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Was that scratch there before? 3 risks a good inventory and condition report can help prevent

June 13, 2019

Inventory and condition reports might not seem like the most exciting topic, but they are vitally important for both landlords and tenants. Unfortunately, there are plenty of people who don’t give them the attention they deserve, only to regret it later.

There are a lot of examples of people who have learnt the hard way what can happen if you aren’t protected by a good report. We caught up with Monika Minko, Senior Leader of Property Management, to discuss some of the risks faced by tenants and landlords who don’t maintain accurate records of their rental properties.

If you are a landlord

Risk: Not being properly reimbursed if a tenant damages your property

We have heard plenty of examples of first-time investors who have bought a property and decided to rent it out themselves. In one instance an investor forgot to complete an inventory and condition report before the tenant moved in. Everything seemed to be going fine until the tenant moved out.

When the owner went to inspect the property, it was a mess. There were stains all over the carpet, holes in the wall, and half the appliances weren’t working properly. When the owner confronted the tenant about it, all they said was “It was like that when I got here.”

The owner took the tenant to the tribunal but, without an inventory and condition report, they couldn’t prove when the damage had occurred, and they were left having to pay for the repairs themselves.

Solution: A customised property report 

“Each property needs to have a detailed report that is tailored to that specific property.” says Monika,

“Unfortunately, a lot of people use ‘Tick and Flick’ reports you can download off the internet. The problem is they are too basic. They don’t cover enough detail or provide enough information.”

“These reports might have a section that just says ‘dishwasher’ with a checkbox next to it. But that really doesn’t tell you very much. Does a tick mean there is a dishwasher? Or that it’s in good condition?”

The concern is, if something goes wrong and you don’t have detailed information on the condition of your property, it can become very difficult to prove when damage was caused. A tenant could argue that the damage was already there before they moved in, and it can end up being your word against theirs. To avoid this, your inventory and condition report should always be updated between tenants.

Risk: Your inclusions and furnishings could be stolen or replaced with cheaper versions

Here’s another scenario you might find yourself facing without a good inventory and condition report. You’ve invested a considerable amount of money in your property. You’ve decked it out with the very best appliances, all of them made in Europe with fancy sounding names.

They are all listed on your inventory and condition report… but the only detail you have is the briefest possible description. The dishwasher section of the report just says “dishwasher” the oven section just says "oven", but it doesn’t say how big they are, their condition or what brand they are.

Then, after your tenant moves out, you notice your stainless-steel Bosch fridge has been replaced with a poorly made rip-off with a rusting sheet metal exterior and a “botch” logo that appears to be stuck on with chewing gum.

However, according to your inventory and condition report, nothing is amiss. The report only mentioned that you had a fridge, not what kind of fridge you had.

You might think this kind of thing never happens, but it does.

“We heard of a landlord who had these really beautiful, designer brass doorknobs installed throughout their investment property.” Says Monika.

“But, this wasn’t reflected in their inventory and condition report. All it said was ‘doors’. There was no description of the doorknobs or any photos. After their tenant moved out, they noticed all their brass doorknobs had been replaced with cheap, tacky plastic knobs… and there was nothing they could do about it. The report wasn’t detailed enough to prove what had happened.”

Solution: A detailed property report including photos

Again, the easiest way to avoid this nightmare scenario is to have a detailed condition report that specifies brands of appliances and includes photos of specific finishing’s, like door knobs and draw handles.

If you are tenant 

Risk: Being held responsible for damage you didn’t cause

Inventory and condition reports are there to protect you against any claims or accusations that you have damaged the property. If something is damaged before you move in, but the report doesn’t mention it, and you don’t make a record of it, chances are you will be held responsible for damages.

We’ve heard of tenants who have moved into properties with cracked paint on the walls, grout missing from the tiles, stains on the carpet and chips in the bench tops. The inventory and condition report they were given hadn’t been updated with any of these issues, and the tenant didn’t provide enough detail when they completed their copy of the report and returned it. Unfortunately, when they moved out, they had to pay to repair the damage, and as a result lost their bond.

Solution: Fill out inventory and condition reports as soon as you move into a new property

To prevent this from happening, Monika advice is to make the inventory and condition report a priority.

“The first thing you should d when you move into a property is complete your inventory and condition report. Don’t put it off until after you’re settled. Do it straight away and be thorough. The more detail you can provide (if not already noted), the better.”

Grab your report and go through each room of the property. Check all the appliances. Make careful note of any marks, damage or stains on the walls, ceiling and flooring. It’s also a good idea to take colour photos with references items, like a coin or a pencil, to show the size of the mark if this isn’t already included in the report by your property manager.

“It’s always better to provide more detail than is being asked for.” says Monika, “If you are specific about the property’s condition when you first moved in, and then leave the property in the same condition, taking fair wear and tear into consideration, you shouldn’t have any problems.”

The thing is, all these issues can easily be avoided with a good inventory and condition report. So, it really pays to give these reports the attention they deserve.

If you’d like assistance with managing your investment property, or advice on living in a rental property, get in touch with our Property Management team.