When it comes to the inner workings of a lease agreement, power isn’t measured by size. There are some seemingly insignificant provisions that do far more than you might expect:

1. Identity of Tenants

“This Agreement is entered into between . . .”

Simple language, but carelessness here can land you in hot water. Only those tenants listed on the lease agreement are subject to its power.

Mistakes can:

Prevent enforcement of the lease, including rent payment provisions;
Hamper eviction and recovery of the unit;
Stall the ability to obtain a monetary judgment; and
Thwart any attempt to collect money owed.

Tips:

Every adult who will occupy the unit must be listed here.

Use only full legal names, spelled correctly.

The names should match the person’s photo ID.

Signatures should match the names — no nicknames or aliases.

2. Purpose or Limitation Clause

“These Premises are to be used solely as a private residence.”

In-home businesses can increase liabilities and costs for landlords, including:

Increased liability for slip and fall injuries and other premise liability;
Risk of tenant complaints over parking congestion, noise and strangers at the property;
Higher costs of paid utilities; and
Problems associated with short-term vacation sublets.

Tips:

Discuss this provisions with incoming tenants. Demand that tenants consult with you and seek your consent before setting up shop in the rental unit.

Note: Day care activities may be exempt. Check your local rental laws.

3. Joint and Several Liability

“Tenants shall be jointly and severally liable for all obligations under this lease.”

With today’s soaring rents and an influx of millennial renters, roommate arrangements are popular. But that doesn’t mean you need a revolving-door policy. This provision is designed to allow you to collect rent from one or any of the tenants. This provision also works as a deterrent for any roommate who is thinking of leaving before the end of the lease term.

Tips:

To maximize the effectiveness of this provision, point it out and explain what it means to tenants, who may not fully understand it. Remember, a lease is all about prevention.

Honor the clause by not dealing with roommates separately. One lease, one rent payment, one deposit, and so forth.

4. Property Inspections

“Landlord may enter the Premises to conduct routine property inspections.”

By reserving the right to conduct inspections, you can better supervise the property. Even if you don’t show up to inspect the property (you should do it!), at least this language can make tenants think twice before:

Conducting criminal activities;
Modifying the unit;
Damaging the property;
Keeping the property perpetually dirty; or
Bringing in unauthorized guests or pets.

Tips:

Discuss the provisions with incoming tenants, including examples of what you might be looking for during an inspection. The deterrent effect may save you money down the road.

Provide the tenant with notice prior to the inspection pursuant to your local rental statutes.

Do your best to make the inspection a win-win. This is an opportunity for the tenant to discuss any concerns and ask questions. Tenants who are involved in the process are more likely to recognize that they stand to gain when the property is safe and comfortable.

5. Modification Clause

“This Agreement cannot be modified except by express written consent of both parties.”

The purpose of this clause is to limit what a tenant can say in court if there is a dispute.

It also requires the tenant to come to the landlord and discuss any proposed changes to the lease arrangement.

Tips:

When the lease is modified, keep any written changes with the original lease agreement.

There is a difference between modifying the lease and substituting the lease for a new one. Each has different legal ramifications, so talk to your attorney first before signing off on any changes.

6. Integration Clause

“This Agreement, along with any attachments, exhibits, and amendments, constitutes the full and final agreement between the parties.

An integration clause is typical in any contract, but when used in lease agreements, it’s like having a virtual assistant. This clause:

Helps to organize the documentation that goes along with the lease;
Requires all pertinent leasing documents to be in one place;
Serves as a cross-check that all the necessary attachments — like a smoke-free addendum or lead paint disclosure — are, in fact, attached; and
Prevents tenants from claiming that some other promise was discussed.

Tips:

Consider this provision a reminder to:

Check all the page numbers for missing sections.

Make certain every exhibit, attachment and so forth is mentioned in the lease, and that everything that is mentioned in the lease is attached.

Point out to tenants that what is in the lease is final, so any concerns can be discussed before they sign it.

7. Renters Insurance

“Tenant is required to maintain a renter’s insurance policy.”

or,

“Tenant is encouraged to maintain a renter’s insurance policy.”

It’s becoming increasingly popular to require this insurance, which can protect tenant’s personal belongings and, in some cases, protect the tenant from liability. However, it also is common to leave the decision up to the tenant. This insurance is necessary because the landlord’s insurance typically does not cover the tenant’s personal losses. Tenants with renters insurance are better able to recover from catastrophic losses and to continue to pay rent.

Tips:

Even if this provision is voluntary, take the time to explain that the landlord’s insurance will not cover the tenant’s personal belongings in the event of fire, theft or any number of other catastrophes.

A good way to encourage tenants to buy the insurance is to have them value their own property. Once they start to make that list, the cost of the insurance may seem nominal compared to their potential out-of-pocket losses.

Avoid tacking on a fee for the insurance or partnering with an insurance carrier when making this insurance mandatory. That can make tenants feel exploited.

