Dear Property Guy: Help… Tenant's dog trashed the carpet

Dear Property Guy:

I recently had a tenant move out and need to know how to handle their security deposit. We had brand new carpet when they moved in, and their dog absolutely trashed it. We tried to clean it, but the stink is impossible to get out. They need to buy us new carpet, right?

– Wall to Wall

Dear Wall to Wall:

This falls under the category of No-But…

No, they won’t be buying you all new carpet. But, they will be buying some of it.

Let’s agree that this falls outside the category of “normal wear and tear,” and that you will be replacing the carpet. The amount that the tenant is responsible for is not based on what you are paying to replace the carpet, but rather the amount you paid for the carpet initially. Follow me here.

At the risk of getting overly philosophical, everything has an expected lifespan. For “rental grade” carpet, this lifespan is more like five years. If your tenants were there two years and you assume a five year carpet lifespan, they owe you for 3 years of your carpet’s tragically shortened life.

So if you initially paid $1,000 for the carpet, with a five-year expected lifespan, each year is worth $200. They lived there two years, so they would owe you $600 for shortening its lifespan by three years.

Again, the amount they owe has zero to do with what it will cost you to replace the carpet.

One last thought: Laminate flooring. Never carpeting in a rental. Never.

— Mike

Dear Property Guy:

I’m new to this whole property owner/landlord thing. Do most rental properties include utilities in with the rent or not? What is usual and customary?

— New Rental Owner

Dear New:

This is an interesting one. In Redmond, this decision is made for you. The rules require utilities stay in the property owner’s name. Sisters is considering a similar rule for water, but hasn’t implemented it yet.

The reason is obvious. The utility companies have been burned too many times by renters peacing out on their bills when they depart. Leaving the utilities (you and I, actually) to foot the bill.

There’s a few ways to handle utilities:

1) Utilities in owner’s name, and include it in rent as a flat-fee;

2) Utilities are placed in renter’s name, and they are responsible;

3) Utilities in owner’s name, and they charge the tenants the actual amount monthly.

The implications of Options two and three are pretty obvious. But number one begs the obvious question, how does an owner know that renters won’t run the water all day? Or what if a renter is running massive grow lights?

If an owner includes utilities in the rent, there should be a lease addendum stating how much water and power is “normal” for that unit with a similar number of people. This addendum will also include how overages to bills are to be handled. We’ve moved to that model with several clients, who have found it simple to implement, especially for ADUs or units with more frequent turnover.

— Mike

Mike Zoormajian is principal at WetDog Properties in Sisters. Providing local real estate, property management and investor services. Questions and comments to: [email protected]. Free legal advice is worth what you pay for it. Consult a real attorney before doing anything crazy.