Wednesday, July 9
Real Estate
FAQs
Lease and
Rental Agreements
Don't
Lease a Home Without It
A
lease or rental agreement sets out the rules landlords and tenants
agree to follow in their rental relationship. It is a legal contract,
as well as an immensely practical document full of crucial business
details, such as how long the tenant can occupy your property
and the amount of rent due each month. Whether your lease or rental
agreement is as short as one page or longer than five, typed or
handwritten, it needs to cover the basic terms of your tenancy.
Not
only should a lease be thorough, it should also be legal. Be sure
your lease or rental agreement complies with all relevant laws
including rent control ordinances, health and safety codes, occupancy
rules and anti-discrimination laws. State laws are especially
key, setting security deposit limits, notice requirements for
entering rental property, tenants' rights to sublet or bring in
additional roommates, rules for changing or ending a tenancy,
specific disclosure requirements such as past flooding in the
rental unit and more. See your state's landlord-tenant statutes
for details. Here are some of the most important items to cover.
Names
of All Tenants
Every adult who lives in the rental unit, including both members
of a married couple, should be named as tenants and sign your
lease or rental agreement. This makes each tenant legally responsible
for all terms, including the full amount of the rent and the use
of the property--meaning you can legally seek the entire rent
from any one of the tenants should the others skip out or be unable
to pay.
Limits
on Occupancy
Your agreement should clearly specify that the rental unit is
the residence of only the tenants who have signed the lease and
their children. This guarantees your right to determine who lives
in your property--ideally, people you have screened and approved--and
to limit the number of occupants. The value of this clause is
that it gives you grounds to evict a tenant who moves in a friend
or relative, or sublets the unit, without your permission.
Term
of the Tenancy
Every rental document should state whether it is a rental agreement
or a fixed-term lease. What's the difference between the two?
Both rental agreements and fixed-term leases cover basic details
such as tenants names and rent provisions; they differ mainly
in the length of the tenancy they create. Rental agreements usually
run from month-to-month and self-renew unless terminated by the
landlord or tenant. Leases, on the other hand, typically last
a year. Your choice will depend on how long you want the tenant
to stay and how much flexibility you want in your arrangement.
Rent
Your lease or rental agreement should specify the amount of rent,
when it is due (typically, the first of the month), and how it's
to be paid, such as by mail to your office. To avoid confusion
and head off disputes with tenants, spell out details such as:
-acceptable
payment methods (such as personal check only)
-whether late fees will be due if rent is not paid on time, the
amount of the fee, and whether or not there's any grace period,
and
-any penalties if a rent check bounces.
Deposits
and Fees
The use and return of security deposits is a frequent source of
friction between landlords and tenants. To avoid confusion and
legal hassles, your lease or rental agreement should be clear
on:
- the dollar amount of the security deposit
- how the deposit may be used (for example, for damage repair)
and not used (such as for last month's rent)
- when and how you will return the deposit and account for deductions
after the tenant moves out, and
- any legal nonrefillable fees, such as for cleaning or pets.
It's
also a good idea (and legally required in a few states and cities)
to include details on where the deposit is being held and whether
interest on the deposit will be paid to the tenant.
Repairs
and Maintenance
Your best defense against rent-withholding hassles and other problems
(especially over security deposits) is to clearly set out your
and the tenant's responsibilities for repair and maintenance in
your lease or rental agreement, including:
- the tenant's responsibility to keep the rental premises clean
and sanitary and to pay for any damage caused by their abuse or
neglect
- a requirement that the tenant alert you to defective or dangerous
conditions in the rental property, with specific details on your
procedures for handling complaint and repair requests, and
- restrictions on tenant repairs and alterations, such as adding
a built-in dishwasher, installing a burglar alarm system or painting
walls without your permission.
Entry
to Rental Property
To avoid tenant claims of illegal entry or violation of privacy
rights, your lease or rental agreement should clarify your legal
right of access to the property--for example, to make repairs--and
state how much advance notice you will provide the tenant before
entering.
Restrictions
on Tenant Illegal Activity
To avoid trouble among your tenants, prevent property damage and
limit your exposure to lawsuits from residents and neighbors,
you should include an explicit lease or rental agreement clause
prohibiting disruptive behavior such as excessive noise and illegal
activity such as drug dealing.
Other
Important Rules and Restrictions
If you do not allow pets, be sure your lease or rental agreement
is clear on the subject. If you do allow pets, you should identify
any special restrictions such as a limit on the size or number
of pets, or a requirement that the tenant will keep the yard free
of all animal waste.
Any other legal restrictions, such as limits on the type of business
a tenant may run from home, should also be spelled out in the
lease or rental agreement. Important rules and regulations covering
parking and use of common areas should be specifically incorporated
in the lease or rental agreement.
