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What You Can Deduct from a Security Deposit

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Every state and province has different laws regarding security deposits so you have to check the laws of the city, province, state and country where your rental property is located. BUT we’ve compiled a general list of things that outline what might be deducted from a security deposit – that you should make very clear to your tenant on arrival to their new apartment so they aren’t surprised (and peeved off) when they move out.

As a landlord, you’re only allowed to withhold or deduct money for actual damages – be it physical damage to the property or financial damages. This means you can deduct money for unpaid rent (or other fees) or damage that is more substantial than normal wear and tear.

An inspection has to occur before the tenant moves in and at the end of their tenancy, with the tenant present (or a representative for them) in both situations. The walk through has to be done when the unit is empty, when the previous tenant has moved out, before the new tenant moves in. You need to bring the initial Move-in Inspection Report to the Move-out Inspection in order to determine any new damages.

In order to keep some (or all) of the deposit, a landlord must have completed a Condition Inspection Report as well as having written consent from the tenant, or an order from an official branch which has the authority to give orders to withhold security deposits.

UNPAID FEES

If the tenant leaves you with unpaid rent, utility bills, parking fees etc. you can withhold or deduct those payments from their damage deposit.

You cannot deduct from a damage deposit if a tenant breaks their lease and leaves (but pays you the required rent and other fees). But sometimes it is easier to just deduct these from the security deposit, if the tenant agrees to do so.

UNKEMPT PROPERTY

Tenants are expected to clean their rental unit thoroughly. This includes:

  • Steamed and cleaned carpets (for residents who’ve lived there for over a year)
  • Cleaned appliances (even behind the fridge and oven if they have wheels or are easily moveable)
  • Blinds and shades over windows should be clean and not broken, and the windows themselves should be clean on the inside
  • If they have balcony doors, they should be cleaned both inside and outside
  • Walls should be washed, no scuff marks allowed!
  • Baseboards should be cleaned and vacuumed
  • Fireplaces (which are now a rarity) should be cleaned out If they were used
  • All light bulbs and fuses should work
  • And they don’t actually have to fill the nail holes in the wall – unless there are excessive holes and damage (which they need to pay for or fix) 

If the rental unit is not clean, belongings are still there and damages are present – you can ask to keep some (or all depending on the extent of the damages) to cover the costs of cleaning.

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DAMAGED PROPERTY

Any damage the tenant, their guests or pets have made that is beyond the normal wear and tear, including the damages listed above, can be deducted from the security deposit.

Wear and tear includes things such as:

  • Worn out carpet
  • Small stains on the carpet
  • A few holes from hanging pictures
  • A small amount of mildew in the shower tiles
  • Tarnish on bathroom fixtures
  • Loose handles on doors and cabinets
  • Chipped paint
  • Worn finish on a wood floor
  • Faded paint

Damages beyond wear and tear include things like:

  • Broken windows
  • Large or excessive (or both) holes in the wall
  • Leaving trash or other items behind
  • Leaving the apartment SO dirty that it’s not safe or healthy for the next tenant (or you)
  • Lots of water damage
  • Missing outlet covers
  • Missing or damaged smoke detectors and Carbon Monoxide detectors
  • Broken doors

Damages do NOT include damage by storm, fire, vandal and other things that are not caused by the tenant, their guests or their pets. And these should be covered by Renters Insurance (let your tenant’s know about our renter insurance here). The repair costs of these items may be covered by the renter’s tenant insurance but that will depend on the terms of the individual policies.  You should ensure that your renters have tenant’s insurance by including tenant’s insurance as a term of the lease agreement.

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LOST OR UNRETURNED KEYS

Because you will have to change the locks, you may charge for this and deduct it from the damage deposit if your tenant doesn’t return their keys (including fobs for the garage, those are expensive to replace!).

ABANDONED RESIDENCE

If a tenant simply up and leaves your property, you may deduct the fees (which would be missing rent) from their damage deposit. Chances are, if they abandon your place, it’s very unlikely they will be back for the damage deposit anyway.

THE TENANT DOESN’T PROVIDE A FORWARDING ADDRESS

In some provinces and states, if a tenant doesn’t provide you with a forwarding address within one year of moving, you may keep their damage deposit.  You will, however, have to review the legislation governing you and your tenant to see if this is applicable to you.

OWED MONEY FOR UTILITIES

If the tenant neglected to cover any of their utilities they agreed to pay on their lease, you may wish to deduct it from their damage deposit.

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In most provinces and states, you have around 10 days to return the inspection report and damage deposit to the tenant, otherwise your tenant can request to have the whole thing paid back to them in full. Your tenant has the right to request a return of the full amount – in which case it’s advisable to come to an agreement together. Otherwise you can go to court or through a residential tenancy dispute resolution service.

You MUST have an adequate explanation why you are withholding or deducting anything from the tenant’s damage deposit, otherwise it is very unfair to the renter. It’s insurance to you and the renter to make sure the property is well kept – and, because you want to cultivate a good relationship with your tenants, that shouldn’t be abused. On the other hand, if your tenant is disrespectful and has caused actual damage to your property, you have the right to use that money to fix it.

The content on this site is offered only as a public service to the web community and does not constitute solicitation or provision of legal advice.  This site should not be used as a substitute for obtaining legal advice from an attorney licensed or authorized to practice in your jurisdiction. You should always consult a suitably qualified attorney regarding any specific legal problem or matter.

Tags : industrylandlordsproperty managersreal estateTech
Emily Stewart

The author Emily Stewart

Emily is the Marketing and Communications Coordinator at RentMoola. She's a reader, skier, and self-proclaimed Beyonce superfan.

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