Legal Question in Real Estate Law in Colorado

I own a number of rental properties in Colorado and have had conflicting info over the years regarding one question. Can I do work myself and bill tenants security deposits for legitimate damage or uncleaned areas after move-out? I often hire guys to help but I am very skilled in most aspects of repair (carpentry, plumbing, drywall, paint, electrical, etc.). I can clearly see a conflict of interest, where there would be a temptation for some to bill out "extra" hours and retain more of the deposit. I try to be very honest and fair but I'm interested in where the law stands regarding this. Thank you for your answers in advance. Sincerely, Sean


Asked on 11/12/12, 10:18 am

1 Answer from Attorneys

Dave Rich Flatiron Legal Advisors, LLC

Sean,

Since you have expertise in this area, so long as you are charging a reasonable market rate, there is no reason you cannot do the work. It does, of course, provide ammo to a disgruntled tenant to argue about over-billing, but the risk may be worth it to you.

Just keep careful track of the hours and work done so that you can defend the billing if you ever need to. You might even get a couple bids on one property in each area where you own property so that you have documentation of what you would have been charged if you hired a third party and you can then more easily justify similar rates as market rate.

If you do this type of work for others, you could create an LLC for your property repair business and then bill yourself from the LLC for the work done on your rental properties and you can then provide a copy of the bill to the tenant.

The most important recommendation I make to landlords is to put each property in a separate LLC if you have not done so, so your liability as to each property is limited to your equity in that single property and limit the chances that your other properties/assets could be reached. Hope this helps.

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Answered on 11/12/12, 11:18 am


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