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Members' Homepage Also see: Lease Provisions | Good, Bad & Ugly | LT Law There are a number of key provisions that should be contained in any agreement for transferring possession of real property, including it's legalities and the basic formalities required in a typical lease.
The contract should always include the rights and responsibilities of each party under the agreement and cover how grievances or disagreements will be resolved. The completed document is commonly called a rental agreement or lease. The terms are used interchangeably throughout our pages. The contract sets out the terms and conditions of the tenancy, is legally binding and enforceable against all parties.
We have several sample leases and rental agreements available from our Forms Web. We also provide more than a hundred common lease provisions that you can copy-paste into your agreements; contained in our Lease Provisions Pages.
Follow the law
Select the first qualified applicant
Lease Basics
Common Lease Provisions
Unlawful Provisions
Types of Tenancy
Attachments
Several types of laws affect the landlord-tenant relationship and must be considered while constructing a lease. Residential landlords must comply with the Fair Housing Act (FHA) and the federal Americans with Disabilities Act (ADA) in addition, to the more restrictive laws of their own state and in some cases, the county or municipality.
Unlike federal requirements, state and local landlord tenant laws are not uniform. Although the various state's share most concepts, their laws may differ in some important and many minor provisions.
Because property managers must become familiar with the laws of their state and area, we have provided most of state law's key provisions in this web. However, it is always wise to join a local apartment or rental housing association as well; in part because some municipalities have added ordinances that can effect the landlord tenant relationship in very profound ways.
Professional landlords also learn that local judges often introduce their own ideology, with it's prejudice and predisposition, into their interpretation and decisions. The only real way to know what you can expect from a particular judge is through experience; yours or someone else's. Some judges want landlords to provide a copy of any written agreement; some want landlords to fill out every court document, including judgments. Some are offended if you do.
While most associations invite judges as guest speakers, and members have an opportunity to ask questions, the information association members share about a particular local judge's decisions is often the most insightful and therefore the most helpful.
You may be confident that you have followed the law to the letter, only to find that the judge has an interpretation that could cost you thousands of dollars if you are not prepared.
Every property manager should also have an attorney who is familiar with landlord tenant law and the local judges; one who they can consult on unusual matters relating to leases, evictions, rights and responsibilities.
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There are many good reasons for accepting or rejecting an applicant that are not discriminatory if they are applied equally and fairly. Make a written list of all requirements and use them to evaluate everyone who wants to rent a property in exactly the same manner.
Once a property manager has completed appropriate tenant screening, including a credit report, qualification check list and interview, they should always select the first qualified applicant.
Some property managers brag that they select the most qualified applicant, but since any such definition can be subjective, it can also be challenged as discriminatory. The mere allegation of discrimination can lead to expensive legal costs, time and trauma covering months or even years.
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The lease governs the landlord-tenant relationship. It transfers possession, use and enjoyment of the property from the landlord to the tenant for a specific period of time and for a stated amount of rent. To be enforceable, the rental agreement should satisfy a few basic formalities which help to protect both the landlord and the tenant from fraud or misunderstanding in the event of disagreements or disputes.
(a) The agreement should be in writing. Most states have adopted a legal doctrine called the Statute of Frauds, which states that contracts for real estate that cannot be performed within one year must be in writing in order to be enforceable. To comply with the Statute of Frauds, leases of one year or more must be written. As a practical matter, all leases of any duration should be in writing, since the written document provides a record of the terms of the landlord-tenant relationship. A lease is in fact a lien on a property, so it's terms and conditions should be easily and clearly discernable by the parties, their heirs or assignees.
(b) The agreement should be signed and dated. Both the landlord (manager or rental agent) and all tenants should sign and date the agreement.
(c) A copy of the agreement should be given to the tenant. All parties to any agreement should be provided with a signed and dated copy to comply with legal requirements and for future reference. The landlord copy should be filed with any other documents or data that pertains to the tenant and kept at least three years beyond the tenancy.
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The agreement should contain a series of lease provisions that address important aspects of the landlord tenant relationship. It is also best to keep the agreement from becoming exceptionally long, so care should be taken to select only those provisions that are important to a particular relationship.
The following are some of the most common items used in a residential lease:
Identity of the parties to the lease: the landlord or agent, and the tenants; usually defined as those persons who will actually be paying the rent.
