Have an ironclad lease?

A lease agreement can be tricky. If it’s too generic, it won’t protect the landlord. If it’s too one-sided, it may not be enforceable. And if it’s too confusing, tenants won’t understand what is expected of them.

Whether you’re a first-time landlord or a veteran who has been lucky so far, it’s worth taking a few moments to consider what savvy landlords have learned about leases:

Where You Find the Lease Makes All the Difference

There is no such thing as a “standard” lease — one that fits every property in every city or state. Landlords might take to the Internet to find free forms, but those leases tend to be:

From another location;
Written by non-attorneys;
Too generic to fit the property; or
Out of date.

Smart landlords understand that the best way to develop a strong lease agreement is to work with an attorney who is familiar with the rental regulations in the specific area where the property is located. That way, the lease includes all the required tenant disclosures and all the remedies available to the landlord.

Generic Leases Have Issues

Most generic lease forms are insufficient. While this format can serve as a framework for a decent lease agreement, the check-the-box options present some obvious — and some not so obvious — problems.

The most obvious issue is checking the wrong box. Because the landlord has control over drafting the lease agreement, any mistakes the landlord makes will benefit the tenants.

These leases are designed to be mass-produced and are used in all situations — single-family homes to large multifamily properties. Any landlord will tell you that there is a huge difference between managing a single-family property and a multifamily building. Without careful tailoring, the generic lease agreement may fail to serve either situation.

Too often, the generic lease — which is designed to be very short — leaves out too many details. For instance, one lease provides “Tenant will be given a copy of the rules and regulations, if any, and Tenant agrees to abide by those rules.” Even if the landlord remembers to provide the list, the rules already have lost priority. That can make the day-to-day management of the property far more difficult because tenants won’t understand what to avoid.

The simple logistics of the generic lease are problematic — the material terms don’t fit in the spaces provided. Take the example of parking restrictions. If the property is a single-family, then the tenants probably only need to be advised of any HOA or city restrictions. However, in a multifamily property, the parking restrictions easily could take up half a page. If the space provided is limited, some of the information will spill over to an addendum or another page. That’s unnecessarily complicated, which defeats the point of a “streamlined” form.

Sometimes landlords don’t realize how the tenant might react to a check-the-box lease that lists multiple options that don’t apply to the tenant. One can’t help but wonder if other people negotiated a better deal. For example, one lease form provides a paragraph entitled “Rent Concessions” that reads “Landlord is offering the following rent concession(s) to Tenant”. If the answer is “none” or “not applicable”, it may have been better to have dropped that clause altogether than to taunt the new tenant.

Another example is a paragraph entitled “Identification of Premises” which includes options like parking spaces and storage. If those options are unchecked or marked “not applicable”, the tenant may feel cheated. A better solution is a tailored paragraph that defines the premises without listing amenities — like garages and storage — that don’t exist.

Other common examples include:

Landlord pays the following utilities: (None);

Pets ____ are ____ are not permitted; and,

This lease ___ includes ___ excludes parking.

Of course, a worse scenario is leaving all the blanks unfilled or boxes unchecked so the tenant has no idea what the rules are.

Generic leases have not been tailored to the landlord’s preferences. Sometimes the wording is incorrect. For instance, “All rent payments are to be mailed….” Or the lease may refer to other documents like “Additional Provisions” or “General Rules” that the landlord then needs to draft — basically all the provisions that should have been in the lease in the first place. In that case, the lease form is not saving time or protecting the landlord.

Regardless of what the landlord and tenant agree to in the lease, local rental ordinances will prevail. Landlords using generic forms must have a thorough knowledge of the local landlord-tenant laws — which vary from state to state and city to city — to flag preprinted provisions that may be illegal in their area.

The Purpose of the Lease is to Educate the Tenant

The terms “legal document” and “contract” tend to conjure images of courtrooms and judges. But most leases are never read by a judge. The primary reason to have a written lease agreement is to lay out the rules for the tenant so there are no hiccups in the tenancy. For that reason, the wrong lease will fail in its most important role.

Often, generic leases fail to clarify important legal responsibilities. For instance, one lease provides, “If Tenant is comprised of more than one person, then all persons are liable for Tenant’s obligations.” That’s the explanation of joint and several liability. It’s not likely tenants reading that provision will comprehend the full extent of their liability.

Landlord Tip: Consulting an attorney who is well-versed in local rental regulations is the most efficient way to navigate lease agreements. Many firms will offer updates for clients when the laws change so the lease will not become obsolete. Another advantage: someone to call for advice when tenancy questions arise — like how to handle a companion animal request or what to do if the tenant breaks the lease.

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 is 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.

