Written by Jamie Palmer, President and Broker of Power Properties

The number one complaint we receive from tenants on Google Reviews, by a wide margin, is “Power Properties scammed me out of my security deposit, they are the shadiest landlords ever!”. So I thought I would address security deposits head-on, all the nitty-gritty details and requirements, and teach you how to make sure you get your security deposit back in full from any landlord.

First off let me say this information applies to Alberta, and I can’t speak to other provinces or states, although usually there are a lot of similarities between jurisdictions.

Damage deposits or security deposits provide exactly that, security for the landlord in case the tenant fails in their obligation to maintain the property and return it in the condition they received it. Landlords are taking a risk in allowing someone to live in a property, having a security deposit helps mitigate the risk that the tenant may damage the property leading to expensive repairs and lost income.

How Much?

So first off in Alberta, the maximum amount of a security deposit is one month’s rent at the start of the tenancy. This means the total of any and all refundable deposits can only equal one month’s rent. It doesn’t matter what you call them, pet deposit, key deposit, rental deposit, the total can only equal one month’s rent. Once paid, the amount doesn’t change throughout the tenancy even if the rent changes. Landlords are required to deposit the security deposit into a trust account and pay tenants the legislated amount of interest either annually or at the end of the tenancy. I should note that for the past 15 years the legislated amount of interest in Alberta has been zero, reflecting the low-interest rates provided on bank accounts.

Timing

Landlords will generally require payment of the security deposit prior to giving tenants possession of the property, and prior to completing a move-in condition report. This will be in addition to the first month’s rent, so you should expect to have two month’s rent ready if you are planning to rent a property.

The Move In Inspection

shutterstock_1785374375 (Large).jpg — “It doesn’t matter how many photos or videos you have, you **must** have a written report.”

On possession day (move-in day), you and the landlord will go through the property and conduct a move-in condition report. This records the condition of the property at the start of the tenancy. This report must be in writing and it must be signed by the person(s) completing the condition report.

As part of Power Properties Proven Process, we make a video of the property showing every scratch, stain, and blemish in the property, we also photograph any defects in the property so we have a written, video, and photographic record of the property. We do this for a number of reasons, but the number one reason is people’s memories are terrible! I can’t remember what I wore two weeks ago let alone whether there was a chip in a bathtub two years ago. By thoroughly documenting the property it avoids unnecessary conflict over what the property was or was not like when the tenant moved in.

We also provide tenants with the opportunity to let us know if they find something we missed in the first five days after they move in.

Now, this is really important, if there is no written move-in condition report then nothing can be deducted from the security deposit. It doesn’t matter how many videos or photos you have, you must have a written report.

Damage Happens, Now What?

In the immortal words of ODB “Now gimmie my money”. You have decided to undertake what has been described as one of the most stressful events, second only to divorce, and move. How do you make sure you get all of your security deposit refunded? One of the best things you can do is give yourself time to move out and time to clean. Try to arrange possession of your new home before you have to move out of your existing home. This will allow you time to fix any damage and give the house a good clean.

Damage happens, we get it, you and your family lived in the house and have created memories in the house. Like that time Jesse tripped and fell through the screen door tearing the screen, smashing the glass, and ending up in the emergency room with glass shards in his arm. Oh Jesse, you crack me up! (True story by the way). So first things first, fix the things that have broken, not worn out, but actually broken. This gives you control over the cost of the repair. That crisper drawer that you overloaded and cracked can be ordered online for $50, but if your landlord asks the appliance repairman to fix it, all of a sudden it’s a $50 part plus a $100 service call.

Second, follow the cleaning instructions provided. Most landlords have a standard checklist that they ask tenants to follow when cleaning. Power Properties’ standard checklist is very thorough because we want the incoming tenant to enjoy the home as much as you did. It can sound a bit excessive to have to pull the stove out and clean behind it, but the grease and dust bunnies that accumulate behind there are fierce! Nobody wants to kill someone else’s dust bunnies, you kill your own dust bunnies.

