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Common Disagreements with Rental Deposit

One of the most common disagreements between tenants and landlords is usually over the refund of the tenant’s security deposit at the time when the tenant moves out of the rental unit. The law is specific on the procedures that landlords should follow whenever they decide to refund, use, or account for the tenant’s security deposits.

There are four purposes that the law allows landlords to use the tenant’s security deposit for. The landlord can apply the tenant’s deposit to cover for any unpaid rent; or for cleaning the rental unit once the tenant vacates; or for repair of any damages; or, sometimes, and if the rental agreement permits it, for the restoration of furniture, furnishings, or any other personal property items.

The law is clear that as a landlord you cannot withhold from the security deposit unreasonably higher amounts that are not necessary for the intended purposes. You cannot use the security to repair defects that existed in the rental unit before the tenant moved in. Also, the security deposit cannot be used to repair damages that are as a result of normal wear and tear. Lastly, you cannot use the tenant’s security deposit to clean a rental unit that is tidy and clean as when the tenant first moved in.

Therefore, as a landlord you are supposed to send a full refund of the security deposit to your client within 21 days after they vacate unless there are deductions made to cover any of the four purposes outlined above. If you decide to deduct any amount of money from the security deposit thus, you should email, mail, or personally deliver a breakdown of all the deductions and the reasons for the deductions.

It is also good to send copies of receipts of any charges you incurred while repairing or cleaning the rental unit. While doing that, you should follow some rules. For example, if you as the landlord and/or your employees did the work, then draw an itemized statement describing the work performed, hours spent, and how much is charged per hour.

If a different person or business did the work, then send the tenant the copies of the person’s invoice or receipt as well as an address, business name, and telephone number. If you are going to deduct for any materials or supplies, then you ought to provide a duplicate of the receipt to the tenant.

But there are times when repair cannot be completed within 21 days and that means a correct estimate of the cost of the repairs, cleaning, or restoration of fixtures cannot be arrived at. In such a case the landlord can draw a good faith estimate of charges and send the same to the tenant. But within 14 days after completing the repairs, as the landlord you are required to mail or deliver an accurately itemized statement, receipts and invoices as well as any refunds that the tenant is entitled to.

A tenant has two options if you as a landlord fails to honor the 21-day rule. The first option is for the tenant to call or write to you requesting a refund of the entire security deposit. If there is a disagreement on whether you should return any security deposit at all and how much you can return, both of you can agree to have the dispute mediated. If the tenant presents convincing reasons why you should return the entire deposit, try to get into a reasonable compromise with that tenant.

But a disagreement on the security deposit can be averted from the beginning. It is noteworthy that most disputes over the security deposits happen because the tenant and landlord don’t document any pre-existing damage before a new tenant moves in. It is important to test all appliances and take photos of any damage in the house beforehand so that you are sure of the state of repair or disrepair of the house before a tenant occupies it.

Ideally, the landlord should not withhold money to cover for normal wear and tear, however, if the tenant does damage the unit or an appliance within the rental unit, then they are bound to forfeit some of their security deposit to cover for that damage.

All in all, it is good to document everything so that you are sure if the tenant really damaged anything.