{ 0 comments }

A Texas landlord and property management company are facing a discrimination lawsuit over restrictions they placed on children.

Those restrictions resulted in the manager levying a fine of $250 — one half of one month’s rent — on the parents of two children, ages 5 and 7. The children were being supervised by other adults while they played at the property, but the owner had adopted a policy that children needed to be supervised at all times by blood relatives. The family was threatened with eviction if the fine was not paid immediately.

HUD brought a lawsuit on behalf of the family. The complaint alleges that the owner and management company adopted house rules governing common areas that were discriminatory, including:

A curfew on children under 18 being allowed in common areas at night unless accompanied by an adult;
Restrictions on pool use for anyone under 18 without supervision by “parents or guardians” or an adult authorized in writing to supervise;
A mandate that tenants with children must ensure children never leave apartments “unnoticed” by using “keyless deadbolts, pin locks and window latches”;
A requirement that all children be supervised by blood relatives; and
Imposing fines and threatening police intervention for violations.

Enforcing different rules and restrictions on families because they have children is a violation of the Fair Housing Act.

HUD’s Assistant Secretary for Fair Housing and Equal Opportunity Anna María Farías comments, “Families shouldn’t be penalized for letting their kids be kids.”

If the lawsuit is successful, the landlord and manager could be ordered to pay damages — including punitive damages — to the tenants, a civil penalty to the government, and may be required to adopt new policies, undergo fair housing training, and report periodically to HUD.

J. Paul Compton, HUD’s General Counsel adds, “HUD will continue to take action to protect the rights of families.”

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 is 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.

{ 0 comments }

U.S. Rents Hit Record High as Rent Growth Slows

October 22, 2018

U.S. apartment rents spiked in September but rent growth this fall is slower than last year, according to the latest quarterly HotPads® Rent Report. Hotpads, which compiles data from rental listings in 35 major metro areas, found the current median rent is $1,500 per month, a 2.5 percent bump from last year. However, this time […]

Read the full article →

4 Easy Ways to Beef Up Your Rental Forms

October 22, 2018

Landlord forms are the mainstay of any rental business. Make your rental forms work harder by following these easy strategies: 1. Make Your Rental Ad Do Double-Duty Landlords may not think of an ad as a rental form, but it can be an effective tool when it comes to tenant screening. Bad tenants have admitted […]

Read the full article →

Eviction Delays Highlight Need for Tenant Screening, Property Management

October 8, 2018

Citing a shortage of adjudicators, Ontario’s Landlord and Tenant Board is warning those seeking dispute resolution that they may experience longer-than-usual delays. Based on reported decisions over the past two months alone, including a tenant who was ordered to stop verbally abusing the landlord, it is likely that many of those pending claims are brought […]

Read the full article →

British Columbia Revises 2019 Rent Increase Guideline

October 8, 2018

The allowable rent increase guideline for British Columbia now is set at 2.5% or the rate of inflation, after the provincial government rescinded the 4.5% figure announced last month. The move came just days after the 3-member Rental Housing Task Force, authorized in April, sent a letter to Premier Horgan and Housing Minister Robinson citing […]

Read the full article →

Top 5 Mistakes Landlords Make with Tenancy Agreements

October 8, 2018

Unfortunately, there is no one universally applicable tenancy agreement form that works for every landlord and every property. Individualized tenancy agreements that reflect the landlord’s preferences as well as local tenancy laws are the best way for a landlord to manage a rental property. But a poorly-constructed lease will not do the job. These are […]

Read the full article →

Where Tenants, Landlords Stand on Marijuana

October 8, 2018

Ratehub.ca, Canada’s leading financial comparison website, conducted a survey of 1,200 Canadians in July and August that provides valuable insights into what landlords may face as legalization looms. The survey makes clear that tenants are not aware of their rights when it comes to marijuana in rental homes. One in four tenants believes they should […]

Read the full article →

Manitoba Announces 2019 Rent Increase Guideline

October 8, 2018

Manitoba Rental Branch has announced that the rent increase guideline for 2019 is set at 2.2 percent. That guideline applies to rent increases throughout 2019. The figure is up from last year’s 1.3 percent cap. To increase rent, landlords must provide tenants with notice of rent increase at least three months prior to the increase. […]

Read the full article →

$8,500 Goes Missing: How Landlords Can Avoid Rent Theft

September 24, 2018

A property manager in Tallahassee has been charged with theft after allegedly cashing tenants’ money orders, according to a news report. A supervisor discovered the discrepancy after posting late notices to three tenants who claimed to have paid rent. When the supervisor researched the ledgers, she discovered potentially fraudulent entries. The property manager allegedly cashed […]

Read the full article →