By Robert Griswold
Question: I am buying some rental units with a partner. Since we want to reduce costs and keep the rents below market, we plan to perform certain parts of the work ourselves. For example, we will personally handle the cleaning, painting and repairs necessary as each tenant vacates the property. To what extent, if any, can the owners deduct their reasonable labor and material expenses towards cleaning and needed repairs from the security and cleaning deposit?Tenants' attorney Steven Kellman replies:
As owners, you may deduct those amounts from the security deposit to repay any rent left owing, to cover costs of cleaning or to make repairs caused by use beyond ordinary wear and tear. You may hire services to do the cleaning and repairs and deduct their bills for labor and materials.
However, courts frown upon landlords charging for their own labor, and therefore you should not do any such repairs yourself if you want to be reimbursed for the labor. This is because a landlord who charges for his own labor creates a situation that casts doubt on the validity of the money charged. The labor charges claimed may be simply inflated as to the value of the work performed. Perhaps the work done was really routine maintenance being improperly passed on to the tenant while calling it a necessary tenant-caused repair item. Maybe the work claimed was not really necessary at all, but the landlord took advantage of an opportunity to improve or upgrade the unit at the tenant's expense. Further, there would be no unbiased worker to be able to explain or justify the repair.
While I am not accusing you of such intentions, the uncertainty of your own labor charges creates this legal suspicion, which I am sure you will want to avoid. This resolves the question about how to make the labor payments to the owners since there should not be any.
Property manager Griswold replies:
While Steve's comments may appear harsh, he accurately describes the position frequently taken by the judicial system when resolving tenant/landlord disputes over security deposit issues. While many rental property owners prefer to perform the cleaning and repairs of the rental unit upon turnover, I recommend that a prudent owner evaluate each potential rental turnover separately when determining whether to perform the needed work themselves.
If you have indications from the departing tenant that they will be challenging or unreasonably scrutinizing the security deposit disposition statement, then I strongly suggest that you use independent outside professionals for all cleaning, painting and maintenance repairs. Of course, you should be able to provide your tenant with copies of dated and detailed receipts for all labor and materials used in turning the rental unit. It is my opinion that there will be certain situations in which it makes no sense to do all of this work yourself if you will then find yourself in court desperately trying to justify your hard work and generous attempts to save your former tenant money.
I have received thousands of letters, e-mails and phone calls to my radio show over the past 10 years, and I am convinced that the majority of rental property owners are honest in determining the proper security deposit charges, and often are able to personally perform rental unit turnover work at lower costs than outside professionals. However, I have also seen some extremely greedy and vicious landlords that seem to believe that the tenant's security deposit is there for the taking and they have no qualms trumping up phony or exaggerated cleaning and repair charges.
If your plans are to perform the rental unit turnover work yourself, I suggest that you let your tenant know upfront. You should provide them with some pricing guidelines from professional firms and then let them know what you would charge them if you completed the work yourself. Let them be involved in making the decision. While still no guarantee that a dispute will not arise, the majority of potential court challenges could be eliminated with a little forethought and communication in advance.
Copyright 2003-2006 Inman News.
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