How do you handle damage found during tenancy?

Question

I was in the basement of my unit last weekend and I could hear the tenants children running and jumping and banging.  This led me to believe maybe I need to check things out.  I didn't do any inspection during tenancy on the last tenant, mainly because they had a toddler (maybe 2 y/o) and they ALWAYS had their curtains and blinds open. I could see in every window as I did basic maintenance.  Not to mention they would always let me know if the slightest thing was wrong.  Not demanding the item be repaired right away. Just FYI's such as "Hey Arthur just wanted to let you know the bedroom closet is off track again. No rush. Just wanted you to know."  But the current tenant NEVER opens her curtains.

So for those of you who find damage while doing your inspections (monthly, quarterly, annual or whatever) of your rentals, how do you handle the repair?  Do you require the tenant to fix right away?  Do you fix and bill/have tenant pay right away?  Do you wait until the end of the lease and assess all damage and repair and charge accordingly? (I won't be waiting until the end of lease. I can tell you that.)  I want to set a standard now.  I've set a time to do an inspection with the tenant present so I can immediately address any issue(s) that I find.

As I'm thinking about it, she never turned in her Move-In checklist (which I reminded her ONCE to get in).  I did take pics and video of the unit after turn over before she moved in.

Steve Rozenberg · Answer

The main difference is you would want to verify is it Damage or is it wear and tear. Damage as stated in your lease (or should be) is what you can charge for. If they are still in the property, you can advise them that you are giving them certain amount of time to have it repaired by a professional or if you have to do it then they will get the bill.

If at the end this turns bad you would deduct that from their security deposit. We have all our tenants sign a itemization document... this is 2 pages of what we will charge them for certain items. We also take 150-200 pictures of the property and a very extensive video inside and out prior to the tenant moving in. We explain to them this is the standard that when they move out we will see and verify the condition. and we make them sign it all acknowledging this fact and what our fees are.

Then when the tenant moves out we take the same exact pictures and video and compare the before and after.. anything that is clearly damaged we reference our pricing sheet and that is how we charge.

We also send them the video when they give us their move notice to show them how they received the home and how we expect it to be returned.

We found it works great by setting the expectations and costs on the inbound of what we expect of them and what the charges will be.

If you want our sheet of charges I would be happy to share if you PM me.

Hope this helps.

Max T. · Answer

I do the walk through/move in checklist with the tenant when they get keys. It takes 1-2 hours but I have them sign it and I take it with me when I leave. They have another 3 days to report existing issues after that and I will add them to the checklist (but that has never happened so far because I encourage them to be very thorough with their inspection). After 3 days, tenants are responsible for the cost of any issues not on the form aside from wear and tear.

I keep the form in their file and use the exact same copy when they move out.

Cameron Skinner · Answer

A nice clever way to do it is a "leak smoke detector inspection"  or "termite inspection" then it comes across as a normal inspection and not you trying to check up on them if nothing is wrong.

Bryan N. · Answer

@Pat L.

Without a doubt that's wear and tear... On someone's fist!

Pat L. · Answer

Wear & tear vs damages!!!

yep seen it all.....

Marcia Maynard · Answer

The important thing is to charge for damages as they are reported or as they are discovered. This gives you funds to use and encourages the tenant to take better care of the property. The security deposit is rarely enough if you let the cost of damages build up.

As @Mindy Jensen mentioned, we have a clause about how we apply money received. Here is is:

"PAYMENTS.  All payments made by Tenant to Landlord
after the tenancy commences, no matter how designated by Tenant, will be
applied as follows: first, to any outstanding amounts due for damages/repairs,
utilities etc.; second, to any outstanding service charges or fees from prior
months; third, to any rent outstanding from prior months; fourth, to any
service charges or fees due in the current month; and lastly to the current
month’s rent."

