Property Management Blog

What Can I Pay for with the Security Deposit for My Phoenix Investment Property?

Dora Pinter - Friday, June 19, 2020

Arizona law is pretty clear when it comes to security deposits; there are limits to how much you can collect and there are timelines for how long you can take to return the deposit at the end of a tenancy.

Following those regulations isn’t usually a problem for Phoenix landlords. What gets tricky is knowing what you can and cannot deduct from that deposit.

Today, we’re sharing some of the things you can do with that deposit and some of the things you can’t do.

Wear and Tear versus Tenant Damage

Landlords can deduct the cost of any tenant damage that’s due to misuse, abuse, or neglect of the property. If there’s a door that’s hanging off its hinges and the wood is warped and cracked, you can charge for that. If there’s a large hole in the wall or stains on the carpet, you can use your tenant’s security deposit to pay for those things. Sometimes, tenants have accidents that are unintentional but still their responsibility. Broken appliances, torn window screens, and missing remotes or keys are all reasons to deduct from a deposit.

However, wear and tear is the landlord’s responsibility. You cannot charge the deposit if there’s a dent in the carpet or scuffing on the wall because a heavy sofa was in place there for a year or more, that’s considered wear and tear as well. This is the general deterioration that happens to any property, no matter who is living there. These are costs you’ll have to cover yourself.

Life Expectancy of Paint and Carpet

Everything in your Phoenix rental property has a lifespan, and that will impact what you are able to charge and when. If your tenant moves out and you need to replace the carpet because it’s stained and worn, you have to measure the age of the carpet against the length of the tenancy. The general life expectancy of carpet is five years.

So, if you had that carpet for four years and your tenant only lived in the home for two years, you cannot charge the security deposit for the full cost of the carpet replacement. You’ll have to prorate it. The same standard applies to paint; there’s a five-year life expectancy, so determine how much of the cost should be the responsibility of your tenant based on the last time you painted and the length of the tenancy.

Avoiding and Resolving Security Deposit Disputes

The best way to avoid a security deposit dispute is with excellent documentation. Make sure your lease states exactly how you expect to find the property returned to you after the tenancy. Do a thorough move-in inspection before you turn possession over to the tenants so you have a clear and accurate representation of the property’s condition before move-in. Then, do a similar and well-documented move-out inspection so you can compare the condition of the home. Take a lot of pictures and videos.

In Arizona, you have 14 business days to return the deposit with an accounting of what was withheld. If your tenant disputes a charge, look at the move-in and move-out inspection reports together. Evaluate the photos and watch the videos. That might help your tenant understand what was charged and why.

Avoiding and Resolving Security Deposit DisputesThere’s a lot to consider when you’re collecting, holding, and returning a security deposit for your Phoenix rental property. If you have any questions or need any help, please contact us at Service Star Realty.