Security Deposits – When is the landlord entitled to keep the security deposit?

In most states you must return the security deposit within 30 days or send a certified letter to the tenant stating why you are keeping it.  Failure to send a certified letter within 30 days could entitle the tenant to the full security deposit even if the tenant moved out owing rent and damaged your property. The Landlord is entitled to use the security deposit for any rent owed and for damages.

How do you determine damages?  One method of calculating the amount of damages for replacing an item such as carpet is to prorate the total cost of replacement so that the tenant pays for the remaining useful life of the item.  For example, suppose a tenant has damaged beyond repair a 2 year old carpet that had a life expectancy of 6 years, and the cost to replace the carpet with similar carpet is $1200.00.  Each year of life (use) is worth $200.00; therefore, the landlord would charge the tenant $800.00 for the 4 years worth of life that would have remained if the tenant had not damaged the carpet.  Examples of damages would include holes in the walls, burn marks on kitchen counter tops, missing blinds or curtains.

The tenant is required to leave the rental in as good a condition as when they moved in, other than normal wear and tear.  If you expect your tenant to leave the rental “move- in” clean, i.e. oven and stove top burners cleaned, refrigerator spotless, bathrooms spotless, etc., then this is the condition the rental should be in when the tenant moves in. You may want to add to your lease a phrase worded something like, “tenant is required to leave the property in move-in condition and in as good a state of repair as the property was when property was turned over to tenant.  Normal use without evident mars will not constitute violation.”  What is considered normal wear and tear? Examples of normal wear and tear would be faded paint, the natural wearing down of carpet, and the natural wearing down of caulking in bathrooms.

Make sure you do a walk through with your tenant before they move in and together write down any “damages” that are in the rental. A check list may come in handy.  Examples may be a stain on the carpet, or small cuts in the linoleum.  Inform the tenant that they must notify you in writing of any damages you may have missed during the walk through within a certain time period (24 to 48 hours is common), or they will be responsible.