Third, clean up the yard. We get it not everyone has a green thumb or likes gardening, that’s okay, but you are responsible for the condition of the yard, so make sure you mow the lawn and weed the garden beds, ideally the day before the move-out inspection so it looks like you cared, and please for the love of all things holy, pick up after your pets. When we have to call in a landmine specialist to clean up after a pet it is not cheap.

A note on painting, if you have hung lots of pictures like an entire wall covered in 5x7 frames (actually happened), or used massive anchors to hang large pictures/TVs then you should probably repaint that wall. If you try to patch all the holes and just paint the patches you end up with a polka dot wall, it doesn’t look good.

The Move Out Inspection and Getting Your Money Back

Just like the move-in inspection, the move out inspection has to be in writing and signed by the people that completed it. Again, at Power Properties, in addition to the written report, we photograph and video any dirt or damage. If it is bad enough to be caught in a photograph or video then you are probably going to get charged for it…

If you have done all of the fixing, cleaning and tidying above and followed the move-out checklist, there is no reason you shouldn’t get all of your security deposit back, but there is a process that has to be followed. In Alberta, landlords have to provide an in-term statement of account within ten (10) days of the move-out inspection. That means if there is damage that is being charged back to you, the landlord will make an estimate of what it will cost to fix the damage, and likely the estimate will be high, and then the landlord will refund the difference. So for example, if your security deposit was $1500 and the landlord estimated there was $300 in damage, they would send a cheque to you for $1200 ($1500 - $300 = $1200). The landlord then has thirty (30) days from the date of the move-out inspection to finalize the security deposit. That means they have thirty days to fix the damage and get a receipt from the repair people. Now let’s say the above damage only cost $250 to fix, then they would have to refund you the $50 left ($300 - $250 = $50).

Miscellaneous items that you might see on an in term security deposit statement include a holdback for utilities (the landlord will want to confirm that you paid the utilities until the end of the lease), and a condominium holdback (the landlord will make sure that you didn’t get fined by the condo association while moving out). These items are routinely held back but you will get the money back on your final statement assuming everything was found to be in good standing.

Myth: Scummy Shady Landlords Just Want to Steal My Money!

There is a huge misconception that landlords like to keep security deposits as some sort of bonus source of revenue. I can assure you that is the exact opposite of what landlords want! In a perfect world, every tenant would leave the property in the same condition they received it, and get 100% of their security deposit back. You see it creates conflict and work when tenants don’t leave properties in good condition, and that uses up a tremendous amount of time. Time to discuss with the tenant why the giant red wine stain in the middle of the cream carpet is not “wear and tear”, time to hire the carpet cleaner to go and clean the carpets, and time to explain to the new tenants that the stain really will come out and we are really sorry the property is not ready for you to move in. All that time is time the property manager could be spending working with other clients to get their properties rented (which is actually how we make money) or spending time with their families. If a part of your security deposit is being held back then there is a good reason. Sometimes it’s hard to accept responsibility for things that were accidents (right Jesse), but at the end of the day recognize the property manager is not trying to punish you, they are restoring the property to the same condition you agreed it was in when you moved in.

Summary

In short, security deposits are capped at one month’s rent, make sure the move-in inspection is in writing and signed, and clean the property so well that you would be happy to move into it .even though you are in fact moving out of it, and you will get your full deposit refunded.

Written by Jamie Palmer, President/Broker of Power Properties Ltd.

Jamie Palmer is the President and Broker of Power Properties. He holds a Certified Property Manager (CPM®) designation, the highest designation in Property Management in North America. He earned an Honors degree from the University of Toronto, and he has over two decades of experience in property management.

Power Properties was established in 1980, and is a member of the Canadian Real Estate Association, the Real Estate Institute of Canada, and the Calgary Residential Rental Association. They currently manage over a quarter billion dollars in residential real estate and collect over one million dollars in rent each month.