Avoid These Mistakes When Writing a Lease

For property owners looking to rent out their property, writing a lease for the first time can be a daunting task. While there are plenty of generic templates you can find online to start with, often times you want to tailor a lease to the specific property, local ordinances, or your personal preferences.

Ideally, you should hire a property manager that can help you draft a lease that takes all these factors into account and ensures you have full legal coverage and avoid disputes with tenants. If you are drafting your own lease, however, these are some of the most common pitfalls to avoid:

Committing to Excessive Repairs or Maintenance

A lease is essentially a binding agreement, and whatever you agree to when the lease is signed, you must fulfill. Often, tenants bring up issues when they first sign the lease, so it’s important to be cautious about making any oral commitments to fix or alter something. If you’re unsure about your ability to make a repair or improvement, it’s better not to make a promise at all. Telling a tenant that you can’t provide the new roof you promised because of unforeseen expenses can lead to finding a new tenant or even legal trouble.

Prohibited Provisions: Overburdening the Tenant

In a residential lease, the landlord is responsible for maintaining a livable environment. This obligation is legally binding for the landlord, as per the lease agreement. However, some landlords may include provisions in the lease that shift the maintenance responsibilities to the tenant. These provisions may vary, but they are generally considered illegal. Requiring a tenant to paint their own walls, install their own carpet, or repair their own plumbing is against the law and can result in unfavorable consequences for the landlord in a legal dispute.

Collecting First and Last Months’ Rent

In several states, it’s no longer acceptable to request both the first and last months’ rent at the time of lease signing. The trend has shifted towards requiring landlords to ask for only the first month’s rent and a security deposit, with the amount of the security deposit being up to the landlord’s discretion. It’s crucial to familiarize yourself with the laws in your state before making a final decision on what to charge your tenants. Additionally, keep in mind that many states require landlords to pay annual interest on the security deposit after a certain amount of time has passed.

Specifying the Rent Increase Amount in the Lease

Most states have regulations on the maximum allowed increase in rent. Landlords may want to include information on rent increases in the lease to provide clarity for tenants. However, even in states where rent increases are regulated by law, there may be exceptions. Landlords may be allowed to raise the rent under specific circumstances, such as if the property hasn’t seen a rent increase for a certain period. Including the increase in the lease will create a binding agreement on the issue, making it difficult to change the increase percentage once the lease is signed.

Ultimately, tenants seek to rent properties where they feel that the landlord is fair and reasonable. With this in mind, making last-minute changes to terms or rejecting reasonable requests can make it challenging to attract the desirable tenants that every landlord wants. Simply exercise good judgement and avoid significant mistakes, and you’ll be able to draft a fair and balanced residential lease.