Common Mistakes to Avoid When Writing a Residential Lease
Having a written agreement is certainly better than relying upon handshake conversations, but if that lease fails to account for common situations, problems will likely arise for landlords (and tenants). Mistakes or omissions in a rental agreement don’t necessarily doom a tenancy, but open up property owners to potential issues should tenants, or the courts, step into the holes left in the lease.
Not having a written lease at all
A verbal lease agreement may hold up in some courts, particularly if it’s 12 months or less in duration, but relying upon an oral contract runs the very real risk of dispute over the terms agreed to or alleged violations of the lease without a written record. Contending with arguments over who said or promised what is an unnecessary headache; whatever the terms of your lease agreement, put it down in writing and have all parties sign it so disputes can be easily resolved.
Failing to personalize the lease
It might be tempting to craft a generic lease agreement that covers every future tenant, but there are no guarantees that future tenants and their situations, and the agreements stemming from those negotiations, will conform to generic rental contracts. While you can use a framework for the basic elements in a lease, be prepared to make specifications for pet owners, smokers, or any number of variables that may be presented by potential renters. To that end, your lease should also specify whether or not tenants are allowed to make any alterations to the property, and if they are, which alterations are allowed; a new coat of paint may be OK, but you don’t want to be surprised by a knocked-down wall.
Not accounting for late payments
You can make explicit to your tenants that you expect rent payments on time and in full, but unless you put those same expectations into the lease, you run the risk of difficulties should your tenant fail to make timely payments or any payments at all. It’s up to you as to whether to offer a grace period for payment, but your lease should detail the penalties for late payment of rent as well as the steps you’ll take for frequent tardy payments or non-payment. Without those provisions, it may fall to pursuing legal action, and without your requirements in writing, it will be harder to make your case in court should the matter get to that point. However, these types of lease provisions should be reviewed by a lawyer to ensure that they do not violate any state or local laws, particularly during an emergency or other unusual period.
A year is a long time, and as anyone can attest, how we feel today may very well not be how we feel 365 days from now. As well as a tenant arrangement may be working out, it’s best to have a set term so that you can easily ask them to vacate for any reason at the end of the lease. That doesn’t mean you’ll have to look for a new tenant in a year’s time; it’s simple enough to sign a new lease with a tenant that wants to stay, or to include provisions to make renewal easy should both parties agree. However, this fixed-term lease gives you flexibility to deal with bad tenants or changes in your situation.
Allotting repair/maintenance responsibility
Failing to address property upkeep in a lease can leave open the possibility of dispute between you and your tenant in the future. Landlords have a responsibility for a certain level of maintenance under law as well as an obligation to keep a home safe and habitable by making necessary repairs. But it’s a balancing act to figure out what responsibility to take on yourself and what can be given to a tenant. Too much on your plate can put you on the hook for time and expense, while too much work shifted to a tenant can make them feel unreasonably burdened and ultimately tasks remain undone. It’s smart to work with tenants to strike a balance both sides can live with.
No security deposit or unclear terms
Any lease agreement is going to begin from a place of trust — after all, you feel comfortable enough to let them live on your property — but landlords should take all the steps available to safeguard the rental. A security deposit protects against damage caused by tenants, or a tenant that leaves before the end of their lease term, and a well-written rental lease agreement with clear terms protects you against any future disputes about responsibilities or what was agreed to at the time of signing.
Lease terms that break the law
Being the owner of the property doesn’t automatically give you final say in what can and can’t be included in a lease. Landlords have some latitude in what they stipulate in a lease, but each of those provisions is subject to state and local laws, and nothing contravening the law would be considered valid should a tenant challenge it in court. Things like required disclosures, late fees, notifications and eviction procedures may be covered under state law, so in creating a lease, it’s essential to adhere to the guidelines prescribed by the state.
One of the easiest ways to avoid critical mistakes in residential leases is to work with a lawyer well-versed in the laws governing leasing and tenancy. With LegalShield, you can work with a real estate expert provider lawyer to review documents, like a residential lease, all within 24 hours of signing up.
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