Here is what we say about repairs/damages:

"REPAIRS.  Tenant
agrees to notify Landlord of needed repairs to premises in a timely manner by
telephone and/or in writing. 
Tenant agrees not to repair their dwelling or anything belonging to
Landlord without prior written consent of Landlord.  Landlord retains the right to determine how and when the
repair will be done, in accordance with federal, state, and local law and
codes.  If the need for repair is
not due to damage caused by Tenant and/or their guests, Landlord agrees to pay
for the repair.  If the need for
repair is a result of damage done by Tenant and/or their guests, and not that
of ordinary wear and tear, Tenant agrees to pay for the repair.   Landlord may decide to remove or
replace an item, instead of repair."

@Arthur Banks You probably have a good idea about the condition of the unit when you do the turnover. That is the perfect time for pre-filling in the move-in checklist, or property condition report, as we call it. Make a copy and walk through the property with the new tenant at the start of tenancy, request a signature from the tenant at that time. Each of you receives a copy and allow a few days for the tenant to apprise you of anything the two of you missed. This document is actually more for your protection, without it a judge is likely to rule in the tenant's favor.

Mindy Jensen · Answer

@Arthur Banks, I'm so glad it went well.

With some of the horror stories I read on the forums (and I am actually working on a horror story post for the blog, so I am in bad-tenant mode) I was hoping for the best but expecting the worst.

Thank you for keeping us updated.

Arthur Banks · Answer

Well the inspection went well. No damage. Just a loose toilet seat. She did advise me a screen is missing that I wasn't aware of.  @Mindy Jensen  That was my opportunity to remind her she never turned in her Move-in checklist.  She bashfully apologized and said she has been so busy with work and school she completely forgot and didn't know where it was. I gave her another form, smiled and told her "this is her last chance. I need it tomorrow, but I guess I can give you until end of week." It was a good exchange and no hard feelings or issue. She smiled and laughed. As I said she's very sweet and seeing she still hasn't unpacked after almost 2 mos I believe her.

Thanks again all.

Arthur Banks · Answer

@Mindy Jensen I wouldn't compare rent to a move-in checklist. Of course I would ask for rent, but I wouldn't ask too many times. The next communication would be a 5 day notice. I'm not going to evict over an un-returned checklist.  I agree about me being in charge, but my thinking is the checklist is for her protection (sure, just as much as mine), but I'm trying to remember a time when I was renting that I had the landlord/management hound me when I didn't turn it in.  Oh well, let's agree to disagree.

I like the idea about applying money to costs and fees first. I've always heard others say it the other way around, but your method does seem it would make them want to get the fees in to avoid being late on rent.

@Max TanenbaumI think I'll consider doing that. At least at this stage in my investing career I'm not overly busy with the business. But at the same time 2 hours is a long time. I'll ponder... I do like the fact that you've gone over together, you get it immediately, and they sign off.

Thanks all.  Off to meet the tenant to do the inspection.

Mindy Jensen · Answer

@Arthur Banks, the issue isn't that you aren't a babysitter, it's that you have asked for it twice and not received it. If you don't press her for it, she isn't likely to return it. It is important that you set expectations at the beginning of the relationship so there is no question that YOU are the one in charge. A casual mention the next time you see her may get you the form. You could also write her a note.

Think of it in terms of rent. If you asked her for the rent, and reminded her of the rent, and she didn't pay it, would you let that go?

As for any damages, Bring it to her attention that there is damage, and tell her you will need to coordinate repairs, and you will send an invoice to be added to the rent the next month.

@Marcia Maynard has a clause in her lease that says something to the effect of all money received will first be applied toward unpaid fees regardless of how the tenant dictates it should be applied. Money received is applied to rent last. In other words, they better pay the fees, too or they can quickly find themselves in violation of the lease and at risk for eviction for unpaid rent. It is a clever way to get around them not paying fees and fines, yet still trying to pay rent. Another clause to have in your lease is that partial rent payments will not be accepted. When you accept partial payments, eviction laws change.

I am not sure if either or both of these clauses have to be in the lease itself, or just in your business practices. It may be overkill for the situation. She may have already filled out the form and simply forgot to give it to you.

How do you handle damage found during tenancy?

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