ATTENTION LANDLORDS: 7 Ways To Make Sure Your Property and Your Rights Are Protected
Landlords, are you doing everything you can to make sure your tenant doesn’t get out of control? Think about it for a moment.
I’ve taken cases from both landlords and tenants. I’ve also turned down cases as well. Having to do that gives me no pleasure. But, the ones that I’ve been forced to turn down always have a common problem….the lease agreement.
There either wasn’t a lease agreement (bad idea) or there was but it was so poorly written that it was effectively useless.
So, what can you do to make sure that, as the landlord, you have control over your tenant and your property? Well, there’s actually a lot you can do and it starts with the lease agreement. But, you can also give this book a try: Every Landlord’s Legal Guide. This book is the guide for landlords. Check it out!!!!
1. MAKE THEM SIGN A LEASE AGREEMENT
This is EXTREMELY important. Never, never, never, never rent out your property to someone without first drafting a solid lease agreement. It controls the relationship. It dictates the tenant’s duties and obligations. It lays out your rights (as well as the tenant’s).
Renting property without a lease agreement is just a bad idea. This is the document that lets the world know what you can and can’t do on your property. It’s the damn that holds back the flood. Without one, you’re vulnerable.
This is especially true if you live in a county that isn’t covered under your state’s landlord/tenant statutes. Let me explain what I mean by that. In Tennessee, for example, we have what’s called the “Uniform Residential Landlord and Tenant Act” (or “URLTA”). URLTA sets out the rights, duties, and responsibilities of both the landlord and the tenant. However, URLTA only applies in counties that have a population of 75,000 or more.
In those counties that are covered under URLTA, landlords and tenants have somewhat of a statutory guide to assist in their relationship. The lease agreement is still important though. It will control certain aspects of the landlord/tenant relationship. But it can’t override URLTA.
For those of you living in a county with less than 75,000 people, URLTA can’t help. This means that the lease agreement is the governing body.
So, the long and short of it is….always have a lease agreement and make the tenant sign it.
But what should it cover?
2. MAKE SURE THE NATURE OF THE LEASE IS CLEAR
The “relationship” between a landlord and a tenant is sometimes referred to as a “tenancy” and there are typically three categories.
(i) Tenancy for a Term: This tenancy has a starting date and an ending date (usually it’s 1 year). Neither the landlord nor the tenant can terminate this tenancy without a valid reason to do so. Otherwise, this tenancy will terminate automatically at the end of the term.
(ii) Periodic Tenancy: This tenancy has a starting date, but no end date. It will continue each period as long as everybody is happy. You typically see this tenancy set up on a “month-to-month” basis. Either the landlord or the tenant can terminate this tenancy by providing proper notice. Depending on your state, proper notice is usually 30 days (for a month-to-month arrangement).
(iii) Tenancy at Will: This tenancy is somewhat of a “catch-all.” If the arrangement you have with your tenant doesn’t fall under the other two categories, then you’ve got a tenancy at will. But most states will convert a tenancy at will to a periodic tenancy.
There doesn’t need to be any guess work here. Your lease agreement should clearly set forth the nature of your relationship with your tenant. You need to know it and the tenant needs to know it.
3. BE VERY SPECIFIC ABOUT RENT AND OTHER EXPENSES
Take a look at your lease agreement, if you have one. How specific is it about the tenant’s rent obligations? Does it dictate who pays for utilities, insurance, and taxes?
I’ve seen well-written lease agreements and some that are, for lack of a better word, terrible. The bad ones are usually one page (at the most) and have one little-bitty sentence regarding rent. They typically look like this, “tenant agrees to pay $____.00 per month.” WHAT?!?!
There’s nothing about when payment is due. There’s nothing about to whom payment is due. There’s nothing about the consequences of not paying. The tenant has the control in this situation.
Rent is probably the top 2 or 3 most important provisions in a lease agreement. It should be beyond specific. No room for negotiation or interpretation. Let me show you an example of what a well written rent provision should look like:
“Tenant (the actual name of the tenant would probably be better) agrees to pay Landlord (again, the actual name would be a better option) $____.00 per month. Rent payment is due on the 1st of each month and will be considered late if not paid by the 10th of each month. Tenant shall make payment directly to Landlord by check, cash, or money order. Payments received after the 10th of each month will incur a 5% late fee (some states cap late fees at 5%). Should Tenant fail to pay the full amount of rent by the last day of the month, Tenant will be in default and this agreement shall be voidable at the option of the Landlord.”
You don’t want to give the tenant any room to move when it comes to rent. He/She needs to know exactly when rent is due, to whom it’s due, and what happens if it’s not paid on time. And if you want your tenant to pay for utilities, insurance, and taxes, you’ll want to include that in your agreement as well.
4. BE SURE TO COVER DAMAGES AND REPAIRS
What happens if the refrigerator breaks or the stove quits working? Who is responsible for the cost of repair?
