Knowing the difference between wear and tear in a St. Louis rental property is imperative if you’re a landlord and doing your own move out security deposit dispositions. Security deposit disposition is when the tenant moves out, and you are assessing what damage to charge against the tenant’s security deposit. My name is Danielle Ohlms and today I’m going over the 3 most common wear and tear items that landlords mistake for tenant damage.
Plus you’ll also find information here for landlords about security deposit depreciation. This is something every landlord should know about, because it’s important to understand that you cannot withhold the entire cost of certain items, even if they have to be completely replaced. But, more on that later.
Let me preface real quick that I am not an attorney, and each state may have its own rules on normal wear and tear, so it’s always a good idea to consult your attorney before withholding anything from your tenant’s security deposit.
BIG MISTAKE #1 – COUNTING A FEW SMALL NAIL HOLES AS DAMAGE
The first big mistake landlords make on their investment property is counting a few small nail holes as damage. Your tenant probably is going to hang some pictures on the wall. Generally speaking, a few small holes in the walls from nails should be considered normal wear and tear.
If you end up having a wall where the tenant had a big collage of pictures or wall hangings, and you’ve got major screw holes or 30+ holes in the walls, then that is probably going to be considered damage.
BIG MISTAKE #2 – COUNTING CARPET WEAR AS DAMAGE
Second, let’s talk about carpet wear vs carpet damage. Over time it’s going to be natural for carpet to get worn out and smashed down especially in high traffic areas. But, if you find stains on your carpet or substantial amount of fraying in one spot that indicates pet damage, that would be damage.
Now, it’s important to remember that carpet does have an expected lifespan, and you have to take into account the carpet’s age when deducting damage costs from the security deposit. If the carpet was new two years ago, and now has stains, you can’t charge the whole amount of replacement cost – you can only charge the remaining value after depreciating five years of use. HUD estimates the lifetime of a carpet to be 5-7 years.
BIG MISTAKE #3 – NOT DEPRECIATING PAINT
And third, paint. HUD estimates that the life expectancy of interior paint is between 5 and 7 years for enamel paint. If you use flat paint, then it’s going to be more like 3-5 years. So again, this would be something you would need to figure out the remaining value after depreciating for age. Over time, paint fades, scuffs and cracking can happen. This is going to be normal wear and tear.
If you had multiple tenants in your St. Louis rental property over that 5-7 year period, you’ll probably need to paint, because tenants hang things in different places, and put furniture in different areas, so it’s going to cause more wear and tear.
If you have a tenant move out after one year of the house being freshly painted and there’s so many scuffs and holes that you have to repaint, then that is something you could depreciate and deduct from the deposit.
WHAT YOU NEED TO KNOW ABOUT SECURITY DEPOSIT DEPRECIATION
Some deposit charges have to be done on a depreciated basis, depending on the life expectancy of the item. Each state and local municipality is going to have their own guidelines on this, so I’m going to use HUD’s appendix for life expectancy for this video.
Let’s say your tenants just moved out and you have to repaint the entire house. It ends up costing you $4,000. You look through your records and find that the house was painted four years ago. According to HUD, life expectancy for enamel interior paint is 5 years. So, this means that the paint has made it to 80% of its life expectancy, leaving you to be able to charge for 20%. So legally, you can withhold $800 from the deposit.
This is going to be the same with carpet, window screens and blinds, etc. In Missouri, the tenant can recover twice the amount you wrongfully withheld, if they were to take you to court. Make sure you know your local and state laws, and at the end of the day, just be fair.
It can be difficult as a landlord to determine what to withhold from the tenant deposit, so hopefully this list helps. As always, feel free to reach out anytime. You can check out our website at keyrenterstcharles.com or give us a call 636-707-2000.