We have shared a blog about how to handle security deposits in Philadelphia. Hopefully, you found that useful in determining how much money to collect as a security deposit and how to handle the return of the deposit within the legally specified time period.
Today, we’re talking about security deposits again. This time, however, we’re focusing on what you can and cannot deduct from a tenant’s security deposit in Philadelphia. This is usually where disputes between tenants and landlords will occur. If you have a solid understanding of what’s fair game and what isn’t when it comes to keeping all or part of a deposit, you can avoid potential conflicts with the tenants who have moved out.
Deducting for Unpaid Rent in Philadelphia
If your Pennsylvania tenant has moved out of the property without being up to date on the rent that is owed, you can keep part or all of the security deposit, depending on how much is owed and whether you can sufficiently document that rent has not been paid.
There are many scenarios in which a tenant might leave with a balance still being due.
- Sometimes, a tenant will neglect to pay the last month of rent, knowing that they won’t be evicted before they’ve moved out of the home. This is not a great situation for you as the landlord, and if you have a tenant who has not paid the last month of rent, you should follow your rent collection policy as you normally would. When a full month has not been paid at the time a tenant moves out, use the security deposit to cover it.
- Perhaps partial rent payments were made during the lease term and the tenant never caught up. If there’s an outstanding balance on the tenant’s account, you can use the security deposit to bring it current.
You’ll need documentation if you’re going to keep all or part of the security deposit to pay for back rent. Make sure your accounting statements are up to date and reflect the balance owed.
Deducting for Unpaid Utility Accounts
Your tenants may owe more than just rent.
They might have overdue balances with utility companies as well. This can create a big problem for you, because sometimes a utility will not return the account at a specific address to your own name or to the name of your next tenant when a balance is due.
If your lease agreement makes tenants responsible for paying the utilities, they are responsible for keeping the lights and the water on until they move out.
When moving out, Pennsylvania tenants are supposed to pay all utility bills in their names. If they fail to do so, the landlord can use the security deposits to cover those expenses.
Again – you’ll need some kind of documentation to prove that you needed to cover the account balances as the landlord. When you let your tenants know why you’ve kept part of the deposit, include the receipts for the utility accounts you settled.
Cleaning Costs in Philadelphia Rental Properties
You should expect your tenants to leave your rental property in the same condition that it was in when they began renting it. The lease agreement should reflect your cleaning standards and the expectations you have for cleanliness when tenants move out. If the home needs to be professionally cleaned, you can deduct the cost of those cleaning services from the security deposit.
Everyone has a different standard for what’s clean.
If you took some good pictures during your move-in inspection, you can likely demonstrate to the tenants what you’re looking for in terms of cleanliness after move-out. They should clean all the trash out of the home. There should be no food left in the refrigerator.
When you pay for professional cleaning services after a tenant moves out, keep the receipts and invoices so you can provide them with the itemized statement you send your tenants when money is withheld from the security deposit.
Deducting for Property Damage
This is the most common reason that landlords will make deductions from a security deposit: property damage.
Damage goes beyond wear and tear. It’s most often due to neglect or abuse. Maybe a tenant’s child used the dishwasher door as a trampoline and the appliance broke. Maybe a window is broken or a floor is severely scratched or a carpet is stained. There could be holes in walls or doors off hinges.
All of these are examples of damage. You can hold the tenant accountable by charging the deposit for repairs and replacements.
Things get complicated when it’s difficult to determine what damage is and what normal wear and tear is.
Normal wear and tear is the responsibility of the property owner. You will have to cover the cost of repairing those tiny nail holes in the wall or the scuff marks from furniture. Understanding the difference between wear and tear and property damage will save you from an unpleasant dispute with your departing tenant.
This highlights the importance of documentation.
You need to demonstrate, without any doubt, that you are justified in withholding any money from the security deposit for damage. You’ll need a move-in condition report and a move-out condition report.
You can deduct for damage such as:
- Large holes in the walls or floors.
- Changes to the property, such as different paint colors that were not pre-approved.
- Tears, stains, or holes in carpet.
- Water stains on wood floors.
- Broken appliances, doors, or windows due to abuse.
- Missing or cracked bathroom tiles and mirrors.
- Writing on walls, floors, and surfaces.
- Yards or gardens that have been destroyed due to animals, cars parked on them, or excessive trash.
These examples go well beyond normal wear and tear, and the photos you took before a tenant moved in will prove that.
We know dealing with security deposits can be difficult, and we’re here to help. Contact us at TCS Management if you’re not sure what you can and cannot make deductions for.
TCS Management is a full service property management company headquartered in Philadelphia, Pennsylvania, also serving Harrisburg, PA, Cherry Hill, NJ, Wilmington, Delaware and the surrounding areas. We focus on single-family and multifamily residential property management of homes, condos, townhomes, and apartment buildings.
