The Need For A Strong Lease Agreement (Even In Landlord-Friendly States)

In 30+ years of managing thousands of rental properties across numerous states, our team at Utopia Management has seen just about any kind of problem you can imagine.

Our experience has been vital in turning around many a landlord-tenant relationship. With our advice and insight, landlords have been able to keep their rental properties in ideal rental condition. However, as any landlord will know, all it takes is one oversight to find yourself in near-constant dispute.

Yet, when we speak to many landlords, they tend to be uncertain about the importance of a quality lease agreement, or even what one looks like. In this guide, we want to provide insight into why these documents matter so much.

As The Property Owner, Do I Need A Lease Agreement?

Whether you manage residential or commercial property, you need a lease agreement. These are vital, binding documents that set the terms of arrangement for the entire rental process. A failure to create suitable rental agreements can lead to all manner of challenges and conflict.

Even if you own rental properties in a landlord-friendly state such as Nevada (which we cover as a property management company), you still need a legally binding lease agreement.

What Is A Lease Agreement, Exactly?

Your lease agreement is the legally binding document signed between the landlord and the tenant at the start of their tenancy. It is the document that sets out the expectations and obligations on both sides. A failure for either side to adhere to the terms within the agreement can lead to potential legal action.

You need a high-quality, easily understood lease agreement if you want to make sure tenant-landlord relations remain positive. Why?

• A tenancy agreement that does not provide enough clarity can leave grey areas that either party could exploit.
• By contrast, a well-written, detailed lease agreement ensures that all parties are on the same page from the first day of tenancy.
• These agreements set clear expectations for things like the cost of monthly rent, the length of the lease, and the security deposit.
• Landlords benefit from the additional stability of knowing that all expectations are set out clearly.
• Tenants also benefit by having clarity on what their requirements are to stay in the property.
• An attorney should regularly review agreements to make sure that they line up with current national, state, and federal laws.

Does A Lease Agreement Need To Be Complex?

No, it does not. Lease agreements need to cover some very specific terms and conditions. In our experience, though, overly complicated lease agreements are more likely to cause disputes.

It is best to have a solid, easily-understood, and – most importantly – legally sound lease agreement. Having a document that makes sense and can be understood by your tenant is a much better place to start than a tenancy agreement that needs a legal degree to understand!

If you work with our team at Utopia, you will have a property manager who can assist with the drafting of a lease agreement. We have years of experience in drafting such legally binding documents. With the help of an attorney, you can make sure your agreements are up-to-date and remain legally accurate.

How Do I Make Sure My Lease Agreement Is Legally Binding?

The challenge with lease agreements is that what is valid in one state could be prohibited in the state next door. At Utopia, we deal with rental properties in states like California, Nevada, Oregon, and Washington. Even across these states, the provisions for tenant agreements change significantly.

Just some of the areas where a lease agreement’s requirements can differ include:

• The conditions surrounding security deposit payments and how they are handled.
• The notice periods that need to be provided prior to a tenant being evicted or moving on.
• Rent increase arrangements: Some states have very strict regulations regarding rent increases.
• Maintenance and repair requests and responsibilities, including when check-ups happen.
• Privacy laws and regulations about when a landlord or property manager can check in.
• Stipulations around private activities, such as indoor smoking and the presence of pets.

While we do everything we can to keep your lease agreements up-to-date, we always recommend speaking with an attorney in your state.

If you need help finding a property attorney in California, Nevada, Oregon, or Washington, don’t hesitate to contact one of our local office locations. We will work to connect you with a qualified, knowledgeable attorney for you to consult with.

The Key Conditions To Include In A Lease Agreement

Any agreement should lay out the tenant’s responsibilities within the rental unit. It should also include details about things like property maintenance, when each month’s rent should be paid, the due date for payments, the lease term, and how to process tenant requests.

Let’s evaluate what you should make sure your lease agreement covers:

Rent Due Dates & Rent Increase Conditions

As a property owner, your lease agreement should be clear about the financial cost of renting your property. This means that you should include:

• Details about the monthly rent cost and how much tenants pay during their lease term.
• Any specific penalties applied should a tenant fail to pay rent on time during their lease.
• Due dates for payment: What day of the month should monthly rent be paid?
• Acceptable forms of payment: What methods of payment are you happy with?
• Rent increase rates: Make sure your increases are in line with state regulations.
• The amount required for a security deposit and the conditions for its eventual return.
• Any non-refundable figures should be made clear from the outset.

Making sure your tenants know when, how much, and what methods to use to pay rent will ensure a better landlord-tenant relationship. In our experience, the majority of disputes start over rent.

