There is a concept in the rental housing business called "fair wear and tear." It is obvious that living in an apartment will cause a gradual deterioration of the condition of floor or floor coverings, paint, window coverings, appliances and other things. That is normal. Normal "wear" is reasonable and is, therefore, called fair wear and tear. Deterioration that exceeds normal fair wear and tear constitutes damage. Breakage of a window is not fair wear and tear; it is damage. Typically, a tenant is not responsible for fair wear and tear but is financially responsible for damage to the apartment caused by the tenant, the tenant's guests, or by pets.

Fair wear and tear is also defined by time. If a tenant moves out of an apartment after only a brief time, the cleaning and touch-up painting expenses do not necessarily qualify as fair wear and tear. Usually a tenant must occupy the apartment for a year to qualify for the fair wear and tear consideration. In some jurisdictions a greater amount of time is required to qualify.

The amount of money that may be demanded as a deposit is probably established by law in your jurisdiction, and may, for example, be twice the amount of the monthly rent. Regardless of legal restrictions, there are practical limits to the amount of money that can be demanded as a deposit. The tenant must pay a deposit plus rent for the first month in advance or, in some places, rent for the first month and last month in advance. The tenant may have to pay utility deposits and moving expenses or, even if moving expenses are employer paid, other expenses related to relocation. Moving is costly.

Some jurisdictions allow additional deposits for pets and, if you accept pets, you should require a pet deposit.

The deposit will not always offset the "damage" costs, and sometimes a financial burden incurred in preparing an apartment for the next tenant does not meet the legal definition of "damage." Consider the following actual cases.

A tenant who smoked cigarettes and was probably a "chain smoker" lived in an apartment for seven years. The tenant rarely or never opened a window. When the tenant moved out, the apartment was discolored and malodorous. The carpet and carpet pad were replaced, as were the draperies. Interior surfaces, including walls, were washed. Several coats of paint were applied. Ozone machines were used to reduce odor. Fans were installed and windows were opened to allow fresh air into the apartment. Several weeks elapsed before the odor had abated enough to allow the manager to rent the apartment and then it had to be rented to a tenant who was accustomed to tobacco odors. Years later, when the apartment was entered, the tobacco odor was still unavoidably detectable. Those expenses, including vacant days, were not recoverable.

In another case a tenant used extremely pungent body cologne in excessive quantity. After the tenant moved out the apartment was serviced to remove odor in the same manner as described above for removal of tobacco odor. Three months elapsed before the odor dissipated sufficiently to allow rental of the apartment.

In a third case an un-neutered male cat had been allowed into an apartment. The cat did what cats do; mark their "territory." The odor penetrated not only the carpet and the carpet pad but also penetrated the concrete floor requiring special chemical treatment to reduce the odor.

By contrast, broken doors, burned holes in carpet, or gouges in walls are clearly damage and the cost can readily be assessed to the tenant.

Traditionally, the tenant's deposit was used to defray the cost of repairing any damage to the apartment caused by the tenant. That is, perhaps, still true in some jurisdictions. But where law does not proscribe, apartment management companies now attempt to retain as much of the deposit as possible even if there is no damage to the apartment. Amounts may be deducted from the deposit for cleaning fees or for any plausible purpose not proscribed by law. This disposition of deposit funds generates additional revenue but creates some problems. The promise of a return of the deposit if the apartment is not damaged constitutes an incentive to avoid damaging the apartment. If the tenant realizes the deposit is going to be withheld regardless of how well the apartment is cared for, there is no incentive to exercise care. Also, the practice causes a disparity in treatment of tenants. The tenant who damages an apartment loses deposit money, but those tenants who maintain their apartments in excellent condition also lose their deposit. They are treated no better than the offending tenant. This creates some bitterness among tenants and it creates a management challenge for the apartment manager.

Deposit refunds are usually forwarded to the former tenant fifteen to thirty days after the tenant departs. The delay can be justified for a number of valid reasons: accounting procedures, supervisory review, or because checks are issued only periodically. However, it should be noted that moving is a very stressful experience for most people and it is a costly process. Tenants frequently need as much cash as they can obtain when moving. If favorable reputation is of concern for your apartment community, consider issuing any justified deposit refund to the tenant on the day the tenant clears the apartment. Reserve the right to withhold the deposit refund until the apartment has been thoroughly inspected and all legitimate charges are deducted. Sometimes an apartment is damaged during move-out. Also, reserve the right to inspect the apartment during regular business hours. That gives the out-going tenant an incentive to clear the apartment at the scheduled time. Although you can certainly charge additional rent if the tenant fails to clear on the specified move-out date, you may have insufficient time to prepare the apartment for the tenant who is scheduled to move into the apartment. The schedules of company work crews and contract vendors are disrupted when a tenant fails to clear on the scheduled date. And the tenant who was scheduled to move into the apartment may be left sitting in the street. That's not good for business!

The tenant's deposit, now frequently called a "security deposit," can be an excellent management tool. It can be a leverage tool to protect the property and a leverage tool to enhance efficiency at apartment turn-over time.

Regardless of the advice given here, you-the apartment manager-must follow the policy of your employer and the law in your jurisdiction.