“7 Mistakes to Avoid Making in Your Lease Form” written by Mike Marko
Making a lease form is pretty much part of Landlord 101. It’s elementary for anyone who’s been in the business long enough, and is required for everyone with a rental/leasing property.
So why, in spite of that, are so many landlords making a mistake in the lease form?
I’ve seen hundreds of examples of faulty forms and agreements. In most cases, landlords were none the wiser as to the vulnerabilities their contracts are promoting.
Why, some of them were even shocked when I told them they could be sued for their lease agreements!
That’s why today, we’re going to enumerate some of the most common mistakes people make when drawing up a lease form. That way, you can check your own lease form to ensure these aren’t present on it.
This can help you keep your business on the right track and ensure the safety of your leases. If you’re ready for that, let’s get on with it!
Lease Form Mistakes to Avoid
Part of the reason so many lease form mistakes abound is that a lot of landlords, when entering the business for the first time, just copy other landlords’ forms.
Now, there’s nothing wrong a little guidance, generally. It’s convenient and saves you a lot of trouble trying to hash out all the details for yourself.
The problem arises when the lease form you copied has an error in it that you can’t identify — precisely because you’re new to the industry and need guidance in it still.
This has led to countless landlords copying erroneous or shabby lease agreement templates from each other. The result is an abundance of poor lease forms in the market.
To help you avoid falling prey to that, we’ll go over the most popular lease form mistakes here, as I said. Note all of these and check your own lease form for them, in case you need to do a little rewriting.
1) Ignoring Your State’s Laws
Here’s one of the main problems you’ll see in lease agreements nowadays. A lot of people copy lease forms they find on the Internet… but forget to ensure that they’re adapted for their states’ rental laws.
Rental laws vary across states. That’s why you need to consult with a professional or someone specializing in rental law when drafting a proper lease form.
Check that the lease form template you’ve copied matches up with your location’s legislation or regulations. Otherwise, you may be opening yourself up to all sorts of legal complications.
2) Violating State Laws on Privacy
I know we just talked about ignoring state laws as a common lease form error, but this one is so common that it needs its own entry!
Most states have regulations on the privacy tenants are due in their rented or leased properties. You should be certain to check them before writing anything pertinent to tenant privacy or landlord visits in your own lease form.
If you don’t, some very unpleasant things can occur. In fact, you may even be slapped with damages for violating privacy laws in your lease form or actual conduct if you make this mistake.
3) Prescribing Unreasonable Late Fees
Yes, there is such a thing as an unreasonable late fee. While you want late fees to serve as deterrents, you don’t want them to make you look like a money-grubber either.
You see, if things get so bad between you and a tenant that you need to take them to court over rent and late fees, an excessive late fee prescription in your lease form will work against you.
Most courts already tend to rule in favor of tenants in such cases. When you hit them with a late fee that also makes you look like your first name should be Ebenezer… well, let’s just say it won’t be good for you.
4) Failing State Regulations on Security Deposits
Yes, this is another of the failures to consider state laws that happen so often they need their own entry in this list.
Some states in the country actually don’t have laws relating to the use or return of security deposits. However, some do — and you need to check what those are for your location before writing anything about security deposits in your lease form.
In particular, find out for what you can use a security deposit in your state. Find out too if there are rules on how you use it, e.g. if you need a record of all payments and the like.
Be sure to include those notes in your lease form afterwards, to make things clear to your tenant. That way, you can’t be faulted either for non-disclosure.
5) Not Asking for a Cosigner
Generally speaking, it’s best to have a lease form that mandates a cosigner.
Of course, that wouldn’t be necessary if you have the perfect tenant. Someone who always pays rent on time, never damages the property, never causes a disturbance, etc.
But the perfect tenant is very hard if not impossible to find. That’s why it’s best for landlords to be safe by asking tenants to have cosigners on their lease form.
That way, the landlord has someone to turn to for redress if the tenant finds himself in a position where he can no longer pay owed rent. The same is true for damage to the property that requires payment to repair.
6) Vagueness over Tenant Responsibilities
You don’t want to be vague in this part of the lease form because it can lead to misunderstandings or even conflict later. Make sure to tell tenants exactly what’s expected of them.
For example, if a tenant breaks a window due to his own activities in the leased unit, he should be responsible for its repair and replacement. But don’t assume that’s understood immediately.
In fact, don’t assume that anything’s “understood”. Make sure it’s spelled out in your lease form instead.
Tell tenants what areas they’re responsible for cleaning and keeping in good condition, for example. Tell them too what parts of the property you’ll repair if broken and under what circumstances.
7) Failure to Specify Renewal Terms
Even if leases are long-term tenancies, there’s always the possibility that your tenant wants to renew them and take on another lease at the end of the term.
To make things easier for you both, you should specify renewal terms for the lease in your lease form.
For example, state in the lease form that tenants need to confirm intent of renewal at least 60 days before the end of the present lease if they want to stay longer.
That helps you because it means you won’t waste time advertising for new tenants then. It also prevents them from missing out on a renewal option because you’ve already agreed to take on a new tenant for the property by the end of their lease.
You may also note in your lease form that the lease is auto-renewing unless the tenant indicates he wishes it to be otherwise at least 30 days before the end of the current term.
Final Thoughts on Common Lease Form Mistakes
Today, you learned about the most common mistakes new landlords make when writing or preparing a lease form. These mistakes may become the source of confusion or even legal squabbles between landlords and tenants later on.
This is why it pays to ensure that they can’t be found anywhere on your own lease form. Let’s go over them again quickly, just to recap:
- Ignoring the local laws relating to rental or leased properties.
- Violating state laws on privacy in particular.
- Prescribing unreasonable late fees to your tenants in your lease form.
- Failing to observe local regulations on how to use, collect, or return security deposits.
- Not asking for a cosigner on your lease form.
- Being vague over the responsibilities of tenants in your lease form.
- Failing to specify the terms under which the lease may be renewed.
These common mistakes are ones you should be certain to avoid in your own lease form. If you still have questions about how to write a lease form, though, you can leave them in the comments below!
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