Handling and refunding rental deposits

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26 Nov 2012

All landlords are entitled to take a deposit as security from their tenant, and from one to two months’ rent as a deposit is a good amount.  

The importance of an incoming and outgoing inspection is imperative to ensure a record of the state of the property before the new tenant moved in and after he moved out.

This, advises Michael Bauer, general manager of property management company IHFM, ensures that if the tenants do not keep the property in the condition in which it was received or fail to pay, the landlord will have funds from which to deduct the repair or cleaning costs.  

On the other hand, the tenant should, if they want to protect their deposit, keep the property in the state in which it was received, apart for normal wear and tear.  

The interest accrued on the deposit held must be added to the deposit refund paid to the tenant at the end of the lease.  

A landlord can claim for things in or on the property that are damaged by tenants or their guests; for cleaning expenses, for example, if the carpets were clean when the tenant moved in but on moving out there are pet or beverage stains on the carpets.  

The importance of an incoming and outgoing inspection is imperative to ensure a record of the state of the property before the new tenant moved in and after he moved out. 

Landlords can deduct money from the deposit refund if it is found that there is an amount outstanding on the water bill or other services not paid for. If items from the house have gone missing, such as door handles, access cards, or keys, the tenant is responsible for the cost of replacing these. Obviously, if there is still unpaid rent, this, too, can be deducted from the deposit. 

It is very important, says Bauer, that before a tenant moves into the unit being let out that a condition report is completed. Ideally the landlord (or his agent) and the tenant should walk through the property together noting items that are not in “perfect” order or things that need to be replaced before the keys are handed over.  

"If possible, take photos of the rooms, so that you have proof of the condition of the rooms and attach these photos to the lease agreement, as this will help if there are disagreements later." 

Bauer advises landlords to also allow the tenant three days to remedy any damages before commissioning any repairs and to always obtain more than one quote.  

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