The move-out inspection is your last point of contact with the tenant, and it's also where deposit (shikikin) settlement begins. Here's how to organize the day and avoid disputes. See the related article for a detailed look at how costs are allocated.
- A move-out inspection runs from receiving the cancellation notice, through scheduling, the on-site check, and preparing the settlement statement.
- On the day, you collect the keys, check wear and damage in the unit, take photos, and check the utility meters.
- It's best to prepare the deposit settlement statement as soon as possible after move-out and walk the tenant through it.
- Many operators don't finalize the amount owed on the spot; instead they follow up in writing later.
- How cost allocation for restoration to original condition (genjō kaifuku) is decided is covered in a separate article (the Restoration Guidelines).
The Process Leading Up to the Move-Out Inspection
After receiving the tenant's cancellation notice, the move-out inspection process starts by confirming the move-out date and scheduling the visit to suit both the management company and the tenant. It's typical for a member of the management company to visit the unit and inspect its condition either on the move-out day itself or within a few days afterward. Tenants moving far away sometimes arrange for a representative to attend instead, so it's worth confirming how the inspection will be conducted in advance.
What Gets Checked on Inspection Day
On the day of the inspection, you confirm the return of the full set of keys, check for wear or staining throughout the unit, verify that equipment works, and check the electricity, gas, and water meters. Having the tenant or their representative present, and walking through any points of concern together on the spot, helps prevent later disagreements about what was actually observed.
How to Keep Photos and Records
It's important to photograph the unit's condition during the inspection. Being able to compare these against move-in photos gives you a basis for judging whether wear is due to normal aging or the tenant's use. Save photos in a way that shows the date, and use them as supporting material when preparing the settlement statement. Sharing photos taken on a smartphone with the management company via the cloud, so they're always available for reference, adds peace of mind.
Preparing and Explaining the Deposit Settlement Statement
It's best to prepare the deposit settlement statement based on what was confirmed at the inspection, as soon as possible after move-out, and explain it to the tenant. The statement should itemize the cost of restoration to original condition, the amount applied from the deposit, and either the refund or any additional amount owed. Attaching supporting estimates and photos when explaining it helps the tenant accept the content and helps prevent disputes.
Avoiding Disputes Over Settlement
Most disputes over settlement stem from inadequate explanation on inspection day or a delay in sending the settlement statement. Many management companies avoid finalizing the amount on the spot at the inspection, instead following up with a full written explanation later. Responding promptly to tenant inquiries, and explaining any questions carefully with supporting evidence, matters. Having the management company serve as the point of contact for these explanations also reduces direct back-and-forth between landlord and tenant, which helps avoid emotional friction.
Check the Separate Article for Cost Allocation on Restoration
Even with a solid handle on the logistics of the move-out inspection, disputes at settlement time tend to arise if it's unclear where the owner's responsibility ends and the tenant's begins. We cover the basic thinking on cost allocation in detail in a related article (the Restoration Guidelines) — please have a look at that as well.
Frequently Asked Questions
Who should attend the move-out inspection?
Typically the management company's staff member and the tenant (or their representative) attend. Owners sometimes attend in person, but when management is outsourced, it's customary for the management company to handle it.
Does the amount owed need to be finalized on the day of the inspection?
Not necessarily on the spot. It's also common practice to get estimates first and send the settlement statement in writing afterward.
What if the tenant doesn't accept the settlement statement?
The basic approach is to explain it using supporting evidence such as an itemized estimate and photos. If that still doesn't resolve it, consider consulting a specialist.
Summary
A move-out inspection proceeds from receiving the cancellation notice, through scheduling, the on-site check, and preparing the settlement statement. Photo records and careful explanation help prevent disputes. Please also see the Restoration Guidelines article for how cost allocation is decided.