Tips for Writing a Custom Rental Agreement
Renting out apartments, condos, or single family houses comes with significant risk. Tenants can balk on paying rent for any number of reasons, or damage the unit, or even sublet it without your knowledge.
Your cashflow can be threatened and your ownership too could be lost. You may find yourself legally or financial responsible for tenants actions unless you specify things carefully in the rental lease agreement.
Without a specific, well-written custom lease, you’re leaving interpretation of your rental arrangement up to chance by the tenant and by the courts. You need a legally enforceable contract.
Controlling Legal Risk
If you’re a short term rental landlord (e.g., Airbnb) the financial risks are heightened and legal remedies are a little sketchy. A customized lease might be the ticket to make irresponsible renters think twice before jeopardizing your rental.
If you consider the legal consequences for you if renters use the property for a party, neglect and don’t assume important maintenance procedures, squat on it, don’t pay their rent, or just straight out destroy the home, that alone is sufficient reason to write a custom lease agreement.
In an era where tenants have more legal rights than landlords, a well written lease is your only guarantee of the safety of your financial investment (other than insurance). And fortunately, you can manage leases within your property management software or a viable virtual leasing app.
The Courts Want to See a Well Written Rental Lease
What the law may respect most, and have most difficulty in dismissing is a well written lease. Such well conceived and clearly written documents are a big helper later in court for your attorney. And given the legal and political climate today and rent arrears problems, it’s not a stretch to say your attorney will be making court appearances.
If all you’re currently using is a standard, common lease you found on the web somewhere, you might want to upgrade to a lease that is well-planned, designed, and validated by an attorney. Not only could it be more enforceable in your state, the well written rental lease is an encouragement for tenants to take care of your asset, meet the written agreement, and to be held liable for damages or failure to pay rent.
What is a Well Written Lease?
A well-conceived and well-written lease is orderly, logical, covers the most pertinent matters and specifics and meets the courts requirements for legality and clarity, with respect to applicable rental laws in your state.
If you want to create an air-tight, legally enforceable lease, there are some general rules to follow:
- know your local and state laws
- make the wording clear and thorough
- indicate the current condition of the unit from your rent inspection and do take hi res photos (keep them on file in your landlord software account)
- specify who is on the lease and who has legal access
- specifies important clauses, addendums, and disclosures
- specify the monthly rent and payment due date in type with no handwritten/notated additions
- specify the ban on smoking in the unit, and what types of pets are allowed
- indicate what happens with the security deposit
- specify what’s needed for early termination of the lease
- state your right of entry to the unit to maintain, inspect, etc.
- indicate all tenant expectations, have them initial each key item, digitally via the the digital lease software
- clearly state your maintenance and repair procedures and policies and what you cover (lighting, plumbing, electrical, A/C and heating, windows, floors, carpeting, fixtures, etc.
- state specifically what constitutes damage with each area or asset
- state a code of conduct related to unit usage, driveways, backyards, parties, noise levels
- state the consequences to the tenant for breaches of the rental agreement including warnings and evictions
- state how the lease can be terminated and what happens after a 12 month lease period ends
- state how rent increases can be applied
Be Specific in Your Lease Terms
Spelling out items on the lease keeps things clear and ensures your prospective tenant really understands what they’re signing and that they understand their obligations.
Use a logical flow in your lease with appropriate sections with titles to make it clear. You might use these sections in the lease:
- Location of Leased Property
- The Term of Tenancy Agreement
- Rent Amount and Due Date
- Deposit Required and Safekeeping Procedure
- Lease Term
- Tenant Rights and Responsibilities
- Landlord Rights and Responsibilities
- Disclosures and Current Condition Report
- Lease Termination Rules
- Laws Governing the Lease
Refer to an Attorney to Ensure your Lease is Valid
Since leases need to adhere to local landlord/tenant laws, you may need to hire an attorney-at-law to create a lease template. Alternatively, you could visit a site such as ezlandlordforms, where they’ve painstakingly reviewed lease design and offer leases that may give you peace of mind.
EZlandlords.com has a lease builder wizard and their knowledge of each state’s tenancy laws could be invaluable.
You can find more on each state’s landlord laws on Nolo.com. Additionally, you can modify or add to the lease you create through them. They remind you that their forms are not a substitute for professional legal advice. They offer other forms and lease addendums you may need. A payment of $30 doesn’t sound too painful!
A comprehensive, thorough lease is believed to carry more weight than a simple one-pager off the Web. Building a thorough lease puts more weight on the applicant/lessee to accept full responsibility.
In fact, the lease document is a foundational document for your business, and items in your lease can become part of your property management automation process, to make your work easier and avoid errors. Always put everything in writing, post it online via your property management software to your tenant portal so the tenant can read it when they need to. And when changes to the lease happens, other parts of your account can be instantly updated (including accounting docs).
More lease writing tips:
- know what constitutes a lease that will be voided
- know what is happening in your local courts with respect to broken leases and rulings
- understand the court’s guidance/advice on how to handle tenant situations
Learn more about going virtual with your leases using ManageCasa.
* Note: the contents of this post is for general information purposes as does not constitute legal advice or a recommended action for any part of a rental lease. Please to refer to expert documentation and the council of your attorney when creating your tenant leases.
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