Here are four common lease provisions that landlords should consider, if they are legal in your state.
Just as often as there are differences in lease provisions between different states, there are as many differences in lease within each state.
Property managers use different forms than owners of single family homes and it seems that each landlord includes terms which are specific to their lease.
While having specialized leases is good, it is also important to include, or at least consider a minimum set of lease provisions.
This article addresses four common provisions that landlords should consider, if they are legal within their respective state. It is important that you check with an attorney within your state to determine the legal application of these common provisions. The following is only a small sample of common provisions that should be considered when preparing a lease.
No. 1 Proper Term and Lease Expiration Information
While it seems obvious for landlords to include the length of the term in their lease, many landlords do not include provisions to address what happens upon the expiration of the lease. This is especially important where state law may or may not provide the default in the event that no information is included.
A landlord should identify whether the lease automatically expires unless the tenant signs a renewal OR if the lease automatically converts to a month-to-month tenancy. A failure to include this in the lease may result in a landlord being left with a vacant house because he thought the tenant was going to stay, but the tenant believed she was required to leave at the end of the lease.
No. 2 Jury Trial Waivers
Inevitably, landlords and tenants will have disputes resulting in litigation. This includes evictions for nonpayment of rent or disputes over security deposits. Because of the cost of litigation, it is important to consider jury trial waivers in states where such provisions are permissible. A jury trial waiver provides that if the parties litigate their dispute, they agree to present their case to a judge or arbitrator instead of to a jury. This significantly reduces the expenses associated with litigation, as the parties and their attorneys do not have to take extra steps necessary for a jury.
No. 3 Personal Belongings Abandoned In The Residence
An important part of owning a rental is reducing the cost and liability, and expediting the process, of re-renting the home after a tenant has vacated. These interests can be significantly impaired when the vacating tenant leaves personal property in the home. Some states require that the tenant’s property be stored and then sold at a publicized auction. This can be a time consuming process, especially when the property has little value. A landlord should consider including a provision that any property deemed abandoned (as legally defined in that state) may be disposed of at the owner’s discretion if the owner reasonably determines that the value of the property does not exceed the cost of moving, storage and the auction.
NO. 4 Mention Utilities In The Lease
If state law doesn’t mandate who pays utilities, it is important that a lease clearly states who pays the utilities, including water and electricity. While many landlords shift this burden to the tenant, leases often fail to indicate whether the utilities are to be transferred into the tenant’s name or whether the bills are to be paid by the landlord and reimbursed by the tenant. Additionally, if the tenant is supposed to transfer utilities, the lease should provide when the transfer must occur and the penalty for failing to do so. A failure to clearly indicate the foregoing can result in a landlord being forced to pay for the utilities the tenant is using, without having any recourse to collect to the expense.
It is always important to remember that if you are creating specific or unique terms with your tenant to control the lease that you put those terms in writing in the lease. Where not in violation of state or federal law, the parties are free to contract as to the terms of the lease. You want to ensure, however, that you memorialize the agreement in writing to protect your interest.
LEGAL DISCLAIMER: READ CAREFULLY:
The foregoing is a list of lease provisions that should be considered when drafting a lease. Each state has different legal guidelines regarding leases and therefore, some or all of the items may not be applicable or legal in a given state. A landlord should not draft a lease without first consulting with and engaging a qualified, licensed attorney, authorized to practice law in the jurisdiction the rental property is located. The foregoing list is general information only, and may not reflect current legal developments, or laws or rules that may apply in particular jurisdictions or circumstances. The author and his law firm expressly disclaim all liability in connection with actions taken or not taken based on any or all of the contents or information accessible through this article or site. The information provided is not considered legal advice and is given only for landlords to consider provisions which may or may not be permissible in the jurisdiction where the rental property is located. ALWAYS SEEK THE ADVICE OF COMPETENT LEGAL COUNSEL BEFORE DRAFTING OR ENTERING INTO ANY CONTRACT.
This article is being provided as a courtesy to ARPOLA. The author, Mark Zinman, is only licensed to practice law in Arizona. By publishing this article, the author is not seeking work in other states nor is he providing legal advice to prospective clients.