Damage deposits are generally used as part of a contract when someone is leasing or renting their apartment, house, office, or any other space that means someone will be occupying the area or property on a monthly lease.
The laws that apply to your particular country when it comes to a damage deposit will need to be adhered to whenever you are setting the amount and when you decide to make deductions. To be absolutely sure make sure you seek the advice of a legal expert whenever you are drawing up a rental contract.
How Much Should the Damage deposit Be?
If you are renting your property to someone on a long-term lease, then the normal damage deposit to ask for is around 2 to 3 months’ worth of the monthly rent. In general, the international standard is 2 months and the renter also ask for the rent to paid in advance.
If you are only renting your place out on a short-term lease such as a vacation rental, then the security deposit is not going to include a month’s worth of rent. In fact, you are posed with a different problem here because you cannot charge too much as you may put people off booking your property.
For more advice about security deposit check out short-term lease damage deposit advice.
When Do You Need To Return The Damage deposit?
Any damage to the property can be assed when the tenant ends the contract and moves out. When the contract ends, you are not obliged to return the damage deposit until 30 days after the tenant has left the property. This gives you as the renter the chance to discover any potential damage.
Make sure that you tell the tenant this before he/she moves in and make it very clear on the rental contract that the damage deposit will not be returned for at least a month after moving out.
How Do You Legally Deduct Money from The Damage deposit For Damages?
Before your tenant moves in, you will need to through the tedious task of gaining proof of the current state of the property. A video camera and photographic evidence should be used. If you do not do this and you try to deduct money from the deposit, you could find yourself in a legal dispute, which are not cheap.
Make sure that you get your new tenant to sign off on the photos and the video if possible. This will give you that little bit of extra protection. You should also list of itemized deductions of all items in the house down to something as simple as blinds.
You now have proof that can legally give you evidence of any damage because you can send before an after picture. You would then need to deduct the value of the damaged item from the itemized list. If it is something like damaged leather, then you will need to put a rough estimate of the cost to fix any damage and make a note that you will need to get a quote.
All of these activities give you proof of damage and allow you to charge the correct amount for damages or replacements without risking overcharging.
What About Taking Away Security Deposits For Non-Paid Rent?
Sometimes people will move out without telling you, or they will claim legitimately or illegitimately that they cannot stay throughout the full contract period agreed or cannot pay the last 2 months’ rent. Once again, the only way to tackle this issue is to make sure that you seek legal advice as the law is different in every country.
In nearly all cases you have the right to withhold the security deposit and only return it if you manage to get another person to rent the property within a month. Then you can return 1 month’s deposit minus damages.
Can I Charge For Wear and Tear?
In almost every instance you cannot charge for wear and tear. Even you put it in the contract and the tenant signs, but the law says that you cannot charge, then you have no right to uphold this clause or term. Wear and tear is something that you just have to accept if you are renting your property.