Accidental Damage, Malicious Damage or Fair Wear and Tear?.
Damage at a rental property is not always easy to classify. The PM’s job is to document what happened, compare the property with its earlier condition and avoid jumping to conclusions about accidental damage, malicious damage or fair wear and tear.
A damaged benchtop.
A hole in a wall.
Stained carpet.
A broken door.
Water damage.
At first glance, the question seems simple:
Who is responsible?
In practice, it can be much more complicated.
The issue may involve accidental damage, deliberate damage, normal deterioration, an underlying maintenance problem or a combination of several things.
For the PM, the safest starting point is evidence rather than labels.
Start with what you can prove.
Before deciding what type of damage you are looking at, establish:
what the property looked like before
when the issue was first noticed
whether it had been reported previously
what appears to have happened
whether there is an underlying maintenance issue
whether anyone witnessed the incident
what the renter says happened
what a contractor says about the cause, where relevant
The stronger the facts, the easier it is for the landlord, insurer or dispute resolution process to assess the situation.
Go back to the condition report.
The entry condition report and supporting photographs are often the starting point.
Compare:
Then
with:
Now
Also review routine inspections.
They may help establish whether the issue:
appeared suddenly
developed gradually
existed previously
became worse over time
had already been reported
A final inspection photograph on its own may show damage.
It does not necessarily show how or when it happened.
Fair wear and tear needs to be considered first.
Properties naturally deteriorate through normal use and age.
Carpet wears.
Paint fades.
Benchtops mark.
Fixtures become older.
This is different from damage caused through an incident, negligence or deliberate action.
State and territory tenancy laws deal with renter responsibility and fair wear and tear, so check the current rules that apply to the property before pursuing the renter for costs.
Do not assume that because something needs replacing, the renter is automatically responsible for the replacement.
Be careful with the word "accidental".
A renter may say:
It was an accident.
That describes how they believe the event happened.
It does not automatically determine:
renter liability
whether the landlord can recover the cost
whether the bond can be claimed
whether the landlord’s insurance covers the event
Those questions may involve both tenancy law and the landlord’s insurance policy.
The PM should record what happened rather than deciding the insurance outcome.
Be even more careful with "malicious damage".
Malicious damage is a particularly strong description.
Do not use it simply because the damage is extensive.
A badly damaged door, wall or fixture does not by itself establish intent.
Unless there is clear evidence, record the facts.
For example:
Instead of:
Renter maliciously damaged bedroom door.
record:
Bedroom door has a large split through the centre panel. The door was recorded as undamaged on the entry condition report and at the previous routine inspection.
That gives the insurer useful evidence without the PM making a conclusion they may not be able to support.
Look for an underlying maintenance issue.
What appears to be renter damage may sometimes have another cause.
For example:
Water damage might result from:
an overflowing bath
a leaking pipe
failed waterproofing
a roof leak
a maintenance issue that worsened over time
A damaged cabinet might have been affected by an ongoing leak rather than misuse.
Where the cause is unclear, contractor advice can be valuable.
Age and previous condition matter.
If an item was already old or worn, that history can become important.
Consider:
age of the item
previous condition
earlier inspection comments
existing marks or damage
previous repairs
normal deterioration
The relevant question is not always:
What does a new replacement cost?
It may also be:
What was actually lost?
Build a simple evidence file.
Where damage may lead to an insurance claim, organise:
entry condition report
entry photographs
relevant routine inspection reports
current photographs
maintenance history
contractor reports
renter explanation
landlord instructions
quotes or invoices
relevant correspondence
Keep the material focused on the issue rather than sending the insurer the entire tenancy file.
Let the insurer apply the policy wording.
Landlord insurance policies can define and cover damage differently.
Accidental damage, malicious damage and deliberate damage should not be assumed to mean exactly the same thing under every policy.
Check:
the landlord’s policy schedule
Product Disclosure Statement
definitions
exclusions
excesses
claim limits
evidence requirements
The PM can provide the history.
The insurer decides how the event is treated under the policy.
Keep tenancy liability and insurance separate.
These are related, but they are not the same question.
One question is:
Is the renter responsible under the tenancy rules?
Another is:
Does the landlord’s insurance policy respond to the loss?
Do not assume that one automatically determines the other.
The landlord may have an insurance claim even where recovery from the renter is uncertain.
Likewise, renter responsibility does not automatically mean the insurer will cover the loss.
Good notes beat strong opinions.
When damage is disputed, the most useful PM file usually contains facts such as:
What was there before?
What changed?
When was it discovered?
What evidence exists?
What does the renter say happened?
What does the contractor say?
That is far more useful than a file filled with assumptions about blame or intent.
The PM does not need to decide whether something is accidental, malicious or insured.
They need to make sure the evidence is good enough for the people who do.