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Xenia's property management quick tip - Tenant damage Vs Wear and Tear

Discussion in 'Property Management' started by Xenia, 19th Jan, 2016.

  1. Xenia

    Xenia Adelaide Property Manager Business Member

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    [​IMG]

    Claiming expenses on a property can be done in several different ways and property investors should know what to claim as wear and tear (through a depreciation schedule) and what to claim as tenant damage (directly through tenant via bond claim or insurance).

    Many times investors will get the two confused and try to claim wear and tear items through a bond claim or insurance claim. Wear and tear needs to be allowed for in a property, depreciated over time and cannot be claimed directly from the tenant.

    One of the reasons landlords get confused is because they do not see the property for years and may see the wear and tear on the property in one visit and confuse it with tenant damage. That is why regular inspections on the property are so important, so that landlords can see the overall effect long term leasing has on properties.

    Depreciation schedules are also important and best when the property is new or newly renovated so that items can be depreciated over time and replacement expenses accounted for.

    Wear and tear is damage to property that is caused through continued use or age of property. Some examples of wear and tear are:

    Carpets worn or flattened in high traffic areas.

    Minor scuffs on walls, paint peeling on walls – due to age or cracks in walls or cornices.

    Bench tops discoloration due to long term use.

    Locks or hinges on doors or cupboards becoming loose through continued use or misaligned due to building movement.

    Roof tiles deteriorating over time.


    Tenant damage can be deliberate or accidental but is damage caused by a tenant during a given incident. Some Examples of tenant damage are:

    Spills on carpet causing stains.

    Chips in paint or corners caused by tenant moving furniture.

    Screen doors torn by pets.

    Knife marks, burn marks or stains on kitchen bench tops.

    While it is important that investors have the right expectations on their property, it is equally important for property managers to identify tenant damage and seek compensation back to the landlord where it is due.

    We have had a number of properties in our agency where burn marks on bench tops, cracks in kitchen tiles – where a tenant had dropped a heavy saucepan, damage to window sills – where a tenant had been watering pot plants, were identified as “wear and tear” by other agencies and put aside. We were able to successfully claim all above items as tenant damage and seek landlord compensation through bond refund and/or insurance claims on the property.
     
    Last edited: 20th Jan, 2016
  2. rmb

    rmb Member

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    Dear Xenia,
    All you have noted is so true and this can add thousands in repair bills to a property owner that could (and should) have been invoiced elsewhere.
    On that note, I am looking for a new property manager in the Logan Qld area. Would anyone have any recommendations?
     
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  3. Beanie Girl

    Beanie Girl Well-Known Member

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  4. jim1964

    jim1964 Well-Known Member Premium Member

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    When minor scuffs are scrubbed with the wrong cleaner,and mark the walls badly,where is this classed as.Not intentional,but still caused by the tenant?
     
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  5. thatbum

    thatbum Well-Known Member

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    It depends. Why wouldn't the resulting marks be removable though?:
     
  6. jim1964

    jim1964 Well-Known Member Premium Member

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    The paint has been removed due to scrubbing the initial marks.Must have used oven cleaner.
     
  7. thatbum

    thatbum Well-Known Member

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    Probably negligent damage then. Ironically, the initial scuff marks were possibly not the responsibility of the tenant to fix anyway.

    Although the situation could be complicated by whether you or your agent told the tenant they had to fix it...
     
  8. Xenia

    Xenia Adelaide Property Manager Business Member

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    I would put this under tenant compensation to the landlord. Some go through, some are challenged, worth a go Jim.
     
  9. Xenia

    Xenia Adelaide Property Manager Business Member

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    OH - I just realised I have over 1000 posts!
    Now when did this all happen lol
     
  10. DiligentPM

    DiligentPM Well-Known Member Business Member

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    Thank you for sharing this great post - this is an excellent overview of contrasting the difference between "wear and tear" that can be offset via a depreciation schedule and "tenant damage" - you are right, it is critical for an effective PM to note any damage early to rectify it otherwise at the end of a lease term the tenant could argue its 'wear and tear over time'
     
    Last edited: 21st Jan, 2016
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  11. balwoges

    balwoges Well-Known Member

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    Its just as important to educate the owner to keep his property well maintained as for the tenant to look after the landlord's property. In the many years of managing properties I despaired of some owners who expected their property to remain as fresh as the days they bought it ... :)
     
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  12. Xenia

    Xenia Adelaide Property Manager Business Member

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    Every property managers dream is owners that keep properties maintained. Most want patch jobs instead of having things properly done.