Address of the property and the unit.
Length of the rental period, and any change in lease conditions in the event of tenant holdover.
The date on which the tenant will receive the right to use the property.
Rental amount. A fixed term tenancy may have to show the total rent due for the term of the lease, as well as the monthly rent payment, in order to be enforceable as to length.
Late charges provide an incentive to pay the rent on time. However, some state laws, like Massachusetts, limit or even prohibit late charges on residential rent. Others, like Michigan, require the charges to be reasonable. Where state law does not address the issue, courts have. In Wadsworth v. Starcher, Court of Appeals of Ohio, the court said that determining whether a late fee is reasonable is totally within a courts discretion. The court held that $5.00 per day was "unconscionable".
Security deposits are perhaps the most contentious condition in a landlord tenant relationship. Consequently, state and local laws addressing security deposits are generally strict and must be considered and addressed in any rental agreement. Most states regulate the amount that can be charged, when and how the deposit will be returned, require that deposits be kept in a separate account, and some require that interest be paid to the tenant. You must check your state law to be sure.
Occupancy addresses how many adults are allowed to reside in the premises. Some leases limit occupancy to a specific number based on square feet per person. Others may use the number of bedrooms as a reasonable limit on occupancy. Most leases also prohibit pets entirely or require additional deposits and rent.
Use and enjoyment is often dictated by the local zoning ordinance which is likely to permit residential use only and should be so stated. Most leases also include language that the premises may not to be used for any illegal purposes. The paragraph may also refer to a list of rules often included as an attachment.
Assignment and Subletting addresses whether such acts are permitted or prohibited and if written consent may be required.
Upkeep of the premises defines responsibility. Usually, the landlord agrees to repair, while the tenant agrees to maintain. The paragraph should also require that all requests for repairs or maintenance be in writing.
Utilities should be described, assigned and/or transferred to the tenant's name. The lease should state what utilities are available, those the tenant is responsible for paying or having in their own name and whether the tenant is responsible for sharing in the cost of utilities for the common areas.
Other rights and responsibilities of the landlord or tenant not contained in the standard lease provisions, but perhaps unique to the demised premises, should also be included in the written agreement.
Additional conditions and modifications may address handicap accessibility, swimming pools, pets, waterbeds, laundry equipment, window air-conditioners, parking and any unusual provisions or property conditions.
Property owners often want to list a great many "thou shalt not's" and "what if's" in their lease, however potential tenants may be intimidated and want to have a complex or lengthy agreement reviewed by an attorney or third party. While such review should never be discouraged, it could add days to a vacancy.
The lease you use should be easy to read and understand and should be limited to just a few pages. You can always supply a list of rules, or other documents, as attachments if necessary.
We have provided more than a hundred common lease provisions that you can copy-paste into your agreements. They are contained in our Lease Provisions Pages.
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Some types of lease provisions are not permitted by law. The lease should not contain provisions that require the tenant to waive his or her rights under federal, state or local laws; these waivers are unenforceable and may cause the lease to be voidable, and can make the landlord subject to penalties.
The following are some common examples of unlawful lease provisions: Provisions that are contrary to federal anti discrimination laws. The lease may not contain provisions that violate fair housing laws or the Americans with Disabilities Act. For example, it is illegal to include a lease provision that prohibits subleasing to members of minority groups or a provision that charges a higher security deposit to a disabled tenant or to a family with children.
Eviction of the tenant without due process. The tenant may not be evicted from the unit without notice or a hearing on the issue. Similarly, leases (in almost every state) may no longer contain a provision that permits a landlord to take possession of the tenant's personal property (Landlord Liens) without due process because of non-payment of rent.
Waiver of habitability by the tenant. The lease may not contain a provision in which the tenant agrees to waive the landlord's warranty of habitability or hold the landlord harmless for breaches of the warranty. The "as-is" clause that is commonly found in most real-estate purchase agreements is not a valid lease clause in most states. In every state but three, a landlord is required to keep a residential premises habitable. Additionally, the landlord can be held responsible for injuries that result from the condition of a rental property, regardless of a habitability lease provision, or the tenant agreeing to correct the problem.
