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Certain costs are to be expected when a rental unit turns over. But when your costs exceed your profits, your biggest asset can turn into your biggest liability. The security deposit is intended to protect against the costs of damages from a departing tenant, but what happens when the costs exceed the deposit amount? When there is damage, the keys are proving that the damage exceeds normal wear and tear, and showing that it is the tenant’s fault.

The first important step is that you and your tenants clearly document the condition of your rental upon move in. This documentation will be important upon move out to distinguish between wear and tear and damage. It also proves that any damage occured during this renter’s tenancy.

As an Owner:

Every part of the unit should be documented, including everything that was included with the unit and all areas of the property, inside and out. Take note of the appliances, other amenities and features, as well as the cleanliness. There is more than one way to document the status, and you should take advantage of as many of these as you can. Here are some ways you can record your unit’s condition.

Invoices and Receipts

Keep all of the invoices and receipts for any repairs and improvements that you performed on the unit. If you put in new flooring, paint, or made other improvements, keeping a record allows you to show the age of the items. This also includes general cleanliness of both the carpets and house. Organized receipts and invoices will help to give a sense of what the condition should be, given the age of the property and amenities.

Photos

Take pictures of your property,with clear time and date stamps. As you are making your photographic record, take pictures of as many elements of the home as possible, including close-up details and zoomed out images. You never know in advance which photo will be important, but the more photographic evidence the better.

Video

The rules for photos also apply to video. Some landlords prefer video over photo as it is easier to get a sense of the unit as a whole. A video will show every aspect of the room, so you are less likely to miss a feature, as you might when taking a series of still photos.

Written Paperwork

Using a condition form, such as ezLandlordForms Move-In Condition, gives you written documentation. Since both parties sign off on this document, the tenant will have a difficult time disputing the original condition.

Not only is it important as a landlord to document the condition of the rental property, but also have your tenant record any issues that they perceive. This way, you can fix any issues at the outset, so that they do not become a lingering problem. An easy way to do this is to send them a form and request it back within a certain timeframe. You can find a copy of the form here.

With this document, it is a good idea to stipulate that if the document is not returned, the tenant acknowledges that the property has no issues. This gives the tenant incentive to return the document, and keeps you from chasing a procrastinating tenant. This also keeps the problem from hanging over your head, and gives you documentation showing that a tenant who did not return declined to record the problem. As always, check your local and state laws regarding this issue.

Being a landlord does not come with any guarantees. Your safeguard against excessive damage is doing your best to cover all of the bases. You can use receipts, pictures of the condition, and documentation from the tenant to memorialize chronicle the condition of the property and the parties’ agreement about that. The key is to have as much proof and documentation as possible.