Today we’re talking about a critical procedure in property management, whether you are a professional manager or an individual landlord. That’s the 30 Day Notice and the security deposit refund. It is imperative to manage this procedure precisely and conduct your due diligence.
Typically you will receive notice from your tenants that they are moving out in 30 days, or perhaps you will give them notice to vacate. First, you want to follow up with the tenant and provide the things they need to be aware of in order to get their security deposit back. This might include the forwarding address, instructions on where to turn in keys and when, and what repairs are required and how they should be done. For example, many landlords require a professional carpet cleaning before tenants move out, and an invoice is required. The lease agreement will tell you and the tenant what’s needed at the time of move out.
Tenants are entitled to be in the property with you when you conduct a move out inspection, except for rare occasions where there are hostilities with the tenant. Schedule a time to do the move out inspection and be very thorough. You want to open every cabinet, cupboard, drawer and closet. Look at everything, and take written notes as well as photos for your records. Then, go back to the office and look through the move in records. When the tenants moved in, you did an inspection and took photos. The tenants might have submitted notes and photos as well. Look at maintenance records and any HOA violations. Review all of these so you can do a proper designation to the tenant for any charges and repairs that are their responsibility. Wear and tear is the responsibility of the owner, and you need to know what wear and tear is, as well as the economic life of appliances, paint and flooring.
The law allows you 14 days to total these numbers and submit the deposit to the tenant. Then, there is no coming back and doing it again. You can’t reach out to the tenant and ask for more money because that window has closed.
This process is critical because if you don’t do it correctly, tenants can take action when you wrongfully withhold funds. They can win default judgment up to 3 times the amount of what was withheld. Be fair. Not all parties will be content with your decisions, but do your due diligence and make sure everything is defensible with documentation.
It’s important to do this correctly, and a good management company has the procedures in place to help you. If you have any questions, please contact us at Paramount Property Management and Realty.