Property inventory is a legal document that describes written record of the property (condition, content) at the beginning of a tenancy. It is important that property inventory is accurate, otherwise it will have no legal meaning. The document protects landlord in case of damage caused by tenant. This document is used for tax or insurance purposes.
Usually every property inventory contains:
- interior condition,
- decorations present,
- doors, windows, ceilings, walls state,
- drapes, carpets, furniture.
Some expendable goods, like journals, living plants are usually excluded, while gardens are described generally. Garden sculptures or facilities can be described in detail. Lofts or cellars if they have no special meaning are not included (K. Otsuka, Y. Hayami 1988, p. 31-68).
Property inventory is a written tally of taxpayer's personal property. This inventory will also be used for the current market value. Property inventories are generally used by taxpayers to calculate the value of insurance companies.
Property Inventory Procedures
Insurers require that new companies submit a complete inventory before releasing the initial insurance policy. Therefore, an annual inventory is required, both to update the company's insurance and to evaluate the effectiveness of internal business controls. Although the process may vary insensibly depending on the business, property inventory generally comply standard inventory procedures (J. Lohrey 2019).
Tax and insurance - property inventory can be used as basis for taxation on insurance. In that case all elements that increase value of the property should be included in the document, as well as e.g. price of the property.
Example of Property Inventory
As part of the property inventory or RPI, real estate may include land and everything permanently attached to the site, such as buildings, installed systems within the building, all systems within the land itself, such as irrigation or ducts and construction equipment. Inventory of real estate may also include roads, parking lots, fences, utility systems or constructions.
If the property inventory is managed by an external organization or asset management team, they will track the property information as part of the database and include identification data such as property name, address, book value, relevant rating codes and descriptions along with forecasts for future forecasts, such as estimates for the replacement of buildings, the expected costs of updating, and a list of any critical repairs to be made according to the level of priority. If the property inventory contains federal ownership, it must also comply with the General Services Administration codes of use (Property Inventory 2008, p. 2-9).
Why Are Property Inventories So Important?
5 Key reasons why to have a property inventory (Jones C. 2013, p.557-579):
- Inventory will determine the condition of the property at the beginning of the lease, as agreed by the tenant.
- This will help in the responsibility for maintenance during the occupancy period. For example, if during the inspection the entry to the broiler was interrupted, but eventually it breaks down, the landlord will have to repair it.
- Inventory serves as a comprehensive guide to the most efficient methods of restoring property until the end of the term.
- This reduces the potential differences in who is responsible for the repairs and damage to finishing the flat, and will help in making a reasonable use.
- It protects tenants' deposits, as long as they give away a property in a similar condition, if the difference causes a formal debate.
Advantages of Property inventory
Property inventory is a legal document that describes written record of the property (condition, content) at the beginning of a tenancy. This document has certain advantages, such as:
- It protects both the landlord and tenant in case of damage caused by the tenant. If the tenant causes damage to the property, the landlord can refer back to the inventory to determine the extent of the damage and the cost of repair.
- It is used for tax or insurance purposes. The inventory provides a detailed record of the condition of the property, which can be used to determine the amount of tax or insurance to be paid.
- It provides a written record of any changes made to the property during the course of the tenancy. This allows for the tenant to be held accountable for any changes made.
- It ensures that the tenant will be held responsible for any damages caused to the property during the tenancy. This prevents the tenant from attempting to avoid responsibility for any damage caused.
- It provides a clear record of any existing damage when the tenant moves in. This allows the landlord to assess the damages and determine who is responsible for them.
Limitations of Property inventory
Property inventory has certain limitations which should be taken into account when drafting and signing the document. The most common limitations are:
- It does not guarantee that all property will be returned in the same condition as it was at the start of the tenancy. This is because, over the course of the tenancy, some wear and tear is expected, or the tenant may have caused some damage to the property.
- It does not protect the tenant from unwarranted deductions from their security deposit. The inventory should list all items in the property and their condition. If any of these items are damaged when the tenant moves out, the landlord must prove that the damage was caused by the tenant and not normal wear and tear.
- It does not cover all items in the property. It is important that the landlord accurately lists all items in the property in the inventory, including furniture, fixtures, and appliances. If any of these items are not listed, it may make it difficult to prove that the tenant was responsible for any damage.
- It is not legally binding. The property inventory is not a legally binding document and should not be used in a court of law.
Property inventory is an important legal document that outlines the condition and contents of a property at the beginning of a tenancy. Other approaches related to property inventory include:
- Tenancy agreement - this document outlines the terms of the tenancy, including the duration and rental amount.
- House rules - these are rules and regulations that tenants must follow while living in a rental property.
- Check-in report - this document is used to document the condition of the property at the beginning of the tenancy.
- Move-out report - this document is used to document the condition of the property at the end of the tenancy.
- Security deposit - this is a sum of money that is held by the landlord in case of any damages caused by the tenant.
In conclusion, property inventory is an important document used to document the condition of a property at the start of a tenancy. Other approaches related to property inventory include tenancy agreement, house rules, check-in report, move-out report and security deposit. These documents are all used to protect the landlord in case of any damages caused by the tenant.
|Property inventory — recommended articles
|Proof of loss — Tax map — Consent order — Output tax — Reliance letter — Declared value — Grant date — True copy — Export license
- A literature review on models of inventory management under uncertainty, (2015), "Verslo sistemos ir ekonomika business systems and economics", vol. 5 (1), p. 26-33.
- Inventory Checklist, (2019).
- Jones C., Tuzel S., (2013), Inventory investment and the cost of capital, "Journal of Financial Economics", Los Angeles, vol. 107, Issue 3, p. 557-579.
- Lohrey J., (2019), Property Inventory Procedures, "Property Management and Inventory Control Procedures", Smallbusiness, Green Bay (Wisconsin), p.1.
- Otsuka K., Hayami Y., (1988), Theories of share tenancy: A critical survey, Economic Development and Cultural Change, 37(1), p.31-68.
- Policy 7450 Property Inventory, (2012), "Caldwell-West Caldwell board of education", p.1.
- Pott H., (2018), Inventory Report, England.
- Property Inventory, (2008), Lawpack Publishing Limited, London, p. 2-9.
Author: Joanna Krygowska