Landlord Penalized for Faulty Lease

by Chris on April 8, 2019

A landlord in New York has agreed to pay a $5,000 fine after a complaint that he provided tenants with a lease agreement that contained illegal provisions.

According to the state’s attorney general, the landlord’s lease included provisions that:

Denied tenants the right to raise a defense to eviction;
Contradicted existing rental laws and claimed the lease would prevail over the law;
Disclaimed that the agreement was a residential lease to skirt consumer protection laws;
Claimed the right to lock out tenants without eviction orders;
Declared that tenants would be deemed trespassers if they didn’t vacate on demand;
Threatened tenants with arrest; and
Disclaimed any liability for negligence, including for lead, asbestos or bed bugs.

In addition to paying the fine, the landlord must replace all tenant leases and undergo continued oversight and monitoring.

It could have been worse. For instance, in a similar case in Iowa, a landlord whose lease was defective was subject to a class-action lawsuit that included as many as 6,000 current and former tenants. In that case, the landlord attempted to shift its liabilities and costs onto tenants.

There are any number of illegal provisions that could be found in a lease agreement. Some of the more common include asking tenants to waive legal rights, to waive notice of landlord entry, to extend the time allowed for returning security deposits, and to assume or waive the landlord’s negligence. To avoid the fallout over a bad lease agreement, it’s important to understand some of the basic rules for leases:

Even if a tenant signs a lease, illegal provisions are not valid;
Former tenants can pursue claims over illegal lease terms;
A lease agreement must comply with local, state, and federal laws;
When it comes to law versus lease, the law wins; and
If  the lease is unfair to tenants, it may not be enforceable, leaving the landlord with little or no legal protection. This is true even if the tenant signs it.

Along with damages payable to current and former tenants, illegal lease provisions can garner fines like in the New York case, and hefty penalties for violating consumer protection laws in many states.

It’s not only what is in the lease that matters. What is lacking can make a lease illegal. Preprinted lease forms are less likely to contain controversial provisions than, say, starting from scratch, but those preprinted leases may not include disclosures or specific language required by local ordinances.

Bottom line: Always have an attorney draft or review the initial lease agreement before providing it to tenants. Don’t make modifications to that language without first asking a lawyer.

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.

{ 1 comment… read it below or add one }

kg April 16, 2019 at 6:41 am

We’re very lucky here in Milwaukee, WI. A very experienced lawyer works with a local printing company to provide us with up-to-date legal forms specific to our area. All we have to do is buy these reasonably priced forms from the printer, either on line or hard copy. Plus Milwaukee City government provides us with free landlord training. There are also excellent landlord and real estate investing groups here too.

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