Windsor Property Management Advice: How to Avoid Security Deposit Disputes

Most landlords and property owners genuinely want to avoid conflict on security deposit refunds. In the California court system, the single largest category of small claims suits are those involving security deposits. There are things you can do to make sure both you and your tenant avoid disagreement and disappointment when it comes time to account for the security deposit.

In California, there is a process called the “pre-moveout inspection.” Each tenant must be notified of their right to this procedure when a move-out is imminent. While the law only requires that the tenant be notified that this option is available, I actually recommend that you consistently DO the inspection every time you have an impending vacancy. By performing the pre-moveout, you are able to provide clarity and guidance for the tenants, and knowledge for yourself as to the likely condition of the property at the time of vacancy. Furthermore, you will be able to set reasonable resident expectations and guidelines for the remainder of their tenancy.

When doing a pre-moveout inspection, be clear about what you expect your tenants to address prior to relinquishing possession. For example, you might require that the carpets be professionally cleaned, or the fireplace/chimney be cleaned. You might require thorough housecleaning or yard maintenance. In the state of California, there is no such thing as a “non-refundable security deposit.” Accordingly, a primary advantage of the pre-moveout inspection is to ensure that your tenants clearly know what is expected of them, in order to receive the greatest possible percentage of their security deposit refund.

When doing the inspection and documenting your observations, detail and clarity are important. According to California law, the tenant can be considered liable for necessary efforts to return the property to its original condition, “normal wear and tear excepted.” So, for example, if you require tenants to care for the yard, make sure they clearly understand how the lawn is required to look when they move out. This is an instance where solid management organization, structure and documentation pays off. If you can provide photographs, reports or invoices showing the condition and preparation of the property BEFORE the tenant moved in, it is fairly easy to establish the “standard” for expected move-out condition.

How to Avoid Security Deposit DisputesFrom our perspective, another benefit to the pre-moveout is that it eliminates tenant requests to try and address deficiencies discovered by the landlord AFTER they ultimately vacate. If we’ve given tenants opportunity and instruction in advance, there’s less likelihood that the tenant will be surprised by something they inadvertently overlooked. While we try to be considerate and accommodating, it is highly impractical to allow tenants to hold on to the keys – and possession – beyond their intended move-out date, just so they can get the carpet cleaned, for example. If we’ve clearly explained the process and provided instructions on everything needed well before tenants relinquish keys to the property, that allows us to immediately start “turning” the property as soon as it’s been vacated.

When you send the security deposit accounting back to the tenant, provide invoices showing exactly what was necessary to return the property to the appropriate condition. This documentation is legally required, and will justify what was deducted from the security deposit. Use fairly priced and competent vendors. A light housecleaning job should not cost $600, for example. Deductions should be commensurate to the tenant’s actual liabilities.

Finally, if the tenant says the amount he got back does not seem fair, you need to make a decision. How firmly will you stand your ground? If your accounting is strong and supportable, if you have thoroughly documented everything and you believe the courts will find in your favor, you might decide to stick to your guns. If it makes more sense to try to find “middle ground” with your ex-tenant, this might be an opportunity to reconsider your deductions, and offer to negotiate. Spending time in small claims court can be a hassle. It is often a waste your time, your vendors’ and witnesses’ time, and the judge might not ultimately find in your favor – even if your case is thorough and compelling! Small claims can be a gamble. Like many of the other detailed processes that property management requires, negotiating small claims is a particular learned skill. I typically recommend that you avoid it, if a reasonable alternative makes sense.

Give us a call at DeDe’s Rentals if you have questions about pre-inspections, security deposit disputes or property management in general. We can be reached at (707) 523-4500.   If you have any questions please feel free to contact us at DeDe’s Rentals. We will be happy to help you.

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One Response to “Windsor Property Management Advice: How to Avoid Security Deposit Disputes”

  1. Elin August 25, 2014 1:59 pm
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    We really like your pre-moveout inspection idea as that is not necessarily something that we do. Instead there is a handbook that we give to tenants, but in order to ensure a full security deposit return, this is certainly a best-practice. http://blog.tlccapecoral.com/avoid-security-deposit-disputes-fort-myers-cape-coral-rental-property/