Leases
Time was when a handshake meant you agreed. There was even a time when a handshake was enough to seal an agreement with a tenant when you rented to him or her. That was before the days of landlord-tenant laws and tenant-friendly, landlord-hating judges. But there’s more to it than that.
When you rent to a tenant, when you let someone move into your rental property with just a handshake agreement, exactly what are you agreeing to? When you rent your property with a handshake, you may be agreeing to one thing, and your ten- ant to something else. Each of you thinks you are agreeing to the same things, but you aren’t.
You think that you are agreeing that the tenant will pay you the rent on the first day of every month, come hell or high water. Your brand new tenant thinks as long as the rent is there sometime during the month it’s just fine. I had a tenant tell me once that he had never had to pay rent in advance before. I was curious what planet he was from, but his application said he was from California. The rental agreement made clear that rent in advance was expected.
You think that the tenant will ask you if and what colors he can paint the apartment. Your tenant thinks that whatever he wants to do in his home is his decision alone.
You think that “normal wear and tear” means the apartment should look pretty much as it did when the tenant moved in—a few dings in the wall, maybe, but certainly clean. You tenant thinks that “normal wear and tear” means that the apartment is still there when he moves out.
You think that when you rent to the te ant and his wife and child, that they are the only people who will be living in your property. The tenant thinks that he can rent out rooms and move in his extended family, amounting to 10 people in a two- bedroom apartment.
That’s why we have rental agreements and leases.
Clauses and Writing that MUST Be in Your Leases and Rental Agreements
Do you have the right to collect the rent? Maybe not. If you leave out any of the clauses or neglect to fill in some blanks, some judge may decide you do not. Fortunately, rental agreements and leases you obtain from your local apartment, landlord or rental owners association contain all the required clauses. Your most important job is to be sure that every blank is filled in.
Lease and rental agreements are both contracts. A lease differs from a rental agreement in that a rental agreement is usually only month-to-month, and allows termination by either party on a specific notice, in most states between 10 and 30 days. As such they must contain specific information. The more specific that information is, the less likely it is that a judge will be called upon to determine the “intent” of the parties.
For a contract to be enforceable there must be mutual consent, an agreement– both offer and acceptance–supported by consideration, entered into by parties having the capacity to contract, the object of which is legal.
When you rent a property, you have an offer and acceptance. You offer to rent the property at a specific rent and with specific conditions to a prospective ten- ant, who accepts and agrees to abide by the offer and moves in. The offer and acceptance are supported by consideration in the form of rent to the landlord and a place to live for the tenant. Consideration can be anything of value, such as two pigs a month or fresh eggs every day, but for most landlords, it is rent in the form of money.
All that is required to show capacity is the legal ability to enter into a contract, in that the tenant and landlord are both adults and they are both of sound mind and not drunk or otherwise intoxicated, when they enter into the rental agreement. A school of thought says that being a landlord automatically precludes being of sound mind. But that is a subject for discussion another time.
The question of legality arises only if the landlord is renting the property when he has no right to do so, such as if the property had been red-tagged for building code violations and the landlord tears off the tags and rents it anyway; or when the property is in foreclosure and the landlord doesn’t tell the prospective tenant about it.
Blanks to fill in
Date signed
Especially important with a lease, since a lease has a beginning and ending date, it is just about as important with a rental agreement. The date the rental agreement went into effect can determine the date and the amount of rent that is due. For example, if there is no date on the rental agreement, exactly how much rent is the new tenant to pay? If the tenant moved in on the 10th of the month, and he pays rent prorated to the first of the next month, is the rent due on the first of the month or the 10th? It seems like an obvious answer except to tenants who are not the swiftest horses in the race. They become confused or forget and actually believe that the amount of rent they paid at move in is the amount due every month. They also are absolutely certain that they moved in on the first. Go figure.
It is easier to just make things a little clearer in the beginning with a date everybody signed on the rental agreement as something you can point to.
Exact address of unit
Just what is the exact address? Is it 1234 Main St, or is it 1234 Main St., Apt. 2? It is, of course, the latter. Clever, bad-tenant attorneys will use the lack of a complete address to try to have the entire rental agreement thrown out as defective. Sometimes it even works. You do not want to take the chance that they can get away with it, though.
Besides, the tenant is renting a particular apartment, not the entire building. A lack of apartment number would give at least some credence to the idea that the ten- ant has the right to use all of and live anywhere in the building he or she wants.
It is easy to make sure the exact address is filled in.
Name or names of the landlord. When, where and how much rent due
The first of the month comes, no rent. The fifth of the month comes, still no rent. More than a little curious, you call your brand new tenant. “We haven’t received your rent check, yet,” you say. “When can we expect it?”
“I was hoping you’d call,” your tenant replies, “I didn’t know where to send the rent.”
You look at your rental agreement and discover that nowhere on it did you write an address to send the rent, or even your phone number. Silly oversight, but could be costly if your tenant has ulterior motives, and wants to avoid paying rent.
Especially dangerous to your bank account would be leaving off a due date. Most states have in their landlord-tenant law a provision that allows a rental agreement to override the law itself if the overriding clause is not “unconscionable” or against public interest. Changing the date the rent is due would override state law.
The law may state that the rent is due and payable in advance at a place to be determined by the landlord, but your rental agreement just says it is payable, not when, not where, not how much, not even how, just payable. That means that your tenant could pay the rent when, and in an amount that suited her.
Names of all occupants (adults)
If you don’t fill this one in, you could be in for a world of hurt. Here’s what could happen:
You rent to someone, her name appears on the rental agreement. You know she has a husband, boyfriend, significant other or evil twin, but you never met him, her or it. Come the 15th of the next month and you don’t have any rent. You decide to make a direct rent collection and go knock on the door.
Someone answers the door and wants to know who you are. The same question crossed your mind. “I’m the landlord,” you answer, “and who are you?”
“I live here,” comes the reply.
Of course you have no memory of having seen any such person when your tenant moved in, but you knew someone else was moving in with her. Maybe this is the one.
“I need to speak to Mary,” you say. “She’s not here.”
“Do you know when to expect her?” “Not really. Sometime tonight.”
“How many more people live here?”
“Er, uh. . . oh, just me and Mary.”
Is this person your tenant? Good question. There would be no question if her name were on the rental agreement.
Is she responsible for the rent? If so, to whom?
See how complicated it all can get just by leaving off some names from your rental agreement.
Leases and rental agreements are essential for effective management. With- out all the terms and conditions of the tenancy spelled out carefully, in detail, and in accordance with state law, it can be a crap shoot as to whether a tenant understands his or her responsibilities. We want our tenancies to go smoothly with the rent paid on time and our in- vestment properties cared for. Written leases are a huge first step to ensuring all of that.