Once a lease agreement is signed, it is difficult to add new terms. Should you decide to change any provisions of your lease agreement, keep in mind that you may have to wait until the next tenant moves in. Speak with your attorney if you have questions about your lease agreement.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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Landlords Challenge Tenant Screening Limits

by Chris on March 13, 2017

A group of landlords are suing the city of Seattle over a recent ordinance that dictates how landlords there must fill vacancies. The landlords claim the city’s new ‘first-come, first-served’ rule hampers their ability to pick the most qualified tenants.

The Seattle ordinance requires landlords who advertise vacancies to list minimum qualification standards for applicants. The first person who meets these minimum standards must be offered a right of first refusal on the rental. The applicant then has two days, and in some cases longer, to decide whether to accept the offer. Landlords cannot collect rental applications from multiple prospects and then choose the most qualified renters.

According to lawmakers, the ordinance was designed to level the playing field for vulnerable renters, such as low-income, those with disabilities, or those on government assistance who might otherwise be passed over for more qualified tenants. However, it has been argued that the ‘first-come’ policy will have the opposite affect, giving the advantage to tenants with better resources — like cars, computers and phones — who can respond to ads more quickly.

Proponents also have claimed that choosing from multiple rental applicants inevitably leads to discrimination, citing what they say is a tendency for landlords to choose tenants based on “gut instinct.” One lawmaker allegedly stated that this law will help to “reprogram” landlords to look at more objective standards.

The landlords, on the other hand, say that a first-come mandate conflicts with their existing tenant screening policies, and violates their rights to due process and free speech.

These landlords say that they have the right to rent or sell their properties to anyone they choose and for whatever price they choose, so long as they are not discriminating. They say that the ordinance does not take into account other business considerations.

For instance, in one case, the landlord rents two units in a triplex where she lives with her kids, so she seeks out tenants that she can get along with. Another landlord prefers tenants who are looking to stay long-term. One landlord cannot afford to risk a one-month vacancy, so he rallies to find a new tenant within the first three days of a 30-day notice to terminate.

These landlords say they’ve given consideration to not-so-perfect credit if the applicant otherwise was a good fit. Now, however, they say they’ve had to make qualifications more stringent — so much so that existing tenants would not qualify.

Each of the landlords runs a small rental business, and none can readily absorb income loss from vacancies. In addition to more stringent rental standards, the landlords are avoiding rental ads and relying solely on referrals in order to limit the potential renter pool.

The landlords are asking the court to grant an injunction against enforcement, overturn the ordinance, and award attorneys fees and costs.

This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

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When Can a Landlord Visit a Rental Property?

March 13, 2017

A frequent complaint from tenants is unannounced or unnecessary visits by the landlord. At the same time, landlords who fail to supervise the property can suffer losses from damage, crime or neglect. How can a landlord strike a balance? A Tenant’s Right to Privacy Inherent to every lease agreement is a promise to provide the […]

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Tenants Sue Landlord Over Pest Control Policies

March 13, 2017

A Denver landlord is facing a class-action lawsuit over its failed pest control policies. Tenants at the large multi-family property allege that the complex was overrun by rats, and then tenants came into contact with carelessly applied pesticide. In a news report, one tenant claims that rats ate into electrical systems in his car. An […]

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Spotting Problem Tenants: It’s a Matter of Respect

February 27, 2017

How do you know if a rental applicant will make a good tenant? It comes down to one factor: respect. Disrespect isn’t simply an attitude. It’s a bad behaviour, one that leads to income loss for landlords. Tenants must respect the landlord, the lease, and the property. There are a number of subtle — and […]

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How to Make Your Rental Ads Work for You

February 27, 2017

Rental ads speak to your prospective tenants in ways you may not realize. An unprofessional ad sends a message to bad tenants to take advantage, while a well-crafted ad attracts quality renters. Yet, some landlords don’t take the time necessary at this crucial stage in the leasing process to send the right message. It doesn’t […]

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3 Property Management Strategies That Fail

February 27, 2017

Property management, like many jobs, gets easier with time. That is, if you’re doing it right. There are some strategies that only get worse. If you are considering one of these, you may want to think again: 1. Long-distance management. There are any number of reasons why people get into the rental business. For some, it’s […]

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Newspaper Sues for Access to Tribunal Records

February 27, 2017

The Toronto Star has filed a lawsuit against the Ontario provincial government seeking more transparency from legal tribunals, including the Landlord and Tenant Board. The move comes after Star reporters say they’ve repeatedly been denied access to records in many tribunals, according to a report. The secrecy of tribunal proceedings interferes with the newspaper agency’s […]

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Rental Ads: From Sloppy to Savvy

February 13, 2017

Did you know that rental ads can multitask? The same ad that alerts tenants to a vacancy also can attract the most qualified renters, and at the same time set the stage for a more successful tenancy. All it takes is a little savvy. Consider the example of a recent ad for a unit near the […]

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6 Pet Policies That Don’t Work

February 13, 2017

There’s a common problem with many landlord pet policies: they tend to be developed in a vacuum. Most of the time, prospective tenants already have acquired their pets, so landlords who don’t sync their pet policies to the applicant pool tend to limit their options for qualified renters. Here are a few common pet policies […]

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