The security deposit can fuel many disputes between landlord and tenant; however, this issue can be greatly reduced with better knowledge. A security deposit protects a landlord financially, but for a tenant, the deposit is their money they are hoping to have returned to them.
This guide provides accurate information on the security deposit, such as how deductions are supposed to be made, where they should be kept, legal limitations, and more.
Navigating Security Deposit Deductions
Just like how there are legal limits set by a jurisdiction’s landlord-tenant laws on how much is a security deposit, there are also rules for how your security deposit will be deducted or returned.
It’s all about a clear understanding of responsibilities and documentation in all three phases.
Before Move-In
The “Move-In Inspection” phase is to establish a point of reference for both parties. Landlords are required to complete a comprehensive move-in inspection checklist or condition report, while tenants are required to diligently document the current condition of the rental unit.
This documentation includes photos and/or videos with a timestamp, of all rooms, as well as the tenant identifying pre-existing flaws such as scratches, stains, etc., that were present upon their initial move-in.
A detailed record from the beginning will help eliminate potential future arguments regarding damages that occurred during the tenancy. The amount of rent deposit allowed by law varies based on the jurisdiction’s landlord/tenant laws.
During Tenancy
The tenant is responsible for preserving the integrity of the property by reporting issues in a timely manner to avoid minor issues developing into costly damage. The landlord’s responsibility is to repair the property within a reasonable timeframe or make smart renovation ideas for tenant comfort and investment longevity.
It is also helpful for tenants to document their maintenance requests and communications with the landlord.
Understanding the specifics of your lease agreement is important in this regard, as your rental security deposit acts as an economic deterrent to your landlord if you fail to adhere to the terms of your lease, including avoidable damage to the property and failure to pay your rent on time.
After Move-Out
The final step is the move-out inspection, where ideally the landlord and tenant will walk through the rental property at the same time and compare it to the documents created during the initial move-in inspection.
The landlord may only make deductions for damages that are not classified as “normal wear and tear” (i.e., small nail holes), or for specific lease violations. The landlord must also create an itemized list showing each deduction with receipts for all repair work completed on the unit.
It would be helpful to have the tenant present for this walk-through so they can take photographs of the unit when they leave to serve as additional documentation of the unit’s condition.
Things to Do When Disputing Deductions
Sometimes, no matter how prepared you are, disagreements over security deposits can still happen. Here’s what to do as a tenant if you receive an itemized list containing things you feel are unfair:
1. Communicate with Your Landlord
Tenants, use an email or mailed letter to politely ask your former landlord why they are charging each of the deductions you disagree with, referencing your evidence that is in your move-in/move-out documents (those pictures you took). Refer to your applicable state or local laws regarding what constitutes “normal” wear and tear.
Tenants may request clarification and some reimbursement for their disputed charges. Landlords will have to provide documentation for each item on their itemized list of deductions, along with receipts. Most of the time, open, documented communication can resolve disputes before additional issues arise.
2. File a Formal Claim
If communicating with your property manager doesn’t work, the next move should be to take formal action against the landlord. Typically, this is done by submitting a claim in Small Claims Court (or an equivalent court) as the process is designed for tenants to represent themselves.
To pursue a claim in small claims court, you will need to gather documents to present your argument, including but not limited to:
- Copy of your lease agreement
- All photos and videos were taken during the inspection before and after vacating.
- Copy of your move-in and move-out report(s)
- All written correspondence between you and the landlord
- Written statement outlining the disputed charges
After reviewing the documentation submitted by both parties, the judge will determine whether there are legitimate damages beyond normal wear and tear and whether the landlord complied with local laws and procedures regarding timelines and documentation requirements.
Bonus: Understanding “Normal Wear and Tear” vs. “Damage”
A rental security deposit serves as a financial safeguard for landlords since it may cover costs if a tenant breaches the lease agreement. However, the vast majority of the time, when tenants are arguing with their landlord over deposits, it comes down to what the difference is between normal wear and tear versus damage.
Normal wear and tear are the typical, gradual effects of how you live with respect in your home and include:
- Small scuff marks on the walls
- Painted walls are fading over time
- Loose door handle,
- A very small area of worn-out carpet from foot traffic
Damage, as opposed to wear and tear, occurs due to careless or abusive actions such as:
- Large holes in the walls
- Broken windows
- Pet stains or scratches on walls/ floors
- Carpet torn from furniture being dragged across it
- Excessive mildew from not using the ventilation fan for circulation
As a tenant, you should not be charged for “ordinary” wear & tear. As a landlord, you can only deduct for damages that go well beyond this “ordinary”. If you’re ever unsure about whether something qualifies as wear and tear or damage, your best evidence will be your photographs/video and/or your move-in and move-out documentation (condition reports).
Conclusion
The key to a fair and reasonable deduction from a tenant’s security deposit is preparation, communication, and understanding the laws regarding security deposits.
Both the landlord and the tenant will have an opportunity to document everything before the deduction is made. The landlord will need to determine whether there are damages or normal wear and tear on the property, and follow the correct procedures for disputing any potential deductions.
This guide will serve as a framework for achieving a transparent resolution, minimizing conflict, and enabling the parties to fulfill the requirements of their lease and build a positive working relationship.
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