Get a Lease Designed to Protect Landlords
Optimizing the rental process is critical to the long-term profitability of your real estate business. Using a lease that is drafted with a landlord’s interests in mind is an important first step.
The Lease You Use Should Cover Certain Key Terms and Conditions
To be effective, a lease must adequately protect your financial interests. To be enforceable, the document must comply with federal, state and local laws.
Working with an attorney can help ensure that the terms and conditions covered in your lease thread the needle between effectiveness and enforceability.
A lease that sets proper expectations and addresses common issues related to the lease term can help you avoid disputes and prevent unexpected rental gaps.
Should your lease be month to month, 6 months with renewals, a year or something else?
Choosing the right term to use in your lease is a balance between risk vs. reward. Month to month leases provide flexibility but may sacrifice income stability. Multi-year leases may provide income stability but can be a problem if a tenant turns out to be a problem.
What date, specifically, should the lease start and end?
To avoid confusion related to pro-rating rent, notice deadlines, late fees and other time-sensitive elements of a lease, it may be best to start and end leases on the first and last day of a month.
What happens if a tenant wants to leave early? Or stay longer?
If a tenant stays after the end of the lease term and the landlord accepts rent, they become a holdover tenant with the right to occupy the property under a new lease term. Make sure your lease properly covers this situation to avoid having to evict a tenant that won’t leave. A lease normally will provide when a landlord or tenant may terminate the lease and the notice that is required.
Every state has laws that address what landlord can and cannot do when it comes to financial terms. For example, California allows landlords to charge up to two months rent for a security deposit, three months if the unit is furnished, and some states require landlords to pay tenants interest on their security deposits. Do you know the laws in your state and does your lease comply?
If you offer multi-year leases, it’s important to address rental fee increases so you don’t get locked in to a low payment over the long term. Also, some states prevent landlords from billing tenants for shared utilities, so you’ll want to make sure utilities, HOA fees and other financial items beyond the monthly rental fee are clearly articulated in your lease.
Rather than stress and guess, get a legal plan from LegalShield and have a provider attorney help make sure you’re following the law.
There are a variety of issues beyond the rental rate and term that warrant specific treatment in your lease document to proactively avoid disputes and have adequate legal protection should you end up in front of a judge.
Many landlords are not aware that they can, for example, require tenants to maintain the lawn, use felt pads under their furniture to protect hardwood floors and require guests to remove their shoes. Adding key details is an important part of protecting your property. Here are a few other common areas you may want to address in your lease.
- Rules for roommates, guests and subletting the rental unit
- Neighborhood noise ordinances or other regulations
- Who is ultimately responsible for the rent if there are multiple “roommates” and one skips town?
- If the power goes out through no fault of the landlord, tenants can hold the landlord liable, unless you address it in the lease.
- What pets, if any, are allowed to reside in the rental unit
A LegalShield business legal plan provides landlords access to vital legal assistance at an affordable price.
Both landlords and tenants have certain rights and responsibilities under federal, state and local law. Having a good understanding of the laws that govern your rental relationship is an important part of creating an effective and enforceable lease.
- Do you know your rights and responsibilities under the Fair Housing Act?
- Does your advertising or lease agreement violate anti-discrimination laws?
- Are you required to provide accommodation to a disabled tenant?
- If you do have to modify your unit to accommodate a disabled tenant, who’s responsible for the cost?
- When are you allowed and not allowed to enter the property once a tenant is occupying it?
Some of the questions above are simply a matter of law. Some issues may require specific language in your lease agreement.
Whether you have a simple question about your lease, a complicated question about a specific law, or any other legal question related to your rental business, when you have a business legal plan from LegalShield, you can pick up the phone and get the legal advice you need without worrying about getting a huge legal bill at the end.
An attorney may charge $150 - $400 an hour for even basic advice. As such, most people don’t think of calling an attorney when they have quick questions or need someone to look over a lease and provide feedback. That could be a mistake.
First, using a standard rental agreement downloaded from the internet without having an attorney make sure it meets the legal requirements in your state can have significant legal and financial implications over the long-term. Second, LegalShield makes getting day to day legal support to protect your real estate investments super easy and very affordable.
Our most popular legal plan for landlords is only $39.70 per month and allows you to have your attorney review your lease (or any other documents up to 15 pages each) and get unlimited legal consultation on all aspects of your rental business. Furthermore, your provider attorney is available to make calls and write letters on your behalf to help resolve a dispute with a tenant, contractor or any other third party.