    I would love properties re-carpeted and repainted every 8 years or so and can get these things done in 4 days with the owners permission.
     
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  13. kitdoctor

    kitdoctor Well-Known Member

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    In a similar vein what really bugs me is when tenants do a lot of damage to plasterboard walls in a say DLUG garage e.g. by leaning bikes, tools, gardening equipment, large/heavy items etc. against them.

    Often this is just dismissed as fair, wear and tear but IMO there comes a point when a line must be drawn. We've had new townhouses only a few years old where the garages reached the point where they needed a lot of patching and repainting with nothing claimed back from bonds.
     
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  14. kitdoctor

    kitdoctor Well-Known Member

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    We had a tenant vacate a property recently and amongst many things that we tried to claim from the bond was a broken handle on a dishwasher. Now just to be clear, the handle is an integral part of a fascia/control panel ($220 replacement part) it's not some thing that can work loose or be detached. The tenants reported to PM that it 'came off' but for it to come off it must be broken or snapped off.

    Our tenant vacates leaving our property dirty, broken light fitting not replaced, dead courtyard garden (carpet placed over it to create an additional storage space), fence pailings taken off fence etc. etc. Tenants claimed they had it professionally cleaned. PM spends three weeks trying to get them prove they had a professional cleaner in and get the tenant back to do additional cleaning.

    In the mean time the tenant submits their claim for their full bond. Once they do this you seem to be screwed. Fast forward and our PM ends up in a RTA mediation meeting and the tenants simply refuse to accept they are liable for payment of fixing it. We don't even get an explanation from PM or even after contacting the mediator directly. It seemed the most winnable claim. So now the only option is to go to QCAT - $65 application fee and $550 in PM costs. From a cost benefit point of view it's simply not worth it.
     
  15. Nemo30

    Nemo30 Well-Known Member

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    Get a pm who doesn't charge for tribunal
     
  16. Xenia

    Xenia Adelaide Property Manager Business Member

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    Oh my gosh
    Yeah it doesn't seem worth it.

    If you switch property managers and take it to someone who does not charge tribunal costs, they may be able to put it through for you as part of the management process.
     
  17. Heinz57

    Heinz57 Well-Known Member

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    Xenia how hard is it to work around tenants? I have 5 properties in need of paint and carpet but the tenants have so much stuff on the floor I think the tradies would not know where to start. I also have 3 bathrooms in need of full reno but how long can you realistically inconvenience people while you replace toilets, shower screens etc. talking about long term tenants 10 years plus.
     
  18. Xenia

    Xenia Adelaide Property Manager Business Member

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    Heinz I would not be replacing carpets and painting while tenants are in there if I can avoid it.
    2 reasons.
    1. The tenants are probably used to the condition of the property and if they are happy to continue, it's an expense you can do without. These properties are already tenanted. It would be a different case if the tenants are asking for it and will be leaving therefore causing a vacancy is these items were not done

    2. I would offer new carpets and new paint to Tenants on a brand new laease and over the rental amount that the current tenants are paying. It is always much easier to rent a property when it's had fresh paint and new carpets so I would keep it until the time comes when the tenants vacate then revamp the property to get it back on the market again.

    We have done lots of cosmetic improvements on properties in between tenants. It's a good idea to have all the tradespeople ready to go during the 28 day timeframe that the tenant needs to give you to vacate and have everything done and back on the market within a week

    Are there any hints of these tenants ever vacating? Sometimes the best rent increases are done with a fresh set of tenants and some property improvements.
     
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  19. MRTLR1000

    MRTLR1000 Active Member

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    Cannot agree more with some of the statements. Im a loss adjuster for Insurance, each week I go to houses that have been damaged by tenants and meet with the owners. The things they claim and demand Insurance to pay, is sometimes a joke. Some of them need to look at the property and think well its just not about getting money, but to also make some of the tenants live in a nice happy place...some owners need to be ashamed , so it is two sides to the story
     
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