Typically, the term habitable includes major systems such as roof, plumbing, heating, air permeation, conditioning, structural elements or any unsafe condition. Carpet, paint and other cosmetic items generally do not affect the habitability of the home unless they present a health hazard. However, landlords and property managers have discovered to their dismay that every judge seems to have their own definition of habitable.
One judge recently determined a kitchen was not habitable because the stove did not work and reduced the rent for the house by 25% for the period it did not work. In another case, rent was abated for a month because a loose carpet bar was a tripping hazard.
Waiver of the landlord's legal responsibilities. Provisions that waive the landlord's legal responsibilities are void. A couple examples are: a provision that prohibits the tenant from holding the landlord responsible for the landlord's negligent acts, or a provision that attempts to circumvent landlord tenant law.
Provisions that penalize the tenant for complying with the law. The lease may not contain a provision that penalizes the tenant for informing government authorities of any landlord violation of the law. For instance, a lease provision that calls for immediate eviction if the tenant informed the building or health authorities of an unsafe condition on the premises is not permitted. In fact, most state law now addresses so-called "retaliatory eviction" and prohibits eviction for any cause immediately following a complaint to authorities.
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The landlord may offer one of four different types of "tenancies" or "leaseholds." The type of lease will affect the parties' right to terminate or alter the landlord-tenant relationship, and the right to change the terms of the lease.
The following are the four types of tenancies:
Fixed Term Tenancy. The fixed term tenancy is the most common type of leasehold and is usually an annual (12 month) lease. This type of tenancy has a fixed duration and terminates automatically at the end of the period. A fixed term tenancy can run for any period of time, as long as the lease terminates automatically at the end of the period. The gross rent for the entire period my need to be stated in the lease to enforce the term.
Periodic Tenancy. A periodic tenancy is commonly known as a month-to-month rental. This type of leasehold runs for a fixed period of time (weekly, monthly, six months, one year) and renews automatically at the end of the lease term. A periodic tenancy does not terminate until the landlord or tenant gives notice of termination. Notice must usually be equal to the rental period term. If the agreement is weekly, a seven day notice would suffice, if it is monthly, the party who wishes to terminate the agreement must give at least one month's notice.
Tenancy at Will. A tenancy at will has no fixed duration and can be terminated by the tenant or the landlord at any time. In some jurisdictions, this form of tenancy is not permitted.
Tenancy at Sufferance. A tenancy at sufferance occurs when the tenant wrongfully remains on the premises, or "holds over," after the lease has expired. Unlike the other types of tenancy, the tenancy at sufferance is not the result of an agreement between the landlord and tenant; therefore, the tenant should have no legal right to remain on the property and the landlord should be able to evict. However, some jurisdictions now address a hold-over tenancy in law, and conclude that by accepting the rental payments, the landlord is deemed to have entered into a new lease contract with the tenant. Some state law specifically says that if the tenant makes rental payments during the hold-over period, and the landlord accepts those payments, a new tenancy is created. In other states a landlord retains his right to evict and, in fact, may be entitled to damages as well.
Most property managers will want to choose either a periodic tenancy (month to month) or a tenancy for years (fixed term).
To help decide between these two types of leaseholds, the landlord should consider a number of factors, including the state of the rental market, new rental construction, vacancy rates, and whether rental rates in the area are increasing or declining.
A periodic tenancy allows the landlord to raise rents more often, since there are more opportunities to terminate and renegotiate the lease; this is advantageous when the rental market is strong. A fixed term tenancy prevents frequent rental increases, but it is more favorable to a property owner in a declining or over-built rental market. Additionally, fixed term leases are usually an asset in the event of a sale or refinance.
See our pages on types of tenancy for more information.
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Lead Paint documents are required to be provided and acknowledged by residents of pre 1978 housing in the U.S.
Condition or Inventory Checklist are required to be completed prior to tenant's possession and updated at the termination of tenancy. Many states will not allow deductions from a security deposit for any damage not addressed on a move-in / move-out checklist.
Utility transfer agreements. Most states prohibit a landlord from turning off any utility deemed necessary for habitation, even in the event of non-payment. It is important that utility transfers take place at the time of possession and remain in the tenant's name until vacating.
Rules and Regulations. Most multifamily housing communities have a printed list of rules and regulations that have evolved to address conflicts and resident interaction. They are usually posted in common areas but should also be attached or included with the lease.
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