“Signs That Your Lease Document Is Bad” written by Mike Marko
Are you having trouble managing your tenants?
If you’ve just started leasing, you probably are.
As a property manager, it’s essential to assert authority and make sure tenants are in line.
This is where a lease document comes in. It provides the lessor a guarantee that lessees will behave according to wishes.
If you’re now asking, “I’ve got a lease document, how come I still can’t control my renters’ actions?”… then you’ve got yourself a bad lease document.
Creating a lease document is no easy task. Not all are aware of what should be covered, and this can often lead to the issues that you are now facing.
In this article, we will discuss the important clauses to include in a lease document to prevent these from happening again.
Mistakes to Avoid When Creating Your Lease Document
A lease document covers the rules and regulations both the lessor and lessee have agreed on. This document that tenants abide by the rules set forth and that property is used carefully.
There are plenty of guides on how to create a lease document. But information stating the importance of each element is lacking. This results in the disregard of these elements and an addition of rules that should not be included.
To avoid issues, a good lease document should be aimed for. Once you have ensured that the mistakes below have not been committed, have your attorney review the document.
It’s Missing the Basics
Every lease agreement format needs to include the basic information of all parties involved in the lease. This includes full names, contact details and addresses. Ensure that all names provided are real and have undergone the screening process.
Every lease document also needs a specific description of the rental property. A good description of the rental property should include:
Statements of Terms and Occupancy are Inadequate
A lease document should have the exact start and end date of lease. Simply putting the length of stay (for example, 1 year) may cause confusion between both parties. Move in too late, and it may result in prolonged vacancy. Move in too early, and conflict may arise if another tenant is still residing.
Clearly state the maximum number of occupants in a unit. Failure to do may result in unpleasant living conditions. Too many people in a small space can result in too much noise and disturbances. It can also affect the property’s condition.
Lacks Specifics of Rent and Payment Methods
As a property manager, money is the most important aspect. The rent amount must be explicitly written in the lease document, as well as the currency in which it must be paid (if appropriate).
When creating a lease document, also add a specific day of due and notice. Absence of these frees the tenant from paying on time. To further ensure that payments are made on schedule, provide consequences and late fees as a result of late payment.
Indicate your preferred payment method. If you are managing multiple units, it is advised to have only one payment method. This prevents confusion and delay.
No Statements about Maintenance of Property and Inclusions
The property and its additions are the main selling points of every leasing business.
A lease agreement needs to contain clauses that protect your property. Inclusions are an important asset when pulling applicants. You can’t have your current lessees damaging them.
Include a detailed description of the unit’s condition and defects. Provide the full list of inclusions your space offers. Complaints are avoided if renters are aware of defects. State which party is responsible for damages that occur during the tenancy and provide penalties in your lease document.
The property manager also needs to conduct inspections to make sure tenants abide by the rules. These inspections must take place after due notice is given. During these inspections, make sure that the place is decent and in a well-maintained condition.
No Sign of a Security Deposit Clause
A security deposit is a sum of money a landlord takes from the renter and is returned at the end of a lease agreement.
This is a great addition to every month to month lease document as it protect you from sudden move-outs and ensures that the maintenance is covered.
If the other party has concealed a defect until the end of lease, the expenses for this can be deducted from the deposit. This is also handy if lessees refuse to take responsibility for damages. An unclaimed deposit will keep them from moving out.
Here are the specifics on what to include in this clause:
- Possible reasons for retention,
- Return conditions,
- Return method, and
- Return date.
Although it is a good safety measure, there are rules to abide. The lessor must provide an itemized list of deductions and the exact amount must be returned, should there by no deductions. Remember, having their deposit in your hands doesn’t mean you can deduct for no valid reason.
The Lease Agreement Doesn’t Cover Renters’ Insurance
A great addition to a tenancy agreement is to include a renter’s insurance clause. Renters’ insurance protects your tenants’ home valuables and covers damaged, destroyed, or stolen possessions.The insurance acts as a safety measure for both parties and is often paid for by the tenant.
Absence of a Subleasing Clause
Subleasing is an agreement between a tenant who already holds a lease and a subtenant who wants to use all or a part of the tenant’s leased property.
Documents without a subleasing clause are troublesome. Lessors will be unable to control how tenants use the property. If you solely want it to be used by your screened tenant, provide your conditions and/or penalties in your tenancy agreement.
However, if you accept the idea of a sublease, clearly state if there are:
- Any additional fees,
- Who pays the rent, and
- Who’ll be responsible for damages.
You’ve Added Illegal Clauses
When creating the lease document, property managers have the tendency to go overboard and write whatever comes to mind. This is an issue if some of the terms turn out to be illegal.
Illegal clauses can cause the lease to be voided. It also results in the lessor’s liability for monetary damages. Examples of clauses that are illegal in a lease document are:
- Provisions stating that tenants agree to take premises as they are no matter how bad the condition.
- Provisions stating that the landlord can immediately evict a tenant for not paying rent.
- Provisions relieving the landlord from the responsibility of giving 30 days notice of eviction.
- Provisions relieving the landlord from the responsibility of giving a 24-hour notice before inspecting the unit, unless during emergencies.
- Provisions waiving the tenants right to a jury trial or to appeal.
- Provisions that free the landlord from liability for damages and/or injury.,
- Provisions that deny tenants’ their right to repair damages in their unit and deduct the cost from their rent.
- Provisions that require tenants to agree to waive their statutory rights.
These depend on your state. Look up state laws before printing your lease document and have it reviewed by your attorney.
Final Thoughts on Signs That Your Lease Document Is Bad
Having a bad lease document puts you and your property at risk. This can result in mismanagement of tenants or worse, total lack of control over their behavior.
A lease document is prepared in order to protect you and your property, as well as the tenants. It should contain the rules and regulations that all parties have agreed on and must abide by. Having this becomes immaterial if it cannot help you establish authority as the property manager.
Knowing how to create a good lease document can make your life easier.
In this article, we discussed the various mistakes that should be avoided when creating your lease document. These also serve as signs that you have a bad lease document in your hands:
- The absence of basic information about the parties involved and the property.
- The inadequacy of terms regarding tenant occupancy.
- Incomplete terms regarding rent, such as due date, late fees, and payment method.
- No statements about maintenance of property and inclusions.
- No security deposit clause.
- No mention of renters’ insurance.
- The absence of a subleasing clause.
- Addition of illegal clauses.
If you’ve found this article informative or have further concerns, feel free to leave a comment below.
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