Does Your Lease Agreement Prevent Disputes, or Provoke Them?

by Chris on August 20, 2012

Does your lease minimize tenant disputes, or incite them?  That’s a question every landlord should ask before a tenant signs the lease.

Each lease has a personality, and it sets the tone for the remainder of the tenancy.  When push comes to shove, make sure your lease is your friend, not your enemy.

Look at the top reasons for tenant disputes, and how your lease might mitigate — or provoke — a fight with the tenant.

Grace Periods

Most standard leases provide not only a date that rent is due, but a grace period to pay late. These leases assure tenants that rent is due by the 1st of the month, but if not, then it’s due a few days later.  Which date does your tenant hear?

Another issue with grace period language is not the number of days allowed, but the word ‘day’ itself.  Is a day 24 hours? Does it end at 5:00pm? At midnight?

What if the grace period ends on a holiday or weekend?  Does Saturday count? 

If you can’t answer these questions, chances are, neither can the tenant.

Security Deposits

It is surprising how many tenants do not understand that a security deposit and last-month’s rent are not the same thing.

Security deposit disputes are the most common reason that landlords end up in court or dispute resolution. The language in the lease regarding security deposits could be the culprit. 

Make sure the language is simple, straightforward and undeniably clear — not just for the tenant’s sake, but for a judge in the event of a dispute.

The exact amount collected must be acknowledged in the lease. When dealing with pet deposits, two separate figures should be shown.  The pet deposit may be best placed in its own paragraph, because deductions from the pet deposit can only be taken for damage caused by the pet.

With regard to roommates — another common area of confusion — keep to the “one lease, one deposit” rule. 

Tenants need to understand what the deposit is for, and under what circumstances they will get it back. It must be clear that the tenant can get it back, or it is no longer an effective tool.  However, the lease needs to set the right tone: “You want it back, you have to earn it!”

Late Fees

Grace periods and late fees interrelate.  Late fees can’t kick in until the end of the grace period.  If you don’t know whether that means the check can be postmarked by that date, or whether the close of business Friday is the end of the grace period — not in the drop box at 7:00 pm — expect to have an argument with the tenant.  It’s one that the tenant likely will win.

Settling In

As soon as a tenant moves in, they go about the business of nesting. And that brings up a question. Just how far can they “let it all hang out?”

It’s impossible to micromanage every detail of the tenant’s behavior; likewise, it’s impossible to anticipate all the reasons why a landlord may want a tenant to leave.

When the honeymoon is over and the landlord wants the tenant out, some landlords find that the law is not on their side. 

What’s worse than a problem tenant?  A problem tenant you can’t evict!

Standard leases can be the underlying cause of this situation. It’s easy to end up with a lease that is too broad.  In that case, it may not be clear what the rules are that the tenant is accused of breaking.  The landlord may not be able to show that the specific actions are a material breach of the lease, and therefore,  a judge may not allow the eviction to proceed.

On the other hand, some landlords go overboard and make the lease too narrow.  This usually happens when a landlord attempts to list all the possible reasons the tenant can get the boot. Unfortunately, this strategy fails to solve one problem — local laws set out the conditions for obtaining an eviction order.  A landlord cannot invent a remedy simply by placing it in the lease. 

By stacking the lease with rules that can’t be enforced — or pushing the tenant to follow such rules, the landlord quickly loses credibility, which only emboldens problem tenants.

How can a landlord strike a balance?  When writing rules into the lease, look first at the remedies.  Under what circumstances can you evict a problem tenant? 

If the eviction section of your lease seems a little wimpy, consider bringing it to an experienced landlord attorney for fine-tuning.  
 
Generally, when looking at rules for the tenant’s behavior, the focus should stay on what may be enforceable through eviction court, for instance, damage to the property, nuisance or harm to others, and financial losses, like nonpayment of rent or having too many occupants.

With the proper language, you lease becomes a tool not only for resolving conflicts, but preventing them in the first place.

 

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).

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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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