754 Elden St l Suite 301 l Herndon, VA 20170 l ChambersTheory.com l Office: 703-609-2323

We have found security deposits to be the biggest point of contention in property management. There

are many misconceptions and confusion about what a security deposit represents and how they are

reconciled. We encourage our clients to consider their rental as a business, and understand that normal

lease responsibilities. The old terminology to bill tenants for damages “beyond normal wear and tear” is

difficult to use as a measure and often leads to arbitrary outcomes.

The new tenant’s expectations or repair requests should not be the determining factor of what the last

tenant’s security deposit deductions are.

If we assign security deposit damages to what actual costs are for items we can clearly define resulted

from tenant misuse/abuse/neglect of their lease responsibilities, then we can confidently proceed and

need not be concerned about the former tenant’s reaction or feelings on this. However, if we are

arbitrary in our approach, then as a property manager we have a responsibility to you to inform you of

potential outcomes, and possible incitement of legal processes. While we are not attorneys, our strategy

is to recommend that clients avoid the legal process and have a clear position on exact damages and

recommendations on our experience, established industry standards, and what we would be confident

would hold up, if challenged in court. We are also required to factor depreciable value to items in the

home (paint, carpet, appliances, etc.). The security deposit must be reconciled within 45 days, including

notifying tenants of any charges.

IF a security deposit assessment goes to the legal process, the landlord nearly almost always loses if we

don’t provide the list of specific deductions within the appropriate timeframe (within 45 days of end of

lease). Waiting until the last day is not an effective strategy, and it also creates logistical issues for our

delivery of security deposit notices to the former tenant if we don’t have a confirmation of damages you

wish to deduct at least a week ahead of the last day.

754 Elden St l Suite 301 l Herndon, VA 20170 l ChambersTheory.com l Office: 703-609-2323

How security deposits are processed;

This means that oftentimes we will pay the invoice prior to the finalization of the security deposit. We

strive to have a good and healthy working relationship with our vendors to ensure top quality service for

within 30 days of receiving the bill. Since some reconciliations take up to 45 days, we will pay the invoice

as soon as possible as long as your operating account has enough funds. This sometimes causes some

confusion as to why you are paying the invoice if costs are to be charged to the tenant’s deposit. When

we reconcile the security deposit, the deposit is transferred to your operating account, a refund check is

sent to the tenants, and the amount reimburse the cost of damages stays in your operating account.

Sometimes this occurs between statement periods which you will see the invoice paid on one

statement, but the reconciliation is processed on the next.

The most common security deposit charges include;

room without permission or draws on walls, is not considered abuse. Landlords should have the

expectation to paint between tenancies.

Carpets are considered to have a six year depreciable value in rentals. Traffic wear, light stains, fading,

are considered normal wear and tear. Large stains or pet urine damages are considered abuse. For

example, if carpet is three years old with damage considered as abuse, and cost to replace $1000, we

would charge the deposit $500, based on depreciable value.

Wood flooring has a depreciable value of 25 years. Scratches, scuffs and dings are considered normal

wear. Large gouges, very deep scratches, water stains from potted plants, would however, be

considered as abuse.

Best practices to limit security deposit disputes;

754 Elden St l Suite 301 l Herndon, VA 20170 l ChambersTheory.com l Office: 703-609-2323

What has been our experience when security deposit charges are disputed or taken to court;

court. We have found that Judges who preside over these disputes have been conditioned to seeing

catastrophic damages and malicious abuse, and tend to be dismissive of any cosmetic or minor damage.

Landlord to return the entire security deposit back to the tenant, even if some of the charges are

legitimate and not in dispute. As your Property Manager, some of our recommendations and suggested

may be construed as “tenant friendly”, but the risks of going to court typically outweigh the benefits.

While there is always an element of subjectivity in the process, security deposit “amounts” should not

be arbitrary - they should be specific to the financial damages incurred by the owner as a result of the

tenant violating lease terms or misuse/abuse/ neglect at the property.

As your Property Manager, we will provide our suggestions and recommendations on what we would

consider as security deposit charges. If the Landlord directs us to charge the tenant beyond what is

recommended, we will, as your Agent, but you should be prepared to defend your position in the legal

process (with attorney expenses at your own expense) if certain damages or the overall amount is

reasonable and fair outcome that leads to security deposit success.

Thank you,

Chambers Theory Team