There are many great things about being a landlord, but it can be trying if the lease isn’t strong. Lease problems put landlords in hot water and allow the tenants to get away with behavior that would otherwise be unacceptable. The lease is meant to protect you, but if it’s not well-written, you could find yourself in a lot of trouble.If you’ve had problems with your lease agreements in the past, or you’re worried that you’ll have future contract issues, it’s time to look at strengthening the lease. Here are some steps you can take:
Get Legal Counsel
As a landlord, keeping your costs down is key to making a profit. However, sometimes you must make financial investments to protect future profits. Getting legal counsel is one of those times. The law is complex, and so is writing an iron-clad contract. Consulting a lawyer will help you avoid common legal mistakes that landlords often make.
With the right legal counsel, a lease agreement can protect you from tenants who want to use the weak points of the lease against you. Consider this scenario: Your lease agreement makes no clear statement about the terms of the security deposit. You withhold some of the deposit to cover repairs and cleaning after a tenant moves out.
However, your tenant has a friend who’s a lawyer, and they point out a discrepancy in the terms of the security deposit. Because it was not clear, you have no legal right to claim that money, and you’re out $600 for your tenant’s repairs and cleaning.
This is just one of many scenarios in which consulting with an attorney on your lease agreement could save you time and a money. It shouldn’t cost too much for legal counsel, and you’ll avoid legal battles as a direct result.
Customize the Lease Template
Most landlords use a one-size-fits-all style when writing lease agreements. Many landlords who are unsure how to write a lease themselves download a document from the internet, making minimal (if any) adjustments to meet their needs. It’s certainly easier than writing your own from scratch.
However, this can create future problems. Many templates have more fill-in-the-blank spaces than they have iron-clad text, which leaves much to the imagination. It’s hard to decipher the template, and it’s easy for tenants to poke holes in the agreement and get away with things.
Downloading a lease from the internet is fine to get started, but it shouldn’t be your final product. It’s important to customize your lease to match local rules and other issues specific to your units. Once you’ve made the adjustments, have your attorney review the document, and make further adjustments per their recommendation.
Don’t Completely Trust Digital Copies
It’s becoming more common for tenants to digitally sign a lease agreement rather than in person. This is fine if you’re dealing with tenants who are moving from afar. It eases communication and locks the contract in place.
However, don’t store the lease solely on the computer. Print a hard copy and keep it in your filing cabinet. Digital files are easily altered, whether purposely or accidentally. Software can often change portions of the lease due to a saving error, or it may try to be “helpful” and delete a page. A hard copy shows proof of the original agreement so there can be no foul play.
Additionally, concepts can get lost in translation when you’re dealing with digital communication. With multiple emails back and forth, the contract can be lost or altered. By printing the lease out as soon as it’s been signed, you protect yourself from confusing modifications.
Watch What You Say
Leases should always have a clause stating that any changes to the agreement must be made in writing. Otherwise, you might loosely verbalize something contradictory to the lease, and the tenant will take that as your word. If there’s no clause on the agreement that prohibits vocal alterations, you may be legally bound to modify the lease.
Also, be careful in your written communications and advertising, as tenants may try to use that to change their lease. For example, if your lease states that tenants pay for their own internet, but you advertise a month of free internet to encourage new renters, existing tenants can take advantage of this offer if you don’t state in fine print that existing contracts don’t qualify. Be careful how things are worded to avoid issues.
Additionally, try not to say too much before the lease agreement has been signed. Once it’s signed, the terms and prices will be locked in, but before that, you could let something slip that would shift negotiations in the tenant’s favor.
Make Terms Very Clear
Avoid open-ended statements on your lease. You don’t want tenants to believe they’re entitled to something they’re not. If there are specific things you don’t want your tenant to do, state them as clearly as possible in the contract.
A common mistake new landlords make is being unclear about the terms of the security deposit. There are security deposit laws for each state, and you don’t want to go against that law in your contract. This will put you in line for a fine and require that you pay back the extra money taken.
Additionally, avoid unclear statements about how the deposit will be used. The required dollar amount, exact purpose for the money, and terms of returning the money should be stated at the beginning. There may be other disclosures that you need to state, such as whether or not the deposit will be held in an interest-bearing account or if there are any non-refundable fees attached.
Require a Co-Signer for Young Tenants
Young people with non-existent credit histories need a place to live, too. However, many landlords are skeptical about allowing a young tenant with very little credit history to rent their property, even if they have no other options. It’s hard to know if these tenants will make rent, but you can strengthen your lease agreement by using a co-signer.
In your contract, make a proviso stating that any tenants with poor or no credit history can live in your units as long as they have a co-signer on the lease. This means that if your tenant fails to pay, the co-signer will be responsible for covering the rent, and you won’t be out any money.
Make sure the co-signer has a great credit history before accepting their signature. They should have a decent income with a good credit history to ensure covered payments. If the tenant can’t provide such a co-signer, move on. You should never sacrifice the strength of your lease agreement for the sake of filling vacancies.
Contact Green Residential for a Stronger Lease Today!
With the help of the property managers at Green Residential, you can have a stronger lease agreement in no time. Our experienced team will not only take care of the finer details of your property, including maintenance, tenant screening, eviction services, and rent collection, but we will also provide contract preparation services to guarantee an iron-clad lease.
For more information about the services we provide, contact us today!