What Smart Landlords Know About Lease Agreements

by Chris on October 22, 2018

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Out of date.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).

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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.

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