When owning property, it is imperative to create a thorough rental lease agreement to protect yourself and your assets. Here are 6 rental agreement mistakes to avoid.
As a landlord, there are things you must handle with each new tenant; from the first inquiry on the property and the scheduled showing to the tenant application and thorough screening report process. While all of these things are incredibly important when it comes to finding high-quality tenants, nothing is as important as your rental lease agreement.
There are many pre-written lease agreements online that you can print for free. Or, you may have a copy of one used by a friend years ago. Unfortunately, this easy way out could cost you big time in the future. One of the biggest mistakes you can make as a landlord is to not have a well-written, thorough rental lease agreement that offers protection to both yourself and your tenants.
Take a moment think about this: Where did your current lease agreement come from?
Before you let another tenant sign your lease agreement, be sure to review your lease agreement so that it avoids these common mistakes.
The Importance of a Lease Agreement
Your lease is not just a document that needs to be signed as a formality. Your lease agreement is a legally binding contract between you as the landlord or homeowner and your new tenant. It states everything that each party in the lease is responsible for, from rental amounts and security deposits to pets, noise, utilities, and more.
The very specific terms of the rental agreement are spelled out in the lease. In fact, you should always consider having the following in your agreement:
- Basic information, such as the names, address, length of rental, and fees to be paid.
- Maintenance requirements to keep the property healthy. Will the tenant be responsible for all expenses when something happens to the property? Will the landlord handle the repairs? Who should the tenant contact?
- Address subleasing and occupancy limits.
- Discuss property insurance and the need for renter’s insurance.
- State your policy (if you have one) on smoking and/or pets.
You never sign a lease with the intention of things going wrong. But life happens – and sometimes those great tenants fall on hard times or turn out not to be so great at all. Having a proper lease signed by both of you ensures that you will be protected should legal action be required.
Types of Rental Lease Agreement Mistakes
Let’s take a look at what not to do with your rental lease agreement.
1. Using a Blanket Lease
It can be tempting to just use a blanket lease and maybe writing in the information as you go. But, here’s the thing – it looks unprofessional and, depending on your handwriting, it could make your lease a bit unclear should legal issues arise. To better protect yourself, it is best to have a well-written and thorough lease agreement.
2. Failing to Outline Tenant Responsibilities
Be sure to address the responsibilities of your tenants since they will be residing in your rental property for some time. If your tenant is to be responsible for the general maintenance and upkeep of the property, then state these expectations in the lease. Be specific. Consider pest control, landscaping, light bulb replacement, air filters, some alarm batteries, overall cleanliness of the property, etc.
Make sure that your tenant has a clear understanding of his/her responsibility in maintaining the property. Of course, make sure your responsibilities are clearly stated, too.
3. Not Stating Rules Regarding Additional Occupants
It is standard practice to have each adult who will be residing at the property undergo tenant screening – and be added to the lease agreement. But what happens when your tenant moves their friend/cousin/significant other into the property after the lease is signed? And what about those friends who just come to visit but never leave?
Be straightforward in your lease about what you expect and what is not allowed – as well as the repercussions if this is not followed.
4. Not Requiring Insurance
Having homeowners’ insurance on your rental property is a must. But, for many landlords, requiring your tenant to have renters’ insurance has been up for debate. Here is something to consider – not requiring renters’ insurance could leave you in the middle of a lawsuit should personal property get damaged. Renters insurance is a small monthly fee and it helps cover things outside the scope of homeowners’ insurance. Adding a clause to your rental lease agreement requiring this protection can save you a lot of headaches in an emergency.
5. Forgoing the Co-Signor
The person (or persons) who sign the lease are agreeing to be liable for the monthly rent and routine care of the property during its term. When you are screening your tenants, you look for things like proof of employment, decent (if not great) credit score, verifiable income, quality references, no prior evictions, etc. However, some people have encountered a rough patch and do not meet all your requirements.
A co-signor is someone who goes through the same screening and is deemed a stellar candidate for the property. Having this individual sign your lease – which should also include a co-signor clause – protects your interests down the road.
6. Disregarding the Law
You must understand your role as a landlord. You have a property that you are renting to tenants. And you are each signing a lease – that you created – accepting certain responsibilities. Do not let yourself get carried away. You have laws that govern you and your position as a landlord – including the rights of your tenants. Do not overstep. If you are unsure, have your rental lease agreement reviewed by a professional before moving forward with it.
How a Property Manager Can Help
Property management professionals know the rental industry inside and out. They have a deep understanding of the laws at the local, state, and federal laws that have been put in place to protect both you and your tenant. When you have a property manager on your side, then you can rest easy knowing that your property is handled by experts throughout the entire rental process – including the lease agreement.
At Real Property Management Evolve, you get the best property management you can find in and around Phoenix. When you’ve got us on your side, you can rest assured that your lease agreement is going to be free of mistakes and be designed to keep you safe and secure no matter what.