Power Struggle: Lease Agreement vs. Letter of the Law

by | Mar 16, 2015 | Rental Forms

No landlord sets out to break the law, but that easily can happen if you don’t have the right lease agreement.

tenant screeningThat’s because there’s an ongoing power struggle between the freedom to enter into contracts, and the letter of landlord tenant law. The right balance must be struck in each individual lease agreement.

This balance is particularly illusive due of the nature of landlord tenant laws, which tend to be:

1. Reactionary. The cure devised for a highly-sensationalized case can be worse than the disease.

2. Difficult to interpret. The language of the law sometimes defies common sense. Odd legal phrases like “the lease agreement notwithstanding…” make laws difficult to digest.

3. Unresponsive. Often landlords’ needs are not addressed, or the law leaves details to the imagination.

What’s more, the courts have a hand in crafting landlord tenant law by interpreting statutes, contract and personal injury law. These decisions are as binding on landlords as statutes and local ordinances, yet are not common knowledge.

The lease is more user-friendly, easily changed to add or subtract provisions that don’t seem to work. But therein lies the problem. Landlords may add provisions that are problematic, like these:

A late fee that is “excessive” or rolls from one month to the next. Even if a statute is silent, courts often say no to these fees.

The tenant agrees to give the landlord 60 days to return the deposit.

Shifting the burden of responsibility to the tenant to keep the premises safe and habitable, or to excuse the landlord’s negligence.

Local laws may prohibit these provisions — but not all local laws. If you have owned properties in more than one state, you may be especially vulnerable to mistakes because what is perfectly acceptable in one place may be illegal in another.

The lease vs. law battle can be won by following two basic rules:

The lease cannot contradict the law. The law controls. If your state says the deposit must be returned in 30 days, you cannot extend that deadline, even if the tenant agrees.

A lease cannot require a tenant to give up any right or protection afforded under the law. Provisions regarding payment of attorneys fees, forgoing litigation, or waiving a landlord’s liability for conditions of the property are all examples of potentially illegal lease provisions.

Many leases contain an “out” in the event a provision is illegal. This “severability” clause allows the inappropriate portion to be severed from the remaining contract, which remains in force. The alternative is dire. If the lease contract is premised on an illegal provision, the landlord may find there is no way to enforce any of the provisions of the lease.

So, when drafting your lease agreement, be sure to:

Avoid using lease forms from another state.

Tailor any standard lease agreement to the local law.

When you think you have the lease agreement you want, ask a local landlord attorney to review it before asking a tenant to sign.

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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