Property Maintenance Responsibilities

Another aspect of successful rental agreements is a breakdown of the kind of maintenance agreements and tenant responsibilities involved. This should include:

• Who is responsible for maintaining the property and dealing with its general upkeep?
• What are the acceptable levels of wear & tear on furniture and appliances provided?
• When and how tenant requests for property maintenance should be addressed.
• Who covers the cost of utility bills such as water, gas, and/or electricity?
• Who deals with property maintenance costs, such as landscaping?
• The specified period for routine property maintenance and repairs to take place.
• Whether or not written notice is needed to carry out property reviews and inspections.
• Whether or not the tenant vacates the property will be worked out.
• Tenant responsibilities and expectations from the property owner.

It is imperative that you understand what your obligations are when dealing with rental properties. As the property owner, there will be certain features and facts about the property that you must deal with, not the tenant.

Working with a property manager makes it easier to determine what your responsibilities are within the rental unit. Some issues fall under the responsibility of the tenant; others are your responsibility.

Property Adjustments & Improvements

When parties sign a lease agreement, there will be certain stipulations to cover. This includes any rules around altering the property. This could be something as simple as allowing a tenant to hang photos on the wall or paint the walls a certain color, or more major decisions such as changing the property’s structure or changing the purpose of certain rooms, i.e., turning a bedroom into a home office.

Setting out these rules early on will make sure that you, as the landlord, get a property back that is in the condition you expected after the rental period. A failure to set out clear terms on what can be changed in your real estate can mean receiving back a property that has been changed significantly.

Rules Around Subletting

While a relative rarity in rental agreements, some tenants will wish to rent out your rental unit only to then sublet it out themselves. Previous landlords the tenant worked with might have been happy for this to be the case; are you?

Subletting adds another layer of confusion to property rental. Failure to set out clear standards about subletting could mean that the property you rent out is actually in the hands of another person entirely. That could lead to legal headaches down the line without proper notice or agreement.

Lifestyle Choices & Tenant Habits

A more abstract part of your lease agreement should cover the kind of behaviors that you will permit and deny. This could include:

• The presence of pets, are you happy to have pets on the premises?
• What about smoking? Are you happy for tenants to smoke in-house?
• If you do, ensure it is clear who holds responsibility for this behavior.
• Set out clear penalties for monthly rent and even termination if broken.
• Consider other features, too, such as partying clauses and noise clauses.
• This could include people who play instruments; is that suitable in an apartment?
• The more detail you can include here, the less risk of the clause(s) being broken.

Resolving Rental Disputes

Even with the best property management company in place, problems can still emerge with tenants as the years go by. With that being the case, you need a rental agreement that strictly lays out what to do in the event of a tenant-landlord dispute.

• The failure to include resolution clauses can lead to headaches with your tenants moving forward.
• These clauses should encourage mediation by a third party over turning to potential litigation.
• Your rental agreements should be as clear as possible to avoid disputes over clarity.
• Without the right attention to detail in a lease agreement, disputes become far more likely.
• Ensure clarity over things like lease termination dates & tenants’ security deposit payments.
• Make sure that your rental agreement meets all fair housing and anti-discrimination laws.

The combination of a property manager and an attorney can make sure that your property agreement covers as much as possible. The more detail in the lease agreement (without being overly complex), the less risk of a dispute turning into a legal battle.

Should I Rely On A Sample Lease Agreement?

Many lease agreements are, for the most part, general and rather standard. Not every rental property needs a completely bespoke rental agreement; most can be pretty standard in their style. However, using a sample lease agreement can lead to issues such as:

• The agreement is too generic and does not provide a thorough enough set of rules.
• The landlord fails to fill in important information, such as the lease termination date.
• The lease relies on general assumptions, not specific to state or federal laws.
• The laws upon which the sample was built are no longer applicable or have changed.

If you wish to have a lease agreement drafted that you can use, it is better to hire a property manager or real estate attorney to provide one that suits your property’s unique needs. Our staff at Utopia can help you with the drafting and management of your lease agreements so they match up to the requirements of the state in which your rental properties are based.

Leave Rental Agreements To Experts In Property Management

If you are having a hard time creating a lease agreement that you feel provides the protection you desire, call us. At Utopia Property Management, we bring decades of experience and know-how about the complexities of managing your property. That includes dealing with lease agreements.

With hundreds of residential or commercial property portfolios under our wing across the years, you can trust us to help you facilitate legally binding, high-quality, easily understood lease agreements. Take away one of the most complex parts of sustaining a landlord-tenant relationship by working with us.

Hire A Property Manager For Easier Landlord-Tenant Agreements

Call our team today to discuss your options. We can quickly show you exactly what we can do to make your rental agreements more secure and effective than before.