Property Inspections: Move-in, Live-in, Move-out & Move On!Posted on June 25, 2012 by
How you monitor the condition of the property will influence your relationship with your tenant, how quickly you can turn the property when a tenant moves out, and the over-all income of the property. If you plan on holding a security deposit to be used for damages against a property, you must conduct a comprehensive move-in/move-out inspection.
This article addresses how communication, documentation and setting expectations with your tenants through scheduled inspections will result in a better landlord-tenant relationship, a better maintained property and avoid costly court cases, all of which effect the net income of rental property.
The Property Move-In Inspection:
The move-in inspection establishes the condition of the property when the tenant takes possession. This inspection should be done prior to the tenant moving in, prior to collecting the security deposit, and must be signed off by the tenant. Without a properly conducted move-inspection, it will be impossible to prove damages when your tenant moves out. Remember, the security deposit is the tenant’s money. The landlord has the right to hold their money as collateral against damages they may cause during the term of their lease; therefore it is critical that both the tenant & the landlord agree on the condition of the home when the tenant takes possession. The condition is documented with the move-in inspection. The following are guidelines and opportunities for a properly conducted move-in:
- This is a good time to establish rapport & set expectations with your new tenant.
- Document the condition of the property on a move-in /move –out inspection form. Note any (AS IS) cosmetic conditions that will not be corrected so that the tenant is not charged for them at move-out.
- Identify any items that were not addressed during the make ready process that will need to be completed or repaired. These “punch-out” items can be listed on a separate move-in repair sheet. Correcting these items quickly will establish you as a responsible landlord and get you off to a good start with your tenant.
- Set expectation for the use and care of the property. A well written lease should have provision for the use and care to avoid conflicts between parties.
- Make the move-in/ move-out inspection form and the move-in repair list (if needed) a written attachment to the lease for future reference. Then scan and email or send copies to all parties involved. Giving all parties access to a shared document web location is also an option. Good communication & documentation is the best way to avoid future conflict.
The (Live-In) Interim Inspection:
It is strongly recommended that you inspect the property during the term of the lease. We recommend inspecting the property 3 months after a new tenant moves in & yearly thereafter as a minium. By visiting the property 3 months after a new tenant takes possession, you will get a good idea of how well your home is being taken care of. You will also find out about any problems or repair issues that may not have been exposed during the initial move-in. This happens more often when leasing a home that has undergone a major renovation prior to leasing. The interim inspection should include a maintenance check list with items like changing the A/C filter and smoke detector batteries. Be sure to have a provision in the lease to cover access to the property for maintenance and routine inspections. Several advantages for interim inspections are:
- Small repairs can be completed at the time of inspection.
- To insure that the property is being properly maintained.
- To insure occupancy in accordance with the lease. No unauthorized pets or additional people.
- To check the property for maintenance issues that the tenant may not be aware of.
- Small repairs that may not be reported by the tenant can be addressed preventing a large repair later.
- Repairs can be charged to the tenant as they occur insuring the security deposit is more likely to cover damages at move-out.
- Making sure the property is maintained during tenancy will help to reduce the turn time when the tenant moves out.
The Move-Out Property Inspection:
The move-out inspection of a property should be completed at the conclusion of the lease and after the tenant has completely moved out. It is preferred that the tenant gives written notice of their last day to occupy the property. Most state requires the move-out inspection to be completed within a given time frame after the tenant vacates the property or you can lose your right to damages against the security deposit. Some states even have a rescission time if there is a dispute which enables the tenant to complete issues themselves that they can be charged for. The objectives of the Move-Out Inspection are to:
- Identify any damage above normal wear and tear.
- Determine the amount of funds that will be held from the security deposit to cover any required repairs or expense items due from the tenant under the lease agreement.
- Document any owner’s expense items and repairs to turn/make ready the property in order to start your make ready process as soon as possible.
- Send a copy of the Move-In/Move-out inspection report to all parties within the time frame required by state laws governing the property. In Georgia the report must be completed and delivered to the tenant within three business day of move out.
- Allow for any rescission time for the tenant to make correction on items of dispute if needed. These items should be sent to the manager in writing and within the time frame required by the state laws governing the property. In Georgia the notice of dispute and all work must be completed with five days of completion of their Move-Out inspection report or the tenant has lost their right for self-correction.
Having a good inspection process in place for the management of rental property is a must. Maintenance and repair issues on rental properties are the most litigated area landlord’s face. Most occur regarding the move-out inspection and damages caused by the tenant or the over statement of damages by a landlord. Good communication and written documentation along with a great inspection program can help avoid costly court cases and time lost that could be better sent in more productive areas of real estate investing.
Please note that Real Estate is regulated on a state level. You should always refer to the landlord law of the state in which you are doing business for compliance issues. Always do your own due diligence when dealing in real estate transactions.