A clean house is a happy house.” Louisa May Alcott

California Attorney General Ron Bonta recently announced a settlement from ARNEL MANAGEMENT, from security deposit deduction which were, according to plaintiffs, unacceptable. 650,000 of the settlement will go to legal organizations, according to the LA Times. The same management company settled a similar case in 2001. ARNEL manages 18 complexes in Orange County and one in Los Angeles County.

WHAT WAS THE ISSUE? The issue was unneeded cleaning deposits and repairs after tenants moved out of their units. Many owners charge a “cleaning fee” which is deducted from the original security deposit, regardless of the condition that the unit is left after move out. This company may have been chosen because of the number of units and deeper pocket of a large company, but a similar thing could happen to you.

REVIEW YOUR SECURITY DEPOSIT When is the last time you checked the wording of your security deposits? You may want to replace it with a more current one possibly from your Apartment Association. Always check with your real estate attorney before making any changes in your paperwork, but with all the new laws and with new lawsuits coming quite often, these are times that call for diligent review of any document which could ultimately affect your investments.

EASY CHANGES. Do you have a tenant move-in and a tenant move-out checklist? These are documents which are signed by the tenant, verifying the condition of the unit when they move in and when they move out. You can get these forms from the Apartment Association as well as other sources. It is a good idea to include pictures of the unit before and after, to provide even clearer evidence in case you have to go to court. Additionally, it is probably advisable not to charge tenants a flat rate “cleaning fee”. Document the condition upon move-in and if the unit is not in the same condition when they move out, you may have a cause to deduct from the security deposit. When you are deducting costs, make sure that you list all deductions and the cost of repairs along with copies of receipts if possible. In most cases, you will agree with the tenant, but memory fades with time, and it is always a good thing to have documentation.

“I’m not telling you it’s easy. I’m telling you it’s going to be worth it.” Art Williams

What we at PRS PROPERTIES CAN DO. We can give you a good idea of the current value of your building. We can suggest changes you might want to make before sale to give you an idea what type of building you would be able to exchange into. You may decide to stay in the rental business. We are always available to chat. We can give you referrals for professionals, such as lenders, contractors, and engineers, so that you can decide who you feel best with. We can supply you with rent and sale comparable in the area of your properties, so that you know what rental values are in your area. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We are currently looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We can offer a 7 day escrow and all cash at closing. Give us a call. We have also put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.