How To Manage Security Deposit Itemization For Rental Properties

How many days does the landlord have to itemize their tenant’s security deposit? Does the landlord need to itemize an evicted tenant’s security deposit? Are there any instances in which the landlord doesn’t need to itemize a tenant’s security deposit?

These are common questions we receive from the “Do It Yourself” landlords and the answer is always one-in-the same – YES!

 

Know the Itemization Process as a Property Manager

Always provide your previous tenant an itemization of their security deposit within 30-days of receiving their forwarding address! In normal instances, the tenant formally surrenders possession of the property when they deliver the keys to the landlord and provide a forwarding address.

When a tenant is evicted, the vacate date can be a little trickier to determine, especially with no forwarding address. Your best bet would be to consult an accredited Property Manager. Conservatively, however, once you’ve changed the locks to the property the 30-day itemization clock starts ticking.

Move-In Documentation is Important

The process of itemizing your tenant’s security deposit can be quite tricky, especially if you don’t have any move-in documentation prior to your tenant taking possession of the property.

While a lease agreement will call for the tenant to fill out an ‘Inventory and Condition’ form a few days after they take possession of the property, unfortunately not all tenants will do this. If your tenant doesn’t complete this form they’re potentially liable for ALL faults at the property when they move-out whether it’s their fault or not.

Take Photos of Rental Property’s Condition

The landlord, however, will need to have their own move-in documentation to present to the court, if it gets that far, to strengthen their case. I recommend taking an abundance of time-stamped photos documenting the property’s condition about 1-3 days prior to your new tenant taking possession of the property.

photos of rental propertyBe sure to include pictures of the address and street signs! Don’t have the time to take care of the move-in inspection? Contact a third-party Dallas property manager or inspection company to do this for you. The cost to do as much should be around $100.

As is this case with move-in photos, it’s equally as important to document the property’s condition after the tenant has vacated the premises. Time-stamped, move-out, or turnover photos will be your keys to success!

Further, you’ll need to obtain a bid to repair all deficient items so that you’ll have the appropriate dollar figures to deduct tenant-responsibility items from the tenant’s security deposit. The best way to do this? Itemize every single repair needed at the rental property to get the property back into ‘Move-In Condition’, commonly referred to as ‘Make-Ready’, and then have a contractor stop by to bid all repairs. Not only will you then have the dollar figures needed for the itemization, most contractors will provide you with a bid for repairs at no cost.

Identify Any Needed Repairs in Your Itemization

Now that you have both sets of photos (move-in/move-out) and hopefully the tenant’s Inventory and Condition form, it’s now time to itemize the deductions from the tenant’s security deposit. You’ll need to initially look through the ‘Make Ready’ bid, determine what repairs needed are potentially tenant-responsibility, and flag those repair items. From there, you’ll need to work backwards and examine each potential repair item by comparing the move-out photos to the move-in photos for each repair line-item.

damaged rental propertyOnce your investigative efforts are complete you’ll need to then review the tenant’s Inventory and Condition form, if applicable, to see if the tenant disclosed any of the deficiencies in the ‘Make Ready’ bid at move-in. After these efforts have been completed it will then be time to send out the tenant’s Itemization.

While there are many forms on the internet you can use for the formal Itemization, it’s important that you clearly identify what repairs you’re holding the tenant accountable to, and what the cost for each repair item is. Once complete, I suggest including a copy of the ‘Make Ready’ bid with the before/after photos for each repair item to clearly identify what the tenant is being billed for even further.

With picture sharing programs it’s much easier to share the photos via email, however, you’ll need to formally deliver the tenant’s itemization via certified mail with return receipt to the tenant’s forwarding address within the 30-day grace period! It’s worth noting, however, the more information/pictures you can give the tenant via email the better.

Huntahome Makes Itemization a Stress-Free Experience

Does the process of security deposit itemizations seem like a lot of work? Well, quite frankly, it is!

Often times, an Accredited Property Manager can save you time, money, and effort during all phases of your property’s vacancy/occupancy. Contact Huntahome today to discuss our terms and your goals!