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What is “Wear and Tear?” What is “Tenant Damage?”

mrs_repairGeorgia law is very vague in defining “normal wear and tear” and “tenant damages”. My Rent Source manages rental property in over 10 different counties. Each of these counties has a different Magistrate’s Court, which is where landlord/tenant issues are resolved, and each court has multiple judges. Our interpretation of “normal wear and tear” and “tenant damage” is based on generalizing the opinions of many different judges over the years. One of the challenges of dealing with issues in Magistrate’s Court is there is no telling how any particular judge is going to rule on any specific issue on any given day.

It is expected that when a tenant rents your property they will move in, occupy, and use the property. They will walk on the floor which, as a result, will show signs of wear. They will hang pictures on the wall and in walking around the house they will bump in to the walls from time to time and leave smudge marks. These types of damage are usually considered normal wear and tear. Generally speaking judges expect landlords to clean rental homes at the landlord’s expense between tenants. They expect any marks on the walls that can be covered with one coat of paint to be treated as normal wear and tear. They expect the landlord to steam clean the carpets between residents at the landlord’s expense (unless there is an applicable Pet Addendum) and they expect the landlord to provide cleaning service between residents. So we don’t charge the tenant for many marks on the walls that can be covered with one coat of paint, or for pathways that develop on the carpet as a result of traffic, or for the house being “dirty” if the house requires “surface cleaning.”

But some needed repairs or replacements will be the result of tenant damage. When determining the amount of the charge to the tenant we are required to take in to consideration depreciation of the item. The best example of this would be carpet damage. If your tenant ruins your 5-year-old carpeting, the judge will not allow you to charge the tenant 100% of the cost of the new carpet to replace carpet that was already 5 years old. Excalibur uses a carpet life of 6 years and, for the most part, we haven’t had to argue over that timeframe with many judges. So, using the example above, if a tenant moved in to a property with 4-year-old carpet that was in good condition, moved out at the end of the year and ruined the carpet with stains while they were there, we would only be able to defend a charge of 1/6 of the cost of the new carpet (the carpet is 5 years old when the tenant vacates so there should have been 1 year of life left in the carpet).

A property owner needs to understand and budget for expenses related to their rental property that are not the tenant’s obligation to pay. And in several instances, even when the tenant did cause the damage, the amount spent to repair or replace will be much more than you can charge back to the tenant. If it is a young property, less than 8 – 10 years old, a good budget estimate is around $1000 per year for maintenance and repair. Older properties, depending on their size, age, and condition, might cost $1500 – $2000 per year for maintenance. Keep in mind these numbers are averages. You might not spend any money for 3 years and then you have to repaint and replace carpet for a total cost of $3000. Your average will still work out to about $1000 per year for younger homes in good condition. Remember the profit is made on the appreciation, not on the cash flow. Let the tenant make your mortgage payment (pay rent) while your property grows in value. Make sure to keep the property in good condition so that it continues to appreciate along with the rest of your market and so you can continue to attract better tenants. As a property owner the liabilities and profits associated with the property will be yours. Make wise choices so that you can minimize liabilities and maximize profits.

EXAMPLES OF “WEAR & TEAR” VERSUS “TENANT DAMAGE”
Normal Wear & Tear: Keys worn out or locks coming loose from door, worn pattern or loose trim on countertop, rust stains in sink, carpet seam coming loose and discolored from foot traffic, rusty refrigerator shelf, toilet wobbles or leaks at base, water stain on ceiling from leak, oil stains on driveway from small car leak, dust and dirt under appliances, scuff marks on walls, small holes from picture hooks, and weeds in the lawn that can be cut with the grass.
Tenant Damage: Keys missing or locks broken off, burn marks on countertop, dye stains in sink, carpet torn or stained beyond simple cleaning, missing refrigerator shelf, toilet tank broken, oil slick on driveway from 5 quart oil spill, several personal items left behind that must be disposed of, large holes in walls, unauthorized custom painting, and planting beds full of weeds.

by excaliburblog

Posted by: myrentsource on April 23, 2014
Posted in: My Blog