Most states have some degree of legislation regarding the return of security deposits. In many states, the security deposit must be returned to the tenant within 14 days; others have 21 or 30 day laws. Some states require the money to be kept in a separate account for the duration of the lease term, and some require that the landlord pay the tenant interest on the amount. Also, many states have a statutory limit on the amount of money that can be collected as a security deposit at the beginning of the lease; if such a limit exists, it is generally one to two months rent.
THE EASY THINGS TO FIGURE OUT
One year my tenants were averse to using a shower curtain properly, and caused a reasonable amount of water damage to the lower unit’s ceiling. After they moved out, I hired a contractor to fix the ceiling, and simply charged the tenants what the contractor billed me. Things like missing blinds and switchplates are also easy to figure out – I simply bill what the supplies cost me, plus a small amount for my time.
THE LESS EASY THINGS TO FIGURE OUT
How much do I charge for an excessive amount of scratches on a newly refinished hardwood floor? Paint on woodwork? The scratches on the floor, an amount above normal wear-and-tear have to be accounted for, but I obviously can’t charge the amount that refinishing the floors would cost. While the paint on the woodwork isn’t bad enough for me to actually go through the trouble of removing it yet (goof off and some elbow grease usually does the trick), it’s still damage to the 100 year old woodwork. I haven’t figured out a good scientific way to charge for things like this, other than to just pull a number out of my head that seems reasonable. For the hardwood floors, I charged $40, for the paint on the woodwork $60.
HOW MUCH IS YOUR TIME WORTH?
Another factor coming in to play is your time. If there is damage or painting to be done, you can deduct for your time, at a reasonable hourly rate. I’ve generally figured $35 an hour, but have a feeling that this is on the low end of things. I use this hourly rate to figure out how much to charge for miscellanous things, like personal items left in the storage area (I bill them according to how much time it took me to haul their things out to the trash/curb.)
Thus far, I have always had tenants who left their place clean as a whistle. One year, it was so sparkling that I actually gave them a $20 credit on their deposit for doing such a fantastic job. When the day comes that I have to deduct for cleaning charges, I plan to use my hourly rate to figure the charges.
HOW MUCH DO YOU VALUE YOUR RELATIONSHIP?
This is where I become less business-like. I have on occasion ran into past tenants on the street, and would rather that they didn’t hate me for being another money-grubbing landlord who took them for every dime. I don’t take as much money out as I could; but (perhaps foolishly) go for the karma instead.