How To Effectively Complete A Move Out Property Condition Report on your Colorado Springs Rental Property Part 3

WHAT SHOULD AND SHOULD NOT BE WITH HELD FROM A DEPOSIT

This can be a tricky subject but here is a list of things that should never be with held from a deposit.

1. Yard Rehabilitation-A tenant moves out and your wonderful green grass is now dead.  Unfortunately there are too many variables that put you at risk of a deposit dispute.  Colorado is a desert climate, vegetation does not grow without human intervention in many areas.  Yards are like anything else in your home.  They have a serviceable life and once that's exceeded you cannot collect money to repair or replace without risking litigation.  Make your yard as maintenance free as possible.  If a tenant does not complete a final mowing, trimming, weed pulling at time of move out this could be a legitimate charge.
2.  Anything that has exceeded it's serviceable life-  Carpet is good for 5 to 7 years, if you have gotten longer than that, consider yourself lucky but don't plan on charging the tenants if it's damaged at move out.  Even if you went to court and won the case the magistrate may very likely award you a pro rated amount based on it's serviceable life.  In this case it would be zero dollars since the carpet exceeded it's serviceable life.  
3. Anything that is not documented on the move in inspection- If you failed to document any part of the home and it's damaged now, chalk it up as a learning experience.  If you go to court you will lose. Refund the money, kick yourself in the pants, and do a more thorough job next time.
4. Anything that is not outlined as a cost in the lease packet-  If you have not made a detailed lists of costs for repairs it's very difficult to enforce.  Include this form in the lease packet at move in and have the tenants sign it.
5. Ordinary wear and tear- Per Colorado State Law, ordinary wear and tear is allowable by law and cannot be charged back to the tenants.  Flooring, paint, windows, etc.  Scuffs, nail holes, fraying carpet by thresholds, are all considered ordinary wear and tear.  

This obviously is not an all inclusive list and there are limited circumstances where some of these may not be applicable but use this as a rule of thumb on your next disposition.

Daniel Muldoon
Muldoon Associates, Inc.

How To Effectively Complete A Move Out Condition Report On Your Colorado Springs Rental Property Part 2

MOVE IN AND MOVE OUT INSPECTIONS

After you have completed all of your repairs and upgrades and you have approved a tenant for move in you you will need to complete a move in inspection.  This will be for your records so you can refer back to the condition of the home after the tenants vacate.  We currently use written reports and photos but we will be converting to video inspections in the near future.  I suggest you use the method that works best for you but make sure you are thorough and have some type of visual documentation (photos or video).  

You will need to test and document the condition of every light bulb, switch, socket, door, window, knob, blind, etc.  Don't forget anything!  Open drawers, inside of fridges, furnace and filter, EVERYTHING!  Once the lease has terminated and the tenant has turned over possession you will use the same process.  Now that you have the move out and move in inspections complete you need to go line by line and compare the condition.  Many of the items that need to be repaired or replaced will be normal upkeep items that the landlord is responsible for.  You need to decide what damages are beyond normal wear and tear, complete the work, and keep receipts for the deposit disposition.  

Your disposition will need to be written and delivered to the last known address of the tenant or a forwarding address if provided.  Make a copy of the stamped envelope and place it in the file in case you ever need proof it was completed and mailed.  Hopefully if you did everything according to the law the tenant will not dispute any of the damages and you are in the clear.  If the tenant does dispute the damages they must do so in writing requesting their deposit be returned because it was wrongfully with held.  The landlord has 7 days to return the deposit (right or wrong) or the precedence in Colorado is you are already wrongfully with holding a deposit.  At this time the tenant can litigate for 3 times the with held amount.  Based on my experience it's best to just refund the deposit except in extreme circumstances.  This will cost you less in the future and even though it can be a tough pill to swallow it's the right financial decision.  

You may have legitimately with held the items owed but this can only be proven by a magistrate or judge.  It could take you month's and thousands of dollars to "prove them wrong" or "prove your right" but that does not make sense in the scheme of things.  I have also heard but not experienced that some magistrates will not award any money that was not addressed at move in.  You should have a form that outlines how much each charge will be if the tenant does not take care of it at move out.  I.E. cleaning is 250 dollars, locks are 75 dollars, furnace filter is 25 dollars, and the list goes on for virtually everything in the home.  This should be given to and signed off by the tenants.  A rock solid lease packet, inspections, and disposition will help keep your return on investment high and your days in court short.  

Daniel Muldoon

Muldoon Associates, Inc.

How To Effectively Complete A Move Out Inspection Part 1

DEFINING SECURITY DEPOSIT

Security deposits are probably the most litigous aspect of a tenancy.  The deposit is regulated by Colorado State law and how the deposit is to be handled post move out is dictated by law.  You must be certain you know every aspect of the laws pertaining to security deposits and dispositions in order to limit your legal liability.

In the state of Colorado a tenant is able to sue for treble damages when their deposit is "wrongfully with held".  This could mean a deposit was not returned in the allotted time (30 days by law unless agreed upon in writing by tenant and landlord at which time it will be extended to no more than 60 days.), with holding for damages or repairs that were not beyond normal wear and tear, or a number of other situations.

The security deposit belongs to the tenant but is held by the management company in order to secure the condition of the home at move out.  This means you better not use the deposit for anything during the term of lease.  It cannot be applied to last months rent, late fees, or anything else while the lease is in effect.  These fees can be with held from the deposit post move out if the tenant has not paid the account in full but you must wait for the lease to terminate and handle it on the deposit disposition.  I may sound like a broken record but I can't stress enough how important responsible and legal handling of the deposit is.

Now that we have defined the deposit and the disposition rules we will proceed to the move out inspection itself.  Per Colorado Law your lease must state that wear and tear damage is acceptable and will not be with held from the deposit.  This means nail holes, trim scuffs, carpet wear, blind wear, etc.  At every single move out (and likely more frequently) you need to be prepared to touch up paint, replace door stops, and other repairs as needed.  This is why long term tenancy and keeping your tenant happy is so important.  The longer they stay the less often you are doing touch up work.  Some landlords are under the impression the tenant is responsible for all damage and do not take normal wear and tear into consideration.  This is a complex subject because wear and tear does not apply equally to every situation.  If you have a property with one individual living in it compared to a property with 4 individuals living in it, the wear and tear will be more, typically, with more occupants.  This does not change the fact it's wear and tear and should be handled as such. 

There are things that can be with held from a deposit.  Major damage, abuse, or neglect.  For example the tenants take your brand new carpet and change their motor cycle oil with no oil pan.  The tenant would be responsible for the carpet but only in that area.  If it can be patched it should be patched and not replaced.  Remember, you are trying to avoid legal disputes so "sticking it to the tenant" is not the methodology you will want to use.  You must be fair and you must document thoroughly.

Your move in inspection is your first tool that needs to be taken seriously. Make sure you have pictures and written documentation, or a video with voice over.  If you ever do have a dispute you are going to need a rock solid inspection.  Your move out inspection must be just as thorough in documenting condition.  These are the first things magistrates will look at if you go to court.  The best thing to do is avoid court all together.  Many times it will cost you thousands of dollars in legal fees and many days in court and you may not even get legal fees awarded.

Daniel Muldoon
Muldoon Associates, Inc.