This is a common issue between landlords and tenants. When something breaks everybody wants to point the finger at the other person. It can lead to arguments, conflicts, and believe it or not, threats.
You want a lease agreement that covers this situation. But you have to be careful. There are some things that are generally the landlord’s obligation. These are things that typically deal with the “habitability” of the property. For example, a landlord typically can’t place responsibility on a tenant to repair things like heating and air, hot water, mold, etc. Anything that has to do with health and safety usually falls on the landlord’s lap.
But if the carpet gets damaged or the microwave quits working, your lease agreement can place that obligation on the tenant.
The problem, however, occurs when the lease agreement is completely silent on this issue. Something is damaged or broke and the tenant starts blaming you. You, in turn, blame the tenant. It can get ugly.
So make sure you cover this situation in your agreement. But remember, if you live in a county covered under URLTA (or something similar), you’ll want to check and see what responsibilities it delegates to the landlord and to the tenant.
5. CLEARLY POINT OUT WHAT CONSTITUTES “DEFAULT” AND ITS CONSEQUENCES
Non-payment of rent is typically always considered grounds for default. If your tenant doesn’t pay, you can evict. That’s pretty simple.
But what if your tenant likes to throw loud parties on the weekends? What if they have pets that live with them? What if they damage the property and refuse to pay?
You’re the landlord. You get to dictate what constitutes default in your lease agreement. If you don’t want pets living in the unit, put it in the agreement. Make sure your tenant knows exactly what he/she can and cannot do.
You also want to clearly indicate the consequences of default. Maybe you have a forgiving nature and you allow your tenants one strike. Maybe not though. Maybe the first violation means eviction. This is especially important if your tenancy is a tenancy for a term that can only be terminated for cause.
And if you have to hire an attorney and go to court to evict a tenant, who pays for attorney fees? Most states will not award attorney fees unless a statute or a contract calls for them. So make sure your lease agreement clearly puts the tenant on notice that if you have to sue and are successful, he/she will be responsible for your attorney’s fees.
6. INCLUDE A SECTION IN THE AGREEMENT DESIGNATED FOR “EXISTING DAMAGE”
If you’ve been renting long enough, you’ve probably encountered this problem before. You go in for a routine inspection and find that the carpet is covered in stains. When you confront your tenant about that, he/she tells you that those stains were already there when they moved in. You know that’s not true, but how can you prove it?
A good lease agreement will have a provision covering this situation. Usually there will be an additional page that has a space for the tenant to write down any damage or issues that existed the day they moved in.
Doing this will protect you in the event a tenant refuses to take responsibility for something that was damaged. If the carpet has stains on it, all you have to do is check the “existing damage” provision and see if the tenant wrote down carpet stains. If you have to go to court over it, you’ve got some pretty solid proof that the tenant was at fault.
7. MISCELANEOUS PROVISIONS TO INCLUDE IN YOUR AGREEMENT
Here are a few other provisions that you may seriously want to consider putting in your lease agreement:
(i) A Severability Clause: This is clause that lets the tenant know that should any individual provision of the agreement be declared invalid by a court, it does not render the entire agreement invalid. It usually looks something like this, “this agreement is severable, meaning that in the event one or more of the terms of this agreement are deemed unenforceable the rest of the Contract remains valid and in full force.”
(ii) An “Entire Agreement” Clause: This clause puts a court on notice that the entire agreement between you and your tenant has been put into the written lease. This is important because of something called the “parol evidence rule.” Essentially, the parol evidence rule says that the exact language of the agreement controls. Any other arrangements, interpretations, or agreements made prior to or contemporaneously with the lease agreement have no impact. This clause typically looks something like this, “this written agreement constitutes the entire agreement between the parties.”
(iii) A Subletting or Assignment Clause: If you don’t want your tenant to sublet the property or assign the property to some else, you have to include a clause that says so in the agreement. If you don’t put that in there, your tenant will likely be allowed to sublet or assign the property with or without your consent.
(iv) An Abandonment Clause: If your tenant abandons the property or otherwise leaves for an extended period of time, you’ll want to include a provision detailing the consequences. For example, you could include a provision stating that in the event the tenant abandons or otherwise stays absent for X amount of days, you will have the right to terminate the lease, enter the property, and store any personal belongings. If the tenant fails to reclaim the property after 30 days you shall have the right to sell it and apply to proceeds to any unpaid rent or needed repairs.
Remember, it’s your property. You have the power to dictate what happens on it. Don’t let it be the other way around. Take the time to draft a detailed lease agreement that covers every possible occurrence.
If you need some help you can always go see your local attorney. Most can draft you up a solid agreement in no time.
Or, you can click here for help.
So the next time you rent, sit down with your potential tenant. Go over every provision with them. In fact, it wouldn’t be a bad idea to require them to initial by each one.
I promise, a solid lease agreement will ease your stress, protect your property, and improve your legal health. Trust me. Start working on yours today!!!
Good Legal Health.
The Juris Doctor