Property Management Blog

Disposition of a Security Deposit | Columbus Property Management

Mitch Deminski - Friday, December 30, 2022

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“It was like that when I moved in.”

Landlords and property managers in Columbus hear that a lot from tenants. When the tenancy has ended and we’re conducting our move-out inspection, we might find signs of damage that go beyond the normal wear and tear we expect from a tenancy. 

The residents who have moved out and are waiting for the return of their security deposit will try to tell us that a door was always off its hinges or the dishwasher had been leaking since before they moved in.

When you’re returning a security deposit, your attention to detail will be just as important as your documentation. You’ll need to prove the condition of the property before the tenants took possession and after they moved out. Move-in and move-out inspections are critical, and you want to take as many pictures as possible. 

In this blog, we’re talking about how to handle the disposition of a security deposit. But to do that effectively, we need to talk about the move-in process. That’s really when the disposition begins. 

Create a Move-In Condition Report for Columbus Tenants

Returning the security deposit to your Columbus tenants actually begins when you collect it. Your job is to scope out the property, take some detailed notes about how it looks, and create a documented folder of pictures and videos that prove beyond any doubt that the home is in good condition and clean at the moments that tenants are moving in.  

Leave your tenants with a copy of that condition report after they move in. This will give them an opportunity to either confirm that the condition is as you say it is or they can make their own notes about what they might notice. Give your tenants 72 hours with this report, and ask them to sign it before returning it to you. If your tenant does make a note, you’ll have it documented so you don’t charge the tenants for whatever they pointed out.

Unless there’s a dispute between you and the tenant on the condition of something, this condition report will establish what everything looks like and how it works.

Move-Out Inspections in Columbus

Before your tenants move out of the property, be sure to get their forwarding address. That’s where you’ll be sending the security deposit as well as any disposition correspondence. 

After your tenants move out of the property, conduct a detailed inspection. You’ll need a copy of that move-in condition report so you can compare the way things look now to the way things looked then. We recommend that you conduct this inspection as quickly as possible - within 24 hours if you have the time. That will prevent too much time between move-out and inspection. You don’t want your tenants to have the opportunity to claim that someone could have broken into the house and caused damage.

Go through each room, open every closet door, and carefully inspect every part of the property. Make extensive notes and take a lot of pictures. You’re doing this for two reasons: 

  1. So you can use the documentation to prove that you have the legal right to charge your tenant’s security deposit for damage left behind.

  2. So you can create a scope of work that needs to get done to make your Columbus property ready for the rental market again. The photos and documentation will help you contact the proper vendors to get your turnover work done. You may need to take out trash that was left behind, clean the walls, paint, and make some replacements. 

For purposes of the security deposit, remember that you’re looking for damage. Maybe you’re planning to make updates and improvements to the property before your next tenants move in. That’s fine, but you have to separate that from the damage caused by your former tenants. Those residents cannot be held responsible for paying to install hard surface floors instead of carpet. Only charge them for the damage they caused to your property while they lived there. 

Reasons to Withhold Money from a Security Deposit

Once you’ve completed your inspection and documented the damage, be sure to get the work done as soon as possible. In Ohio, you have 30 days from the day your tenant moved out to return the security deposit. Time is of the essence. 

What reasons might you keep some or all of that deposit? 

  • You can charge the security deposit for unpaid rent

You are permitted to apply the tenant’s security deposit to any rent that has not been paid. Maybe the tenant didn’t pay for the last month at all, or perhaps they missed a month earlier or they didn’t pay the complete amount the last couple of months and never caught up. You are permitted to apply the security deposit towards whatever balance the tenant has left in order to bring the account current after the tenant leaves. 

This should not be a commonly allowed practice. If your tenants do not pay rent on the first of the month, don’t let it slide just because it’s their last month. You may need that security deposit to cover damage; you don’t want to earmark it for a rental payment. The security deposit isn’t meant to replace the monthly rental payment, but you can use it at the end of the lease period to pay for any past due rents.

Using the deposit to pay for rent when tenants break the lease and leave the property suddenly and without notice is also permissible. The deposit, in this case, can make up for the income you’ve lost. 

  • You can pay for cleaning costs with your tenant’s security deposit

Discuss expectations with your tenants before they move in. You want them to understand that you expect to receive the property back in the same condition that it was when they moved in. This is especially important when we’re talking about cleaning. Be specific about what kind of cleaning you expect before a tenant vacates. When you receive their notice to vacate, provide a written list of move-out instructions, which should include cleaning requirements. 

If the tenants move out and you find that there’s trash left behind or not everything has been moved out, you will have to pay to make the rental home appealing to new tenants. The security deposit can help cover any cleaning costs that should have been your tenant’s responsibility. 

  • Property damage caused by tenants or tenant guests

Property damage can be caused by abuse, misuse, and neglect of the property. It clearly goes beyond wear and tear. While small nail holes cannot be deducted, large holes in the walls or floors can absolutely be deducted from the security deposit. Scratches on the floor or stains in the carpet are examples of damage. If a refrigerator no longer works because a child was hanging on the door, that’s a repair you can deduct from the deposit. 

Columbus Rental Property Wear and Tear 

Normal wear and tear is your responsibility as a rental property owner. You have to expect it and budget for it. You cannot charge a tenant’s security deposit for those small nail holes in a wall where paintings or pictures were hung. 

You cannot charge for the scuff marks on the floor or against the wall where furniture sat for a year or longer. Caulk in the tiles is likely to chip away or grow mold and you’ll have to deal with that at your own expense. Paint will fade and doorways will get chipped. The security deposit is not fair game for these costs. It must be damaged in order for you to charge the deposit, and that damage must be documented.

Returning a Columbus Security Deposit

returning security depositThe security deposit law in Columbus and throughout Ohio states that landlords, owners, and property managers must return the deposit to their tenants within 30 days from lease termination, or when those tenants leave the property.

In any best case scenario, you have had excellent and responsible tenants who took care of the property and left it looking great. In that case, you can return the full deposit and it likely won’t take you 30 days to do it. Send the deposit back as quickly as possible. 

You may have some deductions to make from the deposit, however. In this case, you’ll have to provide a disposition statement, which is a written record of what you’re deducting and why. 

Protect yourself by carefully documenting the condition of the property before the tenant moves in and after the tenant moves out. This will clearly demonstrate what things looked like before the resident took possession and after. It could keep you out of court. 

Security deposits can be difficult to navigate, especially if there’s a dispute between you and your tenant. You can prevent this with excellent documentation and a good tenant relationship. 

Professional Columbus property management can also help. Please don’t hesitate to reach out to us at Solutions for Real Estate.