, and wood gets warped. This kind of natural deterioration falls within the definition of ordinary wear and tear: deterioration that occurs over time through normal usage, not as a result of negligence, carelessness, or abuse.

The difference between ordinary wear and tear and damage has puzzled landlords and infuriated residents for decades. Here’s some insight into the differences between damage and ordinary wear and tear and explain how to use move-in and move-out checklists to assess damages.

Distinguishing damage from ordinary wear and tear

Among other things, security deposits allow the landlord to recover costs of physical damages to the premises caused by the resident or the resident’s family or guests. To help you identify damage and exclude ordinary wear and tear.

Ordinary Wear and Tear (Landlord’s Responsibility) Damage or Excessive Filth (Resident’s
Smudges on walls, near light switches Crayon marks on walls or ceilings
Minor marks on walls or doors Large marks on or holes in walls or doors
A few small tack or nail holes Numerous nail holes that require patching and/or painting
Faded, peeling, or cracked paint Completely dirty or scuffed painted walls
Carpet worn thin from normal use Carpet ripped or pulled up
Carpet with moderate dirt or spots Carpet stained by spills or pets
Carpet or curtains faded by the sun Carpet or curtains with cigarette burns
Moderately dirty miniblinds Bent or missing miniblinds
Doors sticking from humidity Broken hinges or doorframes
Drywall cracks from settling Holes punched in walls or through doors
Peeling wallpaper Wallpaper torn or cut
Scuffed flooring Scratched or gouged flooring
Water stains in shower enclosure Cracked shower enclosure
Loose railing Railing missing or torn away from wall
Dirty screens and windows Missing windows or screens, torn screens, or broken

Assessing damage with move-in and move-out checklists

You can easily determine the difference between the condition of a rental unit before and after residents lived in it by completing a move-in and a move-out checklist. A key benefit of such checklists is that they clearly illustrate on paper any damages that the resident is responsible for, which helps avert future security deposit disputes.

The move-in checklist establishes the baseline for the comparison at move-out. Is the apartment clean? Do the appliances work? Is the kitchen spotless? How about the bathroom, the tub, shower, and sink? Are the closet doors on-track and operating correctly? What about any unrepaired previous damages, such as the condition of the hardwood flooring, the on-again/off-again washing machine, or the carpeting?

The move-out checklist records the condition of the same items immediately after the residents move out. With the two lists in hand, you’re ready to identify damages, which the resident pays for, and ordinary wear-and-tear, which is on your tab.

Complete the move-in and move-out checklists with the resident, so you can resolve any disagreements prior to repairs and cleaning. Take before and after photographs, and have the resident sign off on both the move-in and move-out checklist.

If disputes arise later over the portion of the security deposit that’s returned to the resident, these checklists, along with an itemized statement and receipts for any repairs and cleaning, should be sufficient to convince the resident that the charges are reasonable.

You’re usually not allowed to charge the total replacement cost; courts typically require that landlords account for depreciation of items, such as carpets, countertops, doors, and so forth. For example, suppose the rental unit has carpeting with a 15-year rating (it’s supposed to last for 15 years). The carpet was installed five years before the current resident moved in, and the current resident lived in the unit for three years.

The resident’s cat shredded the carpet in several areas, and it needs to be replaced. You can’t charge the resident for the full cost of the replacement carpeting. You need to figure that you have about 50 percent of the carpet’s life expectancy, so charge the resident 50 percent the cost of the new carpeting.