This is the seventh episode in our new weekly video series covering property management principles. This episode illustrates the critical moments when a property manager inspects a property.
The prior episode covers a covers a property manager’s analysis of the repairs, maintenance, landscaping and improvements needed to increase the property’s curb appeal.
The critical moments to conduct an inspection
A property manager’s frequent, well-documented inspections of property are nearly as important as their accurate accounting of income and expenses through their trust account. Property inspections by the property manager determine the:
- physical condition of the property;
- availability of habitable units or commercial space; and
- use of the leased premises by existing tenants.
When a property manager conducts an inspection of the property, they do so for one of several key situations:
- When the property manager and landlord enter into a property management agreement. Any deferred maintenance or defect which might interfere with the renting of the property is to be discussed with the landlord. The property manager resolves the discrepancy by either correcting the problem or noting it is to be left “as is.” However, conditions which might endanger the health and safety of tenants and their guests may not be left “as-is.”
- When the property manager rents to a tenant. A walk-through is conducted with a new tenant prior to giving them occupancy. The property’s condition is noted on a condition of premises addendum form and signed by the tenant. [See RPI Form 560]
- During the term of the lease. While the tenant is in possession, the property is periodically inspected by the property manager to make sure it is being properly maintained. Notes on the date, time and observations are made in the property management file. File notes are used to refresh the property manager’s memory of the last inspection, order out maintenance and evidence the property manager’s diligence.
- Two weeks prior to a residential tenant vacating. Residential property is inspected prior to termination of possession when the tenant requests a joint pre-expiration inspection on receipt of the mandatory notice of right to a wear and tear analysis to be sent by the landlord or the property manager. [See RPI Form 567-1]
- When the tenant vacates. The property’s condition is compared against its condition documented when first occupied by the tenant. Based on any differences in the property’s condition, a reasonable amount may be deducted from the tenant’s security deposit for the cost of corrective repairs. Cost deductions are to be documented when accounting for the return of the deposit.
- When the broker returns management and possession of the property back to the landlord or over to another management firm. Documenting all property inspections helps avoid disputes with the landlord or tenants regarding the condition of the property when possession or management was transferred to and from the property manager.
The property’s condition is noted on a form, such as a condition of property disclosure, and approved by the property manager and the landlord. The property manager keeps a copy in the property’s file as part of the paper trail maintained on the property.
Inspections that coincide with key events help establish who is responsible for any deferred maintenance and upkeep or any damage to the property.
Joint pre-expiration inspections – a closer look
A residential landlord or property manager is to notify a tenant in writing of the tenant’s right to request a joint pre-expiration inspection of their unit prior to the tenant vacating the unit.
Editor’s note — The notice of right to request a joint pre-expiration inspection needs to also contain a statement notifying residential tenants of their right to reclaim abandoned personal property. [See RPI Form 567-1 §5]
However, unless the tenant requests an inspection after receiving the notice, the landlord and their agents are not required to conduct an inspection or prepare and give the tenant a statement of deficiencies before the tenancy expires and the tenant vacates.
The purpose for the joint pre-expiration inspection, also called an initial inspection, is to require residential landlords and property managers to advise tenants of the repairs or conditions the tenant needs to perform or maintain to avoid deductions from the security deposit.
When a residential tenant requests the pre-expiration inspection in response to the notice, the joint pre-expiration inspection is to be completed no earlier than two weeks before the expiration date of:
- the lease term; or
- a 30-day notice to vacate initiated by either the landlord or the tenant. [ Civil Code §1950.5(f)(1); see RPI Form 567-1]
Ideally, the notice advising the tenant of their right to a joint pre-expiration inspection is given to the tenant at least 30 days prior to the end of the lease term. In the case of a rental agreement, the notice is provided immediately upon receiving or serving a 30-day notice to vacate.
A period of 30 days allows the tenant time to request and prepare for the inspection. Further, after the inspection, the tenant has time to remedy any repairs or uncleanliness the landlord observes during the inspection. Thus, the tenant is provided time to avoid a security deposit deduction.
Notice of entry and statement of deficiencies
When the landlord or property manager receives the tenant’s oral or written request for a pre-expiration inspection, the landlord serves a written 48-hour notice of entry on the tenant stating:
- the purpose of entry as the pre-expiration inspection; and
- the date and time of the entry.
When the landlord and tenant cannot agree to the date and time of the inspection, the landlord may set the time. However, when a mutually acceptable time for the inspection is within 48 hours, a written waiver of the notice of entry is to be signed by both the landlord or property manager and tenant.
When the waiver is signed, the landlord or property manager may proceed with the inspection. [CC §1950.5(f)(1); see RPI Form 567-2]
Following service on the tenant of the 48-hour notice, the landlord or property manager may inspect the property whether or not the tenant is present, unless the tenant has previously withdrawn their request for the inspection.
On completion of the joint pre-expiration inspection, the landlord or property manager gives the tenant an itemized statement of deficiencies. In it, the landlord or property manager specifies any repairs or cleaning which need to be completed by the tenant to avoid deductions from the security deposit.
Also, the itemized statement of deficiencies is to contain the contents of subdivisions (b) and (d) of Calif. Civil Code §1950.5. [See RPI Form 567-3]
The landlord’s pre-expiration inspection statement is prepared at the time of the inspection and delivered to the tenant by either:
- handing the statement directly to the tenant when they are present at the inspection; or
- leaving the statement inside the premises at the time of the inspection when the tenant is not present. [CC §1950.5(f)(2)]
When the tenant chooses to withdraw their request for an inspection after submitting it, the landlord or property manager needs to send a memo to the tenant confirming the tenant’s decision to withdraw. [See RPI Form 525]
Editor’s note — The completion of a pre-expiration inspection statement by the landlord or property manager does not bar the landlord or property manager from deducting other costs from the security deposit for:
- any damages noted in the joint pre-expiration inspection statement which are not cured;
- any damages which occurred between the pre-expiration inspection and termination of the tenancy; or
- any damages not identified during the pre-expiration inspection due to the tenant’s possessions being in the way. [CC §1